For all the money we’re spending, we may as well give it away

Mike Konzal at Rortybomb:

Let’s take the case of student debt and the tax code. How much would it cost to make public colleges and universities free? Rough estimates (quoting Jeffrey Sach’s latest book) put the price of free public higher education at $15-$30 billion, which fits other estimates I’ve seen.

Now what are the costs of how we subsidize higher education through the tax code? There’s already the $1.4 from the interest exemption. Also from subsidyscope, there’s the exclusion of employer-provided educational assistance ($1.1 billion), exclusion of interest on student-loan bonds ($0.6 billion), exclusion of scholarship and fellowship income ($3.0 billion), exclusion of tax on earnings of qualified tuition programs: savings account programs ($0.6 billion), the HOPE tax credit ($5.4 billion), the Lifetime Learning tax credit ($5.5 billion), parental personal exemption for students age 19 or over($3.4 billion), and state prepaid tuition plans ($1.75 billion). There’s also the stimulus’s American Opportunity Tax Credit($14.4 billion) and some part of the deductibility of charitable contributions (education) ($4.9 billion).

Even without the last two, that’s $22.75 billion we are paying through the tax code to make college tuition and student debt more manageable. This amount is in the middle the range of the cost of just making public high education free. Now these aren’t equivalent — much of what is spent through the tax code will be biased more towards private and professional schools, which are more expensive. But this also isn’t anywhere near the full extent we subsidize student debt (a government creation from 1965).

Basically, like many programs that we subsidize through some mixture of taxes and spending, we could just provide it free to the public.

But, of course can’t do that—free markets!

Related posts:

1. The real spending problem
2. Only Suckers Pay Taxes
3. Get yer guvmint outta my Medicare