I want to win one very narrow point. I want to win it and have it killed because I am tired of seeing it. So I am begging anyone and everyone to tell me how I am wrong.
The Opponent’s Argument
Right now, some college graduates wind up doing federal income-based repayment (IBR) because they have very high student debts. The way IBR works is the student pays a certain fraction of their income for a certain period of years.
There is a plan in Oregon called Pay It Forward (PIF). It would make tuition free. It would also require students that went to Oregon public colleges to pay 3% of their income for 24 years into the higher education system.
Some students who go to Oregon public schools may still have to take out high federal student loans even though tuition will be free. When those students graduate, they may have to go onto IBR because of these high debts. For this set of students, PIF would cost them more total money because they’d pay into the IBR and PIF. In the status quo, they only pay into IBR.
All tax-financed tuition subsidies face the exact same problem. Suppose you have a public school that receives no tax-financed tuition subsidies. Some students graduate from that school and have to go onto federal IBR.
Now suppose you levied a general tax on the population to partially or fully subsidize the tuition. The way this works is now everyone in the state pays more tax, and the revenue goes to tuition.
That won’t be enough for some students, and those students will still take out debts that force them onto federal IBR.
For this set of students, the tax-funded tuition subsidies will cost them more total money because they’d have to pay into IBR and the new tax levied to fund the subsidies. In the world where there is no tuition subsidies, they only pay into IBR.
Therefore if you think PIF should not be done because it causes IBR students to pay more in total over the course of their lifetimes, then you must also think that general-tax-funded tuition subsidies should not be done because they also cause IBR students to pay more in total over the course of their lifetimes. To say that you oppose PIF for this reason, but do not have any problem levying general taxes to subsidize tuition is a contradiction.
Why This Happens
The reason you reach this conclusion is simple. All tuition subsidies, whether funded by PIF or general taxes, are of no real value to IBR students. They don’t pay tuition. They pay a percentage of their income to the federal IBR program. Therefore anything you do that imposes extra costs upon them to finance tuition subsidies costs them more in total. Since PIF taxes them 3% of their income for 24 years (under one proposed schedule), it means they have less after-tax income than if PIF didn’t exist. Since general higher education taxes would tax them some portion of their income, it means they have less after-tax income than if those general higher education taxes didn’t exist.
Please tell me how I am wrong in the above analysis. If you cannot tell me how I am wrong, stop making this argument. I am tired of seeing it.