The Costs of Free Education-A View from California
WHAT PRICE ZERO TUITION?
By ARMEN A. ALCHIAN and WILLIAM R. ALLEN
INCE the fiasco in the Garden of Eden,
mankind has suffered from scarcity:
there cannot be enough goods and services to satisfy completely all the wants of
all the people all the time. Consequently,
man has had to learn the hard way that, in
order to obtain more of this good, he must
forego some of that: most goods carry a
price, and obtaining them involves the bearing of a cost.
Poets assure us that the best things in life
are free. If so, education is a second-best
good, for it decidedly is not free. But if education is not free, if a price must be paid,
who is to pay it? By developed instinct, the
economist initially presumes it to be appropriate that payment of the price should
be made by those who receive the good.
"Those who get should pay" is a strong rule
of thumb; the economist will deviate from it
only for profoundly compelling reasons.
But general economic theory does not assert that we must charge tuition to allocate
resources and distribute educational goods;
nor does economic theory tell us that zero
tuition is best. And, of course, there is an
infinitude of alternatives between all or
nothing.
Zero tuition means a public subsidy-a
system of individually non-voluntary gifts
from the community at large to the recipients. And, as with any system of subsidy, we
may ask why this particular group is to be
subsidized, what members of the group, to
The authors are colleagues in the Department of
Economics at The University of California, Los
Angeles, of which PROFESSOR ALLEN is chairman.
PROFESSOR ALCHIAN is an active consultant to government and industry. Both have received numererous awards, and have published widely. Together they have written University Economics
(1964, 1967).
what extent and in what manner, and what,
precisely, is the substance of the gift.
In the California system of zero tuition1 in
the university and state colleges, the particularized gifts go to a small portion of a select
group. The community has singled out a few
of its members as eligible for the gift of some
expenses paid at certain schools. Not everyone can receive the gift, and those who do
receive it must take it only as zero tuition in
a public college in California. Now, such selective and closely specified subsidization
may be the very best use we can devise for
these resources of the community. But the
mere fact of its selectivity, which is not uniform everywhere and at all times, creates
some small doubt that zero tuition is certainly the optimal scheme.
Are we sure-indeed, has there been general and appreciable concern-that subsidization of college students is the best use of
0Our discussion stems most immediately from
the continuing controversy in California over proposed tuition in the state university and the several
state colleges. In those institutions, no tuition has
been charged state residents, but various "fees"
total nearly $250 per year for the university and
about $130 for the colleges (non-residents are
now charged a tuition of $1200 by the university
and some $770 by the colleges). In January 1967,
newly elected Governor Ronald Reagan suggested
tuition charges of $400 and $200 for the university
and the colleges, respectively; shortly thereafter, he
proposed the more modest charges of $250-280 and
$150-160 (in addition to existing fees). In late
summer 1967, the university Board of Regents rejected the tuition proposal-but agreed to raise
"fees" by an amount to be determined later.
A survey by the University of Oregon in November 1966 (many have since been raised) includes
the following data for fees-plus-tuition for undergraduate state-residents in state universities:
New York $500 Indiana $330
Ohio 459 Oregon 330
Minnesota 375 North Carolina 303
Michigan 348 Texas 156
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