Free College on Wall Street's Tab? 5 Reasons the Finance Sector Should Pay for Full Tuition at Public Universities
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3. Family Finances Would Improve: The debt burden on college students and their families is enormous. Two-thirds of college graduates, today, leave with an average of $24,000 in student loans, more than double from a decade ago. With a free higher education program, millions of families would feel significant improvement in their net worth since they no longer would have to deplete savings or go into debt in order to send their children to college. Also, those graduating from college would no longer be saddled with enormous student loans. This increased sense of financial security would surely add to economic demand and further create jobs.
4. States Would Get Help with Their Budget Crises: Because of enormous budget pressures on state government, tuition costs at public institutions rose by 7.9 percent in 2010-'11, nearly twice as fast as tuition increases at private colleges and universities, and many times above the rate of inflation. At the moment states are slashing their contributions to higher education in order to close budget gaps caused by the Wall Street-induced economic crash, which will make tuition rise even faster. If tuition were covered by the federal government, the pressure to raise tuition and to cut back on state colleges and university programs and staff would be greatly reduced.
5. Our Workforce Would Improve Its Skills: It may be a cliché, but survival in a global economic system depends on working smarter. The most productive nations in the world figured that out years ago. European nations, for example, charge little or nothing in tuition and fees. England is the exception, but it has set a cap of $5,000 per year, and by law, tuition can rise no more than the rate of inflation each year. In China, higher education is free as is campus housing. We need to upgrade the skill levels and knowledge background of our entire workforce. As long as we participate in international trade on a large scale, then the free tuition program will help improve our competitive edge.
How and Why Wall Street Should Pay
Just in case any of us are suffering from financial amnesia, Wall Street’s reckless greed caused the economy to crash and caused the destruction of over 8 million jobs in a matter of months. We then bailed out our financial barons to limit the damage and now Wall Street again is making record profits and bonuses.
They owe us and they can afford to pay.
We should expect the yearly tab for a free tuition program to come to approximately $100 billion. It would be both just and economically smart to extract that money from the financial sector. The only question is how to do so.
The best approach would be through a financial transaction tax, which is a small fee on all stock, bond, currency and derivatives trades. This fee would be negligible for those of us who take care of our own 401(k)s and other investment accounts. But if you’re a hedge fund or a proprietary trading desk at Goldman Sachs or JP Morgan Chase, you’d be paying a small fee on the millions of transactions you engage in every day. Economist Dean Baker estimates that a small financial transaction tax could generate $100 billion per year – precisely what we need to make free higher education a reality in America ( PDF). (In case, you’re worried that the financial industry would flee the country if only one nation instituted such a tax, England already has one that is working just fine.)
It’s Time to Choose What Kind of America We Want