Tuition hike for students is like a tax hike for the rich. Eventually, everybody wants to get their money. ben if you are a student or a lower-income person.
In a stunning move to shore up a $535 million budget gap, the UC Regents in 2009 voted to raise student undergraduate tuition by 32 percent (to $10,302/yr)!
Nothing like a little 16X increase over the rate of inflation to get blood boiling. And now in 2011, the UC Regents voted to raise tuition by another 18% over 2010 to a total of $13,500 a year. Talk about runaway inflation as just two years ago that figure was sitting at $8,000.
It's really sad that during a difficult economic climate, the University of California Regents can conceivably raise tuition by such a magnitude. Part of the reason why many of these fine students attend the UC system is because of cost.
Students from UC Berkeley or UCLA, for example, can easily get into many of the best private schools in America. But for many, $40,000 a year in tuition is just too hefty a burden to carry.
The reality remains that due to careless spending by the state, budget cuts and a competitive market place for attracting top professors, tuition increases are inevitable.
The California state government has messed things up for so long that it's now time for students, who have no money of their own to pay the price. As a result, there is a fantastic silver lining to this tuition hike: the grooming of future conservative leaders of America and more empathy towards hard working, tax paying Americans.
Tuition Hike For Students Is Like A Tax Hike For The Rich
The parallelism of a tuition hike and a tax hike proposed by the Obama administration for the “rich” (35%->40% for the highest marginal tax bracket) is an eye-opening irony.
As a student, I remember rallying against “evil corporations and the rich people who run them.” It was just cooler being a liberal then since I had nothing monetary-wise to lose. I may have felt very differently if my tuition bill arbitrary went up one day.
Students by definition are poor, because they are students and don't work full-time. Why should these UC students help fund the atrocious spending habits of the State?
These students worked their tails off during high school to attend a world class university and shouldn't have to pay for another organization's indiscretions. Yes, the education budget is down, but shouldn't the budget have baked in spending over a normal cycle?
Now, President Biden plans to raise taxes on households that make over $400,000 a year. The tuition hike these poor students faced in college may still be fresh in their minds now that they are making the big bucks.
Students Getting Squeezed
I feel the rage of the students because such a large increase is ridiculous. What I wonder though, is whether students can better empathize with “the rich” for suddenly having to pay 5%-10% more in total taxes due to a new administration? Those doctors, lawyers, and other high income earners, like the students, also worked hard to get to where they are.
Imagine if you're a doctor who spent 8 years and $240,000 in tuition. You're ready to make your well-deserved 35%-taxed salary when the government tells you, “So sorry, give me 40% of your salary now! On top of that give California another 10% to pay for their bankrupt ways!” How would you feel?”
Should the government disproportionately tax high income earners for their spending mistakes, just as the UC Regents bilk bright, hard working students by 32%?
Guess how many of the UC Regents took a pay cut? Zero! Oh how nice it would be to get a 27% pay RAISE to $400,000 as the Chancellor of UC Davis, or a 100% pay raise to $900,000 as the President of the UC this year! This is a classic case of “Do as I say, not as I do.”
Related: How Student Loan Forgiveness Can Cost You A Fortune
A Better Understanding On The Struggles Of The Rich
What I hope from this unfortunate situation is a better understanding from “the poor” why raising taxes for “the rich” by a disproportionate amount is not right. Why should existing or incoming students pay for a budget gap they had no hand in creating? The budget gap responsibility lies in the hands of state regulators and politicians.
The bright side is that the University of California has unknowingly created thousands of future fiscal conservatives who believe big government is bad and egregious pork spending should be curbed. The solution to all government budget problems lies in fiscal prudence and not taxing honest citizens up the wazoo!
Remember, if you vote for big government, whether you are rich or poor, they will eventually come for you. And when they do, be prepared to greet them with your arms and wallets wide open.
With more tax hikes under Joe Biden, my plan is to retire under a Democratic President over the next year or so. I'm tired and no longer want to work so much and pay so much in taxes.
Tax hikes are a real bummer when when you're burned out. Let's hope not everybody else feels this way. Otherwise, the economy would collapse.
Related: Why Households Need To Earn $300,000 To Live A Middle Class Lifestyle Today
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Related post: Private Or Public School? Spending $1 Million On A Private Education Seems Ridiculous
In my own situation, knowing what the cost of my student loans would be when I graduated forced me to evaluate what degrees I could get so that I could apply for jobs that would have salaries capable of paying off my student loans and living expenses.
I know it sounds horrible, but studying spanish, philosophy, and psychology are out if they can’t pay the bills in my mind. At the same time an increase in student loans could really impede the next generation of artists, sculptors, and the like which creates another problem (we’ll call it the death of creativity).
I did find a job I love doing within my field so I find myself quite lucky in the long run.
That doesnt sound horrible. That sounds completely rational!
This is so sad. The poor people should be provided with some benefits. They should be free from hikes. They only know how problematic it is for them to keep up with the world.
I’m actually going to throw up a post on this within the next couple weeks. I like the 70%-30% split we have in Canada in terms of subsidized schooling (at most schools it’s close to this). I think there needs to be a balance between having society benefit in general from a well educated person, and an individual’s responsibility to prepare and pay for their own education. I fundamentally disagree that post-secondary education should be considered a right. That being said, I feel for the 32% hike, that definitely hurts. It could be worse, you could go to school in England and have had your tuition triple virtually overnight, yet still be paying taxes to send the royals around the world!
The quote I always relayed to my more liberal friends was, “In University your heart makes you a liberal, then you graduate and your brain makes you a conservative.” Plainly there is room for balance in the statement.
So true, regarding the last sentence, so true.
Canada has it good with very cheap tuition and good schools like UBC and McGill!
When my daughter was at UC, her tuition nearly tripled by the time she was a junior. I understand that the universities need money, but there were many years there were no increases. Students must take additional loans and will have impossible debt loads when they graduate. A college education will be only for the rich and elite.
Kinda sad indeed. We need more alumni giving and establishment of scholarships. It’s a big part of the reason why I started the Yakezie Writing Contest. To help combat rising tuition!
This is so distressing. I hate when education related expenses go up as education is one of the best paths out of poverty.
@jk2001 You write “Raising an income tax doesn’t discourage people from continuing to earn an income.”
Rising taxes absolutely deter some folks from working harder. The optimal income to earn it looks like is around $200,000. Any more, and it’s just a waste of time it seems.
An increase in fees is not the same as an income tax increase. Fees are associated with a service – and thus discourage people from using the service. A fee is a way to help regulate the consumption of a resource.
The problem with a fee on education, of course, is that we don’t want people to decrease their education, particularly not just the smartest people (because they say there’s a shortage), but everyone in general. We want an educated populace, not a country full of ignorants.
Raising an income tax doesn’t discourage people from continuing to earn an income. Instead, it just encourages dodging taxes via alternative compensation options, or moving away. So, you lose out on some, but not all, of the projected taxes.
Generally, people just keep earning cash because there are only so many giftcards or stock options you can use, and, generally states with low taxes also have lower wages and fewer opportunities.
The correct thing to do is to raise taxes on either the rich, or everyone, for the benefit of students. That ultimately benefits everyone.
We might consider going back to the days when fees for UC were $0, and wealth was not an issue.
Also, politically, I’m very liberal. Basically a communist these last few years. Fiscally, I’m conservative (and I don’t mean Republican; I mean I like to save money and avoid debt). In my younger days, I was pretty doubtful of the government’s ability to do anything right, but, lately, I’ve seen the private sector screw things up, and screw us over.
I want to return to the “good old days” of socialism, full funding for UC, “progress”, and Glass-Stegal.
Remember, the only president to balance the budget was Clinton, a fiscal conservative, pinko, crypto-socialist, tax-and-spend liberal.
GO BEARS!
@ Roger Ah, VERY good point about throwing in the socially conservative policies as well with the fiscal policies. Hence, why I don’t want to get into that stuff here.
The students are captured, and are already in school, so it’s not fair to say they can choose to go elsewhere. All the cards need to be on the table BEFORE the student attends a particular school, especially cost.
.-= admin´s last blog ..Tuition Hike For The Poor Is Like A Tax Hike For The Rich =-.
Heh, didn’t mean it to be apathetic; but when looking at the national situation, there’s little I (or any other individual) can do. Certainly, voting and supporting candidates who favor more fiscally conservative policies is a start, but even that’s not guaranteed to make a difference. Plus, the problem with having a two-party system is that the fiscal conservative candidates tend come with socially conservative policies, as well. It’d be much easier to support the candidate saying ‘Cut down spending’ if he wasn’t also saying ‘Keep the gays from marrying’.
Don’t get me wrong, the students certainly shouldn’t just accept things, but when it comes to school, at least, they have the option of choosing somewhere else. If they opt to stay in school (or stay in the country, to extend my metaphor), they’ll have to deal with the financial situation of the school, and the attempts to remedy said situation. As much as I’d like to see their protests actually result in a policy change, it’s not going to decrease the budget gap anymore than having the one hundred richest American hold a protest in Washington, DC will decrease the national debt. (Although, that would be great to watch.)
.-= Roger´s last blog ..Weekly Thoughts: Moving On Up! =-.
Hunh, an interesting post, as always. Perhaps it’s just because I’m still a left-leaning youngster, but I don’t think this situation is entirely analogous to rising taxes. First off, isn’t this ‘tax hike’ just a return to the tax brackets that existed before Bush’s tax cut? (Which, if my admittedly fuzzy (I was in college when it was passed ;) ) recollection serves, were scheduled to end about this time if not extended?) Not that it makes the rise in taxes owed any less painful, but unlike the UC students, the rich people facing this new, higher rate shouldn’t have been surprised about the increase.
Second, I kind of doubt this wave of protests will create a generation of new fiscal conservatives; in your linked article, one of the goals of the protesters was to reinstate 38 janitors who lost their jobs. If they do succeed, the lesson they may draw is that being employed is a right, not a privilege, and that nobody should be able to fire employees just to balance their budget. Hardly the foundation for a group of die hard Objectivists.
Finally, as to the question of ‘Why should existing or incoming students pay for a budget gap they had no hand in creating?’, the answer is simply, ‘it exists, and they are there.’ I’m only twenty-seven, I’ve done little to create the massive national debt that has built up over the decades (to say nothing of creating the shortfalls in Social Security, Medicare, and Medicaid that are ever looming), yet a large portion (perhaps disproportionately large, but that’s another story) of the effort at keeping the debt under control will fall on the heads of me, my generation, and yes, the current UC students. Blame it on bad timing, the luck of the draw, or the refusal of previous generations to cut their spending (*cough*or-raise-their-taxes*cough*), but it is what it is. Much the same way that current political leaders can’t undo the deficits created and promulgated by previous politicians, the current crop of UC students can’t change the financial situation of the university and will have to either adapt or find somewhere else to get an education.
.-= Roger´s last blog ..Small Business 101: S and C Corporations =-.
Rog – This is a great response, so I appreciate your thoughts. “It is what it is” though, = apathy. As old farts, we can be apathetic, but as young guns, apathy kills!
You’re right about having your doubts of creating new fiscal conservatives. I just think the next time a fiscal liberal tries to skewer a fiscal conservative, they will think twice, if they were one of those who are affected by the 32% tuition hike.
Your left-leaning ways will become more balanced, the older you get. Trust me! :)
@Cap Hi Cap, I think lawmakers in Sacramento made the cuts, and told the UC Regents to figure out how to close the gap or else more bad things will happen i.e. firings, shut downs, furloughs etc.
It’s true, higher education levels are ridiculous. And, I still would rather pay $10,000/yr to go to Berkeley than $45,000/yr to go to Stanford ANY DAY!
I know if I was a student, I would protest like hell and make a point. Apathy is a detriment to all and we should fight for what’s right always.
Here’s hoping to a better understanding by these students in the future!
I’m confused, I thought the legislation made the budget cuts, not the regents. While a 32% tuition hike is fairly substantial, you can spin it another way and call out the fact that the type of education they’re receiving is slowly matching the cost of other private, top-tier schools (or the fact that cost of tuition at any higher ed. institutions are just outright ridiculous…)
Personally I think the students with the protests, disrupting classes etc. (e.g., fire alarms, blocking building exits etc.) are misplacing their efforts, but then again its understandable too. What’s easier? Making a fuss on local campuses or taking it further up to those that have the ability to affect change (although the budget cuts are fairly set in stone so I suppose protesting beats not making a fuss what-so-ever).
Also, these protests have been going on at UC Santa Cruz for awhile now, but was never really a big deal until similar actions were taken at Berkeley and UCLA. I feel for the students, but again, from what I read and heard from others, those that are protesting are making the situation worst more than any… when you disrupt classes and force students to listen to professor lectures in the rain — https://www.youtube.com/watch?v=4TSH5GZ_yGQ — you’re doing a disservice to your fellow students.
When all is said and done though, I do hope that the affected parties will walk away being more aware of what their local/state legislation are doing and how it impacts them (now or in the future) — regardless of the person’s political affiliation.
I do understand where a lot of you are coming from though. 5 years of college showed me that even if I may agree with the majority of what someone says, that doesn’t mean they have any clue what they are talking about. I never subscribed to a certain political angle and always based my decisions on the best data available to me. Over the years though, that has led me toward a left leaning political viewpoint.
I think I’ll stick with taking the word of people I know who are both rich and old. If we take a look at other countries who do have more liberal systems than we, we are beat out on nearly every measure of success so clearly it’s possible. What’s stopping this country from performing well, I don’t know.
Negative on that one Edwin, and I come from a country that has one of the more “liberal” systems you’re referring to. The Scandinavian balance sheets have looked great since they struck oil, but the USA still rewards hard work and innovation as well as any country in the world.
@The Genius
Whoops that second car example was very poorly written. You’re right, they better not be buying a second card or I really don’t have any sympathy.
I hear quite a bit that I just don’t know because I’m not old enough yet (it’s true, I’m not very old yet) but I come from a middle / upper middle class family and know quite a few wealthy and very wealthy people. My experience with them is they hold similar views to mine on our tax system.
They tend to fall along the lines of, “I’m successful because of my hard work (along with many other factors) but a lot of that is due to the institutions that helped me along, and to keep those institutions churning out more successful people, I’m willing to make that monetary sacrifice.”
Of course its naive to think that all of our institutions function extremely well, as we’ve seen in the very recent past that they are extremely flawed. Not to mention a lot of the spending can be irresponsible.
I don’t actually have a lack of empathy for the rich, but their loses at the hands of the tax man are minor compared to the gains of society as a whole (including the rich, if only indirectly). I also wouldn’t chalk myself up as one of those random college students who suddenly went liberal because it’s the cool thing to do. During my college years I pursued two degrees which clashed in their world views (one conservative, one liberal) which made for a very interest view on things. Combine that with a fairly mixed opinion on both political sides in my social circles (I live in Utah which is rather conservative, but as I said earlier, I know quite a few rich people who tend to lean liberal).
Hi Edwin – It’s true, rose colored lenses fade to grey the older you get. Just take our word for it.
When you’re younger, you believe the government can change the world. As you get older, you realize a lot of the money you’ve given to support noble policies never seem to come to fruition. It’s frustrating and you tend to just try and help society yourself.
The key is controlling spending. Sam-urai
@Edwin You’ll just have to get old and see how your sentiment changes then. Or, you can just trust someone who is older.
Why does the poor guy’s cost come at “the cost of a second car.” Maybe that’s why he’s poor in the first place, b/c he’s buying a second car!!
Of course you don’t feel as bad for the rich guy, because you aren’t in his shoes. I do feel sympathy for students AND people who get taxed 50%. That’s the difference between me and you. I have empathy for both.
@The Genius
You’re right I didn’t really touch upon that point. I disagree with the sentiment in general that as you get older, you get more fiscally conservative but just like people that claim that, I don’t tend to have any evidence backing my opinion.
I totally disagree that the rich guy is hit as hard because he still has to maintain a level of disposable income. Wealthier people put excess money into investments and vehicles to increase their wealth as opposed to just getting more stuff (you can only spend so much on luxury) so when they have to deal with higher taxes, it doesn’t come at the cost of a second car, it comes at the cost of a lower contribution to their stock portfolio.
Even if that were false, I don’t feel as bad for the person who has to downgrade from the BMW 8 series to the BMW 5 series. On the other hand, I do feel bad and sympathize with the person who has to sacrifice another 10 hours a week that they could have otherwise spent on schoolwork. The comparisons are just not similar.
@Geek So you’re saying it’s not working people’s faults if they only make a certain amount of money, and it’s not because of the rich guy’s hard work that he/she does make money?
I’m certain the thousands of students stung by this 32% tuition hike will think twice about voting on pork spending and blatant tax increases, whether it affects them or not.
The Genius
@The Genius
Regardless, it is quite the oversimplification. Aside from issues of class mobility and crime vs. the servicepeople losing jobs (and turning to crime!) because rich guy can’t have his dinner parties –
Sure the rich guy has to get a raise to maintain the same level of disposable income as before, but at higher incomes if you don’t have more savings padding to take the sting out of tax increases, which almost always occur at some point, you deserve what you get.
If you don’t have padding to take the sting out of tuition hikes after being low-income all your life, it is quite probably not your fault. Maybe your parents’ fault, but you can’t change what your parents do.
Edwin – Whether the comparison is flawed or not, you miss the point about students showing more empathy as they grow older for those who oppose the progressive and unfair tax system. No longer are liberal students going to scream for tax hikes as often for the rich because they just got their own tax hike, and it doesn’t feel so good!
You don’t think when a rich person gets a new expense, they don’t have to work more to main the same level of disposable income to pay for things too? Huh?
The Genius
The comparison between tuition increases and tax increases on the rich is extremely flawed. I shouldn’t have to explain the details of why this is. But as a short overview, when student’s get a new expense that they have to deal with, the money comes from a variety of places including more work (less study time) or cutting back on fundamentals. When a rich person gets a new expense (taxes in this case) that comes out of their disposable income, nowhere near the same situation.
I’m not touching on whether its right or wrong to tax unequally like we (and every other developed nation) do just that the comparison is severely flawed because of the different impact the two expenses has on the two separate populations.
This is a sad set of events. I could see a 10-15% increase, but 32% is outrageous. I hope there enrollments go down.
I had a huge tuition increase back when I was in university. The previous government in Canada froze tuition for 10 years and then bam, as soon as I went to university they unfroze tuition and played catch up. Not exactly helping the poor students. At least loans were easy to come by.
@Evan I see where you are coming from. So you believe that if there was a much shallower, or strict credit market, tuition prices will be lower. That may be the case on the margin, but I still think tuition prices will always beat inflation.
Why? Because the elasticity of demand for quality education is inelastic. Population growth continues but supply is so limited. There will only always be only 8 Ivy League schools, but there will be an endless amount of people who wish to attend.
It’s the same theory that goes with buying prime property. Prime property and elite schools sit at the top of the triangle, with an ever wider base.
@Financial Samurai
I think most people can agree the pretige of college is already gone…where I am from it is assumed that this the route you are taking. I am really talking about the loan/tuition situation. Tuition has increased way faster than inflation in the past 20 years, and that works only if there is a credit market to support it.