North Carolina has for a long time been one of the most aggressive states in subsidizing public colleges and universities. Many assert that this “investment” has paid handsome returns in the economic, political, and social arenas.
It’s hype. The success of this rhetoric is due to the alumni effect, the sports-team effect, and the vague halo that many see floating above the heads of university officials. The halo is most apparent to, well, university officials, but you get the point. We’ve had decades of assertions about the indispensable nature of massive taxpayer subsidies of UNC — from politicians, from journalists, from historians and others — but the data to support this thesis are surprisingly lacking.
I’m not writing, of course, to suggest that higher education has no economic value. It can have great value. So don’t read this the wrong way. The argument is about whether taxpayer subsidy, particularly subsidy above the average experience in the U.S., results in more real investment in valuable higher education.
All but three states in the nation subsidize public higher education less than North Carolina does. While our state expects users to finance around a quarter of the cost of an undergraduate education, most states have tuition pay about a third or more of the cost. South Carolina, for example, is near the median at about 34 percent. Virginia splits the cost roughly 50-50. (BTW, these statistics are a bit dated. The past couple of years of tuition hikes nationwide have likely upped these percentages a little, but are unlikely to have changed the relationship among the states much).
So is our population better educated as a result? Apparently not. About 23 percent of North Carolinians aged 25 and over had earned at least a bachelor’s degree by 1998, compared to 30 percent of Virginians and 21 percent of South Carolinians (the data are fuzzy enough that the difference between the Carolinas is not significant).
The national average was about 27 percent. So even though North Carolina bends over backwards (relatively) to subsidize the mostly middle-class and upper-class families who send their children to public universities, there is little evidence to suggest, at least, that this effort overcomes the other barriers to improving our college-going rate. We seem simply to be transferring income from taxpayers who don’t send their kids to a UNC school to those who do. That’s not investment. It’s redistribution.
Perhaps, for example, we should be focusing our efforts on improving high schools so that more students are qualified to enter and succeed in college. After all, if a student is really likely to gain a lot from a college education, it will make economic sense to go into debt to finance this education. It is far from obvious, in economic terms, that higher education is a “public good” for which individual incentives are insufficient to guarantee a socially “optimal” amount of investment.