Robert Reich’s Plan for College Debt is Anti-State School

Robert Reich (Bill Clinton’s former labor secretary) gave a commentary on public radio’s Market Place this morning, that presents a solution to the growing amount of debt that students take on.

Here is his proposal:
“Any college student can get full funding from the government, with only one string attached. Once they've graduated and are in the work force, they pay 10 percent of their incomes for the first 10 years of full-time work into the same government fund they drew on to finance their college education.”

He also notes that the average graduate has $22,000 in debt. Interestingly this figures is more than 4 years of tuition and fees at Reich’s own institution (California Berkley) and mine Towson University. Many of my students work part time to pay for school. According to this report the average Towson graduate had $16,000 in debt upon graduation.

Towson students on average could pay back their loans in 10 years by paying under $1,500 a year (I don't have the figure, but I hope our graduates make more than 15k a year). Most state governments already offer an affordable alternative to private schools.

Now Reich’s plan implies it is optional, so what would the effects be? When something is subsidized then its final price tends to rise. The price consumer pay is lower than before, but part of the benefit goes to the seller. In short the plan sends money from the government to private universities.

Perhaps increasing funding for public universities would be a better policy to alleviate student debt.

Choosing a College Major

From a recent Chronicle of Higher Education article by Middlebury Economics Professor David Colander:

“We asked economics students to identify majors as hard, moderate, or easy, and we found that 33 percent viewed economics as hard, 3 percent said sociology was hard, 7 percent saw psychology as hard, and 13 percent thought political science was hard. Since other social sciences were the primary alternative majors that most of the economics students considered, that data is compelling evidence that the respondents perceived those other majors as too easy. Students likely reasoned that taking a "too easy" major would signal to potential employers that the student had chosen an easy path through college, thereby hurting their chances of being hired.”

“On the other end of the spectrum were math and science majors. In the survey, 81 percent saw chemistry as hard, 84 percent thought physics was hard, and 68 percent said math was hard.”

It’s surprising how much this sounded like my thoughts when I was an undergrad. Political Science and Sociology classes can be harder than economics classes, but for me science always seemed too hard. Maybe it was because of the 3 hour labs.

I think students choose their major based on the perceived difficulty and the job prospects they think they will get from it. Students will vary in their ability in certain subjects so difficulty will vary from person to person. At Towson there are about by my guess 10 times as many business majors as economics majors. I wonder if this is a result of a perception that the economics major is too hard or easy; or is that they perceive economics majors are less likely to get jobs.

If anyone would care to comment, did you choose your major based on ease or job prospects?

The Economics of Parking Policy: Pay Me not To Park

There is an old saying that it is the job of the college president to make sure the students can have sex, the faculty can park, and the alumni have a winning football team. Let’s look at faculty parking. Today I got a news story about Towson’s new program to give a 50% discount on parking passes to hybrid drivers. I’m probably going to purchase a new used car within the next year, the saving of $350 a year makes a hybrid a lot more attractive of a purchase.

If you just did some quick math you realized I pay $700 a year for parking at Towson. Not all faculty pay this rate as it is in part determined by income, but I would guess most pay at least $300-$400 a year. Interestingly I never realized until the reading the article that it was not me subsidizing the lower paid faculty members, but Towson who is subsidizing me less. From the article Pam Mooney the direct of parking states “To provide a parking space costs between $2,000 and $3,000 per year per person versus $200 to $300 if a person takes the bus instead of driving.” That means Towson is spending between $1300 and $2300 a year to provide me a parking space.

So here is what I propose as a solution. If you do not purchase a parking pass you get paid equivalent of the cost of your parking pass. Faculty could work out car pooling, biking, public transportation, hiring a car service on their own. If Towson pays me $700 extra dollars for not buying a parking pass, then it saves $600-$1600 in subsidies for parking.

Next year I plan on purchasing a house a large swing in the benefit of not parking on campus, could be just the incentive I need to make sure it is close enough to bike.

International Malaria Day and Towson Associate Contest

So Today is International Malaria Awareness Day. Malaria is a big problem as:

“The World Health Organization reports that 300 to 500 million new cases of malaria occur each year, and over one million people die, mostly children. Pregnant women and non-immune adults are also especially vulnerable to severe disease.”

Another reason that malaria is a popular cause is that

“malaria can be prevented with protective insecticide treated nets, insecticide spraying, and the elimination of mosquito breeding sites.”

In other words lives can be saved for just a few dollars for a protective bed net the chance of contacting malaria can be greatly reduced. The question is how best to get nets to people. Jeffery Sachs has been a strong advocate for giving away nets, while others have suggested that bed nets should be sold for a small price (good link here). The idea being is that if people pay a small price those who will actually use the nets get them, while those that would not use them would not pay.

Analysis of these studies have come out on both sides in terms of what is best way to distribute the nets (free or small cost). It is an ongoing debate in development economics and my sense is it depends on local conditions.

I was thinking about all of this yesterday when I went to get a cup of coffee from a fund raiser outside my office. The funds being raised were going to be used for free bed net distribution in Tanzania. The woman running the coffee sale was Kim Hawk who is one of two finalists in Towson’s the Associate Contest. The contest is like Donald Trump’s the Apprentice, except instead there are eight Towson students competing to work after graduation with John Tolmie who is CEO of St Joseph’s Hospital. Out of curiosity I asked Ms. Hawk about her opinion about giving away the nets versus selling them, she seemed well versed on the subject I was impressed that part of the experience was learning about these issues. She would certainly get my vote (although I have not met the other finalist), the big decision day is Tuesday so best of luck.