What We Talk About When We Talk About Oregon’s Debt-Free Tuition Plan

There has been much to-do about the bill passed in Oregon to form a committee to look at the possibility of passing a future bill for student debt-free college tuition. If you remove the whole middle part of that last sentence and just kind of ignore it, the hubbub makes sense — with student debt causing both personal hardships and macroeconomic ripple effects, the option to offer public higher education and guarantee no debt could be a game-changer.

Some people on the left like this plan. Some people to their left hate it. Some people to the left of the people who are already on the left love it. And most people don’t care one way or another because they have jobs and families and still can’t get over the fact that Kim Kardashian and Kanye West managed to ruin their baby’s life at literally the very first possible moment by naming their kid a direction. A direction!

Now I want to weigh in even if it adds little to no value to the world, which is why Al Gore invented blogging in the first place.

Putting aside the policy nitty-gritty, what is at stake here is whether we think public higher education should be a universal program or an individual luxury good. Most progressives and advocates of increased college access favor the former — rather than pushing tuition onto individual students or groups of students, they prefer public subsidies to fund the majority of public higher ed.

The liberal blogger Matt Bruenig (with whom I have discussed this), however, lays out the case for a different strategy. In his view, only users of college should pay because the non-users are predominantly poor. The benefits of the Oregon plan, then, are that it narrows the group of people paying for college from society at large (in the form of tax revenues) to only users of college — but does not put the onus on any specific individual. Unlike simply increasing tuition for each student, a plan like the Oregon plan puts the cost on the entire group of students that have used the college’s services under the payment plan (any underpayments are covered by the buffer fund paid into by former students). Thus, students under the Oregon plan share the same risk pooling of wider tax-funded programs.

It is not ‘Pay It Yourself’ as much as it is ‘Pay It If You Also Attended College.’ The second acronym is less catchy, but they can hire a team to work on that.

The worst solution is increased tuition on individual people, who then get screwed if they cannot repay their debt. But the difference between an Oregon-style repayment plan and a more universally-funded system is whether the additional cost should fall on the entire population or just on the population of current and previous college users. Matt wants to just charge the latter to ensure that the non-college poor and working classes are not subsidizing the rich. I, however, think a more universal system is preferable to an Oregon-style plan. Here’s why.

First, even though postsecondary education is not currently a universal good — it is used by about half of the population — that is not to say it ought not to be. As an advanced society, we ought to provide a quality postsecondary education of every kind, ranging from technical training to the liberal arts, to any student who wants it. Either a more universal system that keeps costs low or a no-debt plan could solve this problem, of course. But while they may achieve the same ends in theory (which is a big if given many practical considerations), having a universal program is an acknowledgement of our priorities: it is important to us as a society that we recognize that higher education is valuable and collectively important.

I agree with Matt and the view of labor progressives that education is not the answer to inequality and that we need strong labor market policies to reduce the absurdly high college premium that is, contra many economists, pretty arbitrary. But even if we recognize that education is not the answer to our economic problems, it can still be a good that we value as a society and should be willing to ascribe value for its own sake.

Second, the biggest problem with the Oregon plan as it currently stands is the issue of public vs. private higher education. While Matt is concerned with the working poor paying for the rich and middle classes to go to college, I am concerned with the rich not paying for the middle classes to go to college. This is probably a result of my educational upbringing that involves a bougie private high school and a bougie private college and the associated liberal guilt. Oregon’s plan only applies to public education, not private education, which means that students who attend private colleges do not pay for public education.

When a parent chooses to send their child to private high school, they still have to pay local taxes to fund public high school education. Even if they do not use the public services, it is important that they contribute to ensure that the public services are funded. If rich families that sent their kids to private colleges were no longer responsible for helping to fund public higher education in the state, this would be terrible for public education.

If public higher education is, as I view it, a predominantly middle class program (as opposed to private education, which is predominantly for the rich), a universal funding mechanism makes sense. Funding a middle class program through universal mechanisms is sensible because we are a middle class society. And it ensures that the rich are not off the hook getting their own private education while leaving the middle class to fend for itself.

Critics of Rick Perry’s $10K college plan in Texas – which is supported by many liberals – argue additionally that the public colleges will get screwed relative to the private colleges under a $10K plan. Nobody can know for sure how it will pan out in the real world, but I think this is a justified criticism. If we make our public colleges relatively less competitive to the private ones, we once again hurt the lower and middle classes at the expense of the rich.

Let’s get philosophical one more time and imagine that we could make the Oregon system national and include both public and private students. Now there are no adverse selection or competitiveness issues. Would this be better than a universal program?

My answer is again no. At that stage, the two programs become nearly identical and the minor differences weigh in favor of universalism.

If the Oregon-style plan is done on a national level for all college graduates, the group shouldering the cost burden would be total college graduates. This share of the population is similar to the top half of the population (give or take a few people), as postsecondary graduates tend to make much more money.

National funds are more progressive than state funds because they are funded from income taxes rather than property or sales taxes. If we had some sort of national program, then, the funding source would be highly progressive income taxes. Only the top half of the population, give or take, pays income taxes, so this is essentially the same group as those who have graduated from college. If the program is national, the outcomes are close to identical given how unequal or society is. With this in mind, the difference is essentially semantic plus a few Bill Gateses or anti-college Peter Thiels.

If this is the only difference, then, the universal program is preferable for two reasons. One, it includes the rich non-collegians, who would otherwise not be subject to helping fund public education. Second, as mentioned earlier, it is an indication of our priorities. If we want to value higher education as a universal good that has value for its own sake, funding it in a less targeted sense is crucial.

Moreover, if the plan won’t work at a state level but you can change state taxes to be more or less progressive, a universal program at the state can be more progressive than the status quo without forcing all funding to come from the states. Thus, you do not necessarily need a national plan to have a more progressive universal program, whereas you do need a national plan to have a functional Oregon-style Pay-It-Forward program.

Even though I am a sympathetic to the arguments in support of the Oregon plan, I think a universal funding mechanism is the best strategy. Our focus should be on how to ensure that funds for higher education are increasingly progressive so that we can keep public college affordable and make all of my rich high school and college classmates pay more.