Financial Barriers of Higher Education

Written by Shane Hackett

Edited by Juliana P., Laura P.,
and Bianca S.

From Volume 1 Issue 2 on
Poverty in America

               
     Colleges and universities have been steadily increasing their cost of tuition for the past few decades. The average costs of tuition for the 2019–2020 school year was $41,426 at private colleges, $11,260 for state residents at public colleges and $27,120 for out-of-state students at state colleges, according to the U.S. College Board survey (Powell and Kerr). Also, entrepreneur and author Zack Friedman wrote in his online article that, “in 2018, over 44.2 million borrowers owed a total of 1.5 trillion in student loan debt to the United States government” (Friedman). These astronomically high tuition costs, and increasing student loan debts mean that more and more lower class citizens are unable to achieve a higher education. The national motto of the United States is ‘E Pluribus Unum’, which is Latin for ‘Out of many, one’, but how can an individual in the U.S. genuinely feel part of that ‘many’, if they are not given an equal chance at education, because of their economic standings? The only way for this nation to become whole again is if the same opportunities are within the grasp of all of its citizens. Despite the possible limitations, the federal government should increase income taxes of the wealthiest 10% of Americans by %5 in order to subsidize the cost of higher education for students in poverty so that crime rates in impoverished communities would decrease, lower class families would have better job opportunities, and local economies would grow.

     Primarily, crime rates in impoverished communities would decrease significantly if the federal government subsidized the cost of higher education for students in poverty. This aspect of the solution may be the most beneficial for the nation. Alma Gonzalez, a college student, wrote an article about a possible solution to crime while studying at New York University. Gonzalez identifies that, “A 5% increase in the college graduation rate, for instance, produces an 18.7% reduction in the homicide rate” (Gonzalez 32). This statistical drop in crime rate occurred nation-wide, and many researchers largely attribute this to the increase of college grads that same year, in 2015 (Gonzalez 33). If lower class students were given the opportunity to attend more prestigious colleges, a rise in college graduation would occur, subsequently leading to another drop in certain crimes. Stephen Machin, a professor of economic statistics at the London School of Economics and his associates conducted a study that provided similar results to Gonzalez’s data. Machin states, “there was a 4.7% fall in the conviction rate in the years after the education reform, revealing a statistically significant crime reduced form”...“the same is true of education, with a 5.7% fall in the proportion with no qualifications and an increase of almost a quarter of a year (0.22) in the average school leaving age” (Machin et al). These significant crime and education statistics suggest a critical impact of education on crime. Machin and his associates identify a positive correlation between the two demographics; the more adults entering college, means a lesser number of convicted and incarcerated individuals. Although Stephen Machin’s study was of adults that lived in London, he says at the end of his study that, “We matched out data with that of other countries, including Ireland, Canada and the United States, and found overwhelming similarities in the relationships of crime and education” (Machin et al). This relationship between education and crime is very relevant in the United States. Similarly, data gathered by Lance Lochner and Enrico Moretti from the US census, found that men with no college education are more likely to be incarcerated from 2000 to 2010. The study reported that, “Incarceration rates for white men with 12 years of schooling are around 0.8 percent while they average about 3.6% for blacks over the decade” (Lochner and Enrico 6). This data suggests that if more adults were given things like grants, scholarships, and loans then the rate of incarceration would decrease in communities.

     Another notable effect of this subsidization would be that lower class families in the U.S. would have better career opportunities. College courses are the best ways for people to gain experience and knowledge about a subject, which creates a more hirable individual. According to David Edelson Ph.D., the senior vice President and chief financial officer of Public and Land-Grant Universities, adults with a bachelor's degree or higher are, “half as likely to be unemployed as their peers who only have a high school degree, and they make $1 million more on average throughout their lifetime” (Edelson). If the federal government allowed more impoverished students to get these degrees, students would be more likely to achieve higher paying careers in fields they are passionate about. Although a college degree does not guarantee a fulfilling career, it does however, level the playing field for people who actively pursue their goals. Roy Y. Chan, the Director of TRIO, a Student Support Service at Lee University agrees with Machin’s ideas, when he says that according to “2016’s Cooperative Institutional Research Program (CIRP) survey, 60% of college freshman admit that ‘landing a good job’ was their largest factor when considering a college” (Chan). Chan identifies the increasing expectation of prestigious colleges to help students get better careers. Dennis Vilorio, a researcher of the U.S. department of labor statistics, creates a similar claim to Chan, stating that individuals with an associates degree or higher 3% to 7% less likely to be unemployed and earn $200 to $1200 more than individuals with no college education (Vilorio). Vilorio’s data concludes that a college degree provides significant advantages when applying for higher paying jobs.

     Finally, the federal government would promote long term economic growth among communities if it subsidized the cost of higher education for students in poverty. By allowing lower income students to achieve a college degree, and consequently raising the number of higher paid workers, the government would indirectly create more middle and higher class citizens. When the number of middle and higher class families begins increasing, so does the amount of money being spent on luxury items and goods. Jonathan Rothwell, a writer of the Brookings online editorial, displays his research on a correlation between higher education and increased spending, According to Rothwell, “the average bachelor’s degree holder contributes $278,000 more to local economies than the average high school graduate through direct spending over the course of his or her lifetime” (Rothwell). The more money a family makes, the more money that they will likely spend on ‘want items’. Families with low paying jobs would not be able to afford these items, therefore giving less back to the economy. Workers are also forced to pay a federal income tax. Julia Kagan, a personal finance editor explains how, the amount that a person pays towards this income tax is dependent entirely on the amount of money that a person earns from their job. For example, if a worker with a low paying job earns 12 dollars an hour, two dollars of that hourly wage will be taxed by the government. Now, assume that a worker with a higher paying job earns 60 dollars an hour, and ten dollars of that hourly wage will be taxed by the government (Kagan 1). On a national scale, the United States government’s best interest lies in creating more higher paying careers in order to collect more tax revenue. Lastly, Lance Lochner and Enrico Moretti also estimated the probable economic benefits in the incarceration study from before. The researchers concluded that if the U.S. federal government increased funding to Pell Grants for students, “a 1-percent increase in male high school graduation rates would save as much as $1.4 billion, or about $2,100 per additional male high school graduate” (Lochner and Moretti 15). This money would be saved in the form of decreased costs of prison accommodations, and inmate charges. The more students that are able to attend college, means fewer people are incarcerated, and the government spends less money on the costs of incarcerating those people.
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     Although these benefits are highly desirable, there are limitations to implementing this plan in the United States. First, is the ethical dilemma of raising property taxes of the richest 10% of American citizens. Richard Vedder, an American economist and author for the Foundation for Economic Education, would argue that, “these multimillion, and billionaires should not have to pay more for their accomplishments,”(Vedder). Although many people agree with Vedder’s argument, others have found ways to diminish their arguments. Ethical researchers like Jonthan Cohn would debate that, “the argument that opposes (tax raises) suffers from two main faults. One is that it fails to account for the power of luck” ... “The other, albeit related, flaw in the conservative argument is that it fails to acknowledge the debt wealthy people owe to society” (Cohn). A majority of people in the top 10% of wealthy Americans gained their wealth through inheritance. It is due to this fact that an increase in property taxes of the richest 10% of Americans is mostly an ethically right decision.
Next, The other notable limitation is the fact that there may not be enough funds to accommodate a substantial amount of lower class students who are attempting to achieve a higher education. According to Robert Bellafoire, an economic analyst, the top 10% of Americans paid a total of 70% of all income taxes in 2018 (Bellafoire). Bellafoire also found that the total amount paid in income taxes totaled approximately 1.4 trillion US dollars (Bellafoire). This means that the top 10% of Americans contributed a total of 980 billion in income taxes. According to Steven Dillingham of the US Census Bureau, $694.1 billion of that was funded towards education (Dillingham). Even if tax rates for the wealthiest 10% of Americans were to increase, by a minimum of 5%, the amount of money raised in income tax may not be enough to significantly increase the number of students able to achieve a college degree. According to the US Census Bureau, a defining variable like this is completely dependent on the income of the top 10% and the number of high school graduates.
Despite these two possible limitations, the federal government should increase income taxes of the wealthiest 10% of Americans by 5% in order to subsidize the cost of higher education for students in poverty so that crime rates in impoverished communities would decrease, lower class families would have better job opportunities, and local economies would grow. This tax increase would allow more lower class students to achieve a college degree; subsequently increasing those individuals’ chances of getting a higher paying job, making them less likely to commit crimes, and making them spend more in their community. The effects of this tax reform are overwhelming beneficial, not only for individuals but for the nation as a whole. Although, the reform is limited by the ethical dilemmas and financial uncertainties, the benefits of this solution outweigh the possible detriments. This reform would be the most probable way for this nation to truly become united again, and give every one of its citizens a fair chance at the pursuit of happiness. Afterall, we are all just people trying to achieve something greater than ourselves.

​Sources
Bellafoire, Robert. “The NCES Fast Facts Tool Provides Quick Answers to Many Education Questions (National Center for Education Statistics).” National Center for Education Statistics (NCES) Home Page, a Part of the U.S. Department of Education, NCES, Mar. 2019, https://nces.ed.gov/fastfacts/display.asp?id=66.

Chan, Roy Y. “Understanding the Purpose of Higher Education: An Analysis of the Economic and Social Benefits for Completing a College Degree.” Researchgate, Research Gat, 13 Jan. 2016, www.researchgate.net/publication/305228497.

Cohn, Jonathan. “Moral Arguments for Soaking the Rich.” The New Republic, The New Republic Newspaper, 17 Oct. 2010, www.newrepublic.com/article/78459/moral-argument-soaking-the-rich.
Dillingham, Steven. “2018-2019 Tax Brackets.” Bankrate, Bankrate.com, 22 Oct. 2019, www.bankrate.com/finance/taxes/tax-brackets.aspx.

Edelson, David. “How Does a College Degree Improve Graduates' Employment and Earnings Potential?” Association of Public & Land-Grant Universities, Association of Public & Land-Grant Universities, 7 Oct. 2016,www.aplu.org/projects-and-initiatives/college-costs-tuition-and-financial-aid/publicuvalues/employment-earnings.html.

Friedman, Zack. “Student Loan Debt Statistics In 2019: A $1.5 Trillion Crisis.” Forbes, Forbes Magazine, 14 Oct. 2019, www.forbes.com/sites/zackfriedman/2019/02/25/student-loan-debt-statistics-2019/#51f16ba6133f.

Gonzalez, Alma. “Education: The Secret to Crime Reduction? .” International Relations, New York University, 18 May 2015, as.nyu.edu/content/dam/nyu-as/politics/documents/Gonzalez.pdf.
Kagan, Julia. “Understanding the Federal Income Tax.” Investopedia, Investopedia, 9 Oct. 2019, www.investopedia.com/terms/f/federal_income_tax.asp.

Lochner, Lance, and Enrico Moretti. The Effect of Education on Crime: Evidence from Prison Inmates, Arrests, and Self-Reports. Oct. 2015, eml.berkeley.edu/~moretti/lm46.pdf.

Machin, Stephen, et al. “The Crime Reducing Effect of Education*.” Wiley Online Library, John Wiley & Sons, Ltd (10.1111), 12 May 2011, onlinelibrary.wiley.com/doi/pdf/10.1111/j.1468-0297.2011.02430.x.

Powell, Farran, and Emma Kerr. “What You Need to Know About College Tuition Costs.” U.S. News & World Report, U.S. News & World Report, 18 Sept. 2019. www.usnews.com/education/best-colleges/paying-for-college/articles/what-you-need-to-know-about-college-tuition-costs.

Rothwell, Jonathan. “The Economic Value of Education.” Brookings, Brookings, 29 July 2016, www.brookings.edu/blog/the-avenue/2013/11/12/the-economic-value-of-education/.

Vedder, Richard. “Why ‘Free College’ Will Do Little to Help Poorer Americans: Richard Vedder.” FEE Freeman Article, Foundation for Economic Education, 13 Mar. 2019, www.fee.org/articles/why-free-college-will-do-little-to-help-poorer-americans/#0.
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Vilorio, Dennis. “Education Matters : Career Outlook.” U.S. Bureau of Labor Statistics, U.S. Bureau of Labor Statistics, Mar. 2016, www.bls.gov/careeroutlook/2016/data-on-display/education-matters.htm.