All aboard the amusing AFT contradiction train

Today, I was directed to this amusing paper from the American Federation of Teachers regarding something I’ve called universal income-based repayment. I am working on a longer piece to explain my position on this, but here I just want to pick out a handful of the truly strange points made by AFT.

Before we start, I am going to assume AFT supports using general taxes to fund higher education that is free at the point of delivery. I can’t tell from this paper if that’s their actual position, but that’s what the leftists that point to the paper support. So it’s worth engaging. Here we go.

AFT argues that an IBR scheme would harm need-based aid recipients because in the status quo they receive means-tested money for college without having to enroll in an IBR scheme. But IBR would mean that they go to college for free, and then pay money later into the free higher education system. So in the status quo, they get free higher education without having to pay anything later, but under IBR they get free higher education with having to pay things back later.

This is so wrong it is astonishing that it managed to get past a proofreader even. A poor student who receives means-tested financial aid does have to pay things back later. That’s what taxes are! I feel like 95% of the confusion involved in this debate is people misunderstanding that, in fact, taxes are going to be paid by college graduates even under some other free or subsidized higher education scheme. If you want to fund free or subsidized higher education with general tax revenue, guess what: students are going to be forced to pay portions of their income back into the higher education system after they graduate, i.e. they will pay general taxes. So how on earth is IBR any different on that front? It isn’t. This argument is outrageously stupid.

AFT argues that an IBR scheme that uses a flat rate (for instance 3%) is a like a flat tax. Indeed it is like a flat tax. We can easily fix that by having an IBR scheme with progressive rates. But check this out: a flat tax is actually more progressive than using general tax revenue to fully fund or subsidize higher education. Why? Because state and local taxes are regressive. Imposing a flat tax that also exempts the disproportionately poor people who don’t go to college from payment would be a huge step forward for tax progressivity! Again, bad argument.

Finally, AFT claims that this could affect federal grant aid because it would effectively place the cost of attendance for the school at $0. I don’t know if that’s true, but if it is true, it is equally a problem for funding free higher education directly through general tax revenues! It turns out we shouldn’t do that either, I guess.

It is surprising how far off the mark this entire debate is. I suspect it reflects the fact that higher ed people don’t really know or think too much about tax policy. The persistent idea that IBR forces students to pay things back to higher education while free higher education funded by general taxes doesn’t is so obviously wrong that I can’t even begin to fathom the confusion swirling in the heads of those who utter it. Both IBR and general-tax systems force students to pay parts of their income to fund free higher education (that’s what a tax is!). The only difference is that the first one exempts those who don’t go to college from the tax (disproportionately poor people it must be emphasized) while the second one does not.

That is literally the only thing being debated right now. Should non-attendees be exempted from the Free Higher Education Tax or not? Everything else being uttered about the general idea of IBR (as opposed to things being uttered about specific implementation plans) is a sideshow of either totally ignorant comments or criticisms that equally apply to both forms of Free Higher Ed funding.

Opposing a plan that eliminates student debt because it has exemptions for non-attendees is utterly bizarre. I mean, even if you’d rather squeeze some extra money out of high school dropouts (as AFT does), I’d think you’d at least put that desire aside for a minute for a policy that eliminates student debt.