North Dakota Doesn’t Need A Tuition Entitlement

alcarlson

America has a higher education bubble. This is undeniable. As Investor’s Business Daily writes in an editorial today, government subsidies for higher education and tuition has created a glut of college graduates for which there just isn’t enough room in the job markets. Meanwhile because of seemingly bottomless government-created demand for higher education, the cost of getting a degree has gone through the roof.

It’s clear, to any rational observer, that the solution for higher education is to stop subsidizing higher education. We’re distorting the market and creating a bubble.

So it’s in that context that the legislature is about to consider a very bad idea. HCR3018, sponsored by House Majority Leader Al Carlson, would take $10 million from the state’s Legacy Fund and use it to fund scholarships awarded based on guidelines set by the legislature:

Beginning July 1, 2018, on July first of each year, the state treasurer shall transfer ten million dollars of the earnings of the North Dakota legacy fund to a special fund in the state treasury known as the legacy scholarship fund. Money deposited in the legacy scholarship fund and the earnings of that fund may be expended only by legislative appropriation for legacy scholarships. Legacy scholarships may be awarded as provided by law but only to recipients of a North Dakota school district high school diploma who meet academic performance and other minimum standards established by law. Legacy scholarships may be awarded only for attendance at North Dakota state institutions of higher education.

North Dakota graduates about 7,000 or so high school students every year, so this entitlement (assuming it’s given to all students, which it may not be) breaks down to about $1,400/student. Assuming that the legislature might apply some standards to who gets the money, we may be talking as much as $2,000 – $2,500 per student.

That’s not going to pay for the entirety of anyone’s tuition, but it’s a healthy chunk of tuition at most schools. But will it help?

No, of course not. As we’ve seen before, the more money the government makes available to subsidize tuition (be it through subsidized student loans or grants) the higher the price of tuition goes. Colleges know the market will bear more tuition increases when the government appropriates more money to subsidize tuition.

What Carlson and his co-sponsors are proposing will only exacerbate the higher education bubble.

Rob Port is the editor of SayAnythingBlog.com. In 2011 he was a finalist for the Watch Dog of the Year from the Sam Adams Alliance and winner of the Americans For Prosperity Award for Online Excellence. In 2013 the Washington Post named SAB one of the nation's top state-based political blogs, and named Rob one of the state's best political reporters. He writes a weekly column for several North Dakota newspapers, and also serves as a policy fellow for the North Dakota Policy Council.

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  • WOOF

    Subsidized tuition is what made this nation an economic powerhouse.
    Education is cheap, ignorance is expensive.
    FDR signs the GI Bill of Rights 1944

    • http://sayanythingblog.com Rob

      Subsidized tuition is what made this nation an economic powerhouse.

      Subsidized tuition is why the cost of tuition has exploded:

      http://static5.businessinsider.com/image/4ffd98096bb3f71079000023-590/a-key-reason-driving-student-loan-growth-is-skyrocketing-tuition-inflation.jpg

      • opinion8ed

        UND Graduation Rate:
        First Year Student Retention (full-time students): 77%
        4-Year Graduation Rate: 23%
        6-Year Graduation Rate: 54%
        NDSU Graduation Rate:
        First Year Student Retention (full-time students): 76%
        4-Year Graduation Rate: 23%
        6-Year Graduation Rate: 54%

        • http://sayanythingblog.com Rob

          Those are atrocious numbers, and I actually think the six year rates are high.

    • opinion8ed

      Education is cheap? It is the largest debit on your taxes. Education standards are falling despite all there newfound wealth. The majority f tax money is NOT USED for education it is used for salaries, pensions, and buildings. Get a clue

      • Mark Ugelstad

        Higher Education is not even close to the largest debit on our taxes. DOT, Health and Human Services are both considerably higher.

  • camsaure

    Higher Education cannot and will not be responsible with the money that they get now. So RINO Carlson’s solution is to give them more??? Enough already!

  • http://Sayanythingblog.com The Whistler

    Why don’t they take it out of the support for the schools in the current budget. It’s better to fund students than bureaucrats.

    • http://sayanythingblog.com Rob

      I still think that’s problematic, because subsidizing tuition only clears the way for more tuition hikes. They’ll get it back in the end anyway.

      But yeah, we’ve got so much administrative bloat we shouldn’t be increasing higher ed spending at all. As it is, we’re giving them a 38% increase.

  • spud

    There is already plenty of scholarship money available at our college’s from donor’s at all our state college’s. Heck even lots of scholarship money provided by benefactor’s in our high schools. The state has serious issues to deal with and this is not one of them.

    • http://sayanythingblog.com Rob

      Well, yeah, that and the fact that this will make things worse.

      • spud

        As a parent I want us to cut down the cost of an education for these kids. The debt these young people have to incur is crazy. My girl is going to Concordia in Moorhead and to be frank it has been a dream of hers as other cousins have went there. I feel a little bad discussing this issue when I am sending my child to a Minnesota school. But like you have been stating we are not looking at cutting budgets in our state colleges and education has gone through the roof. Why should our state legislators offer a bill handing out scholarship money for students and picking who or whom is more qualified than the next to receive this money. Higher ed improvements is something all of us want but pumping money and money and money at the problem is no solution.

  • WOOF

    Public education is still a bargain.
    “States have cut the amount of money they are giving to colleges by a
    total of $15.2 billion since 2007, or 17.4%. At the same time, the
    number of students enrolled in college has risen 12%. That means the
    average public college gets a tax subsidy of only $6,600 per student,
    down from $9,300 just five years ago.”
    Republicans hate poor people being educated.

    http://money.cnn.com/2012/10/24/pf/college/public-college-tuition/index.html

    • http://sayanythingblog.com Rob

      That’s not been the trend here in North Dakota. We’ve increased the higher ed budget by 150%, meanwhile tuition rates at our two largest universities have doubled.

      Also, the growth trend in tuition growing several times faster than inflation dates back to decades before 2007 and it encompasses both public and private institutions.

      So your data is irrelevant.

    • opinion8ed

      First of all college is not a right it is a privilege and costs money, that money should be coming from the students and the parents. Mr. factoid why don’t you look at freshman dropout rates, graduation rates, and total indebtedness. Do you think that pisses colleges off that 19 year olds are making more money in Williston then they ever would even if they attained the degree and do not start out in debt… Apprentice Electrican’s are making $100,000 a year that is more than most 30 year employees are making. This is why colleges are hurting. They build and give pay raises according to their genius future attendance rates and in North Dakota a lot of the smaller institutions are losing students to employers who are paying them very well.

  • Roy_Bean

    Colleges are the best in the world at getting their hands on the consumer surplus. If students were offered a “free” education colleges will raise tuition to get their hands on the money that students or their parents would be willing to pay if they had to. A free college education is a great concept but the cold reality is that it won’t happen.

  • http://nofreelunch.areavoices.com/ Kevin Flanagan

    Education is shielded from market forces. That’s why tuition has led the way in price increases. The educrats and tenured pointy heads laugh all the way to the bank!

  • RandyBoBandy

    This probably will not affect tuition rates much at all. Most of the kids who would qualify for these scholarships were probably good enough to go to a myriad of institutions in other states. This just helps to keep them in North Dakota. A performance based reward that helps to keep North Dakota’s academic talent in North Dakota and you still oppose it?

    • http://sayanythingblog.com Rob

      Subsidies impact prices. There’s no getting around it.

  • opinion8ed

    They have quite a few in place right now. You keep your GPA above 2.75, take 12 or more credit hours and you receive $750 per semester. If you are going to handout money then hand out $7500 per semester for those with cumulative GPA’s above 3.5 and who intend to go into North Dakota’s job market. If you leave the state for 1 year you would be required to pay all of it back. The average tuition with room, and board and fees, is about $19000 give or take, include books and you are in excess of that. You can borrow $5500, $6500, and $7500 each successive year until you have reached $31,000 then you are cut off from government lending ($39000 if you an independent student). If the best and the brightest were given the money instead of those just skating by then, maybe education would work best. In the summer you would be able to earn the rest of what you need to educate yourself and of course you are your parents burden not the taxpayers.

  • yy4u2

    I was thinking the same thing when I read it from Dustin’s ND Watchdog email. Here’s a crazy idea, decrease and/or cut the taxes of those whose money is filling up this fund.

  • SusanBeehler

    Don’t they already subsidize many out of state students?

  • bethsioux

    my kids go to a Catholic high school across the river in Minnesota, yet we pay North Dakota taxes–no scholarship for my tax-paying kids
    Do we really need an excuse to jack up North Dakota tuitions? Nope. I don’t think so…

  • Mark Ugelstad

    To follow your logic, why fund any school? It just drives up the cost. Let the parents and teachers pay for grade school thru high school. We have always valued education in this country, because if we don’t we can’t find enough qualified workers to support the economy. North Dakota colleges are very reasonable and I think it is a good thing to support our youth if they choose to attend college.

    • http://sayanythingblog.com Rob

      Let’s not reduce this to the absurd.

      There is a direct connection between subsidizing higher-ed tuition and long-term and dramatic increases in the cost of tuition.

      • Mark Ugelstad

        The same collation is true of grade school and any government funded program. North Dakota Higher Education is still a bargain which pays us back with better citizens.

        • Tim Heise

          Sure but do these graduates stay in ND. For graduate schools I do not think so. My law school tuition is in the top ten cheapest in the nation and over half of my class will leave the state. THANK YOU ND taxpayers for paying for their schooling.

          • Mark Ugelstad

            It is the least we can do for the youth of North Dakota. If we can’t offer them jobs, we can at least give them a good start and then they can fund hockey arenas when they strike it rich. Some of those grads we exported have their names on building now.

          • http://sayanythingblog.com Rob

            You’re storming on the assumption that this sort of thing is helping.

            In the last decade we’ve increased higher Ed spending in ND by 150%. Meanwhile tuition has doubled at the two largest schools.

            Where is the money going? Certainly not to make the education more affordable. Or 150% more valuable.

        • http://sayanythingblog.com Rob

          No, you’re buying into fairy tales.

  • robertwetsch

    If you think Higher Ed is expensive now, wait until college is free. The taxpayer will not be able to afford it.

  • Captjohn

    I may agree with most everyone that the cost of a college degree in North Dakota is obscene. All over the country legislators and some governors are trying to devise a way to reign in rampant spending at state controlled institutions of higher learning.
    My argument is different however. Why would the legislature encumber money generated by the Legacy Fund. From my reading it was clear the proceeds were to go to the general fund unencumbered. By doing so the legislature could be able to give tax relief in what ever form or at least never have to raise taxes that accrue to the general fund. In other words the Legacy Fund would be there for all the citizens of your state.
    If the legislature has to give out a 10 million dollar subsidy at least restrict it to a Needs based formula and appropriate it out of the general fund.

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