What is the socio-economic argument or historical basis for university tuition fees?

Question

One of the major differences between Europe (here I am mainly referring to Scandinavia) and Northern America, from an academic viewpoint, is the perspective towards higher education. In Scandinavia there it is generally accepted that anyone despite their financial status should be able to pursue higher education. Elsewhere in Europe I know of systems were the state subsidises a majority of the cost and only a minor portion of education costs are reflected on to the students.

The quality of education and research, and all the top X ratings aside, I personally never really understood the "American" way of looking at education, namely that it is a practically a business. I have noticed this other question on reasons for increasing tuition fees but little to no information behind why they exist.

I came across this comic recently, which seems to be gaining some popularity on the web, where the artist takes up some of the aspects and consequences of the north american perspective towards higher education; subjects that are mentioned are student loan debt, tuition fees and federal spending on education vs military or prisons.

Please note that I the language s/he chooses might be offensive to some and it is not at all my intention to insult anyone or incite a subjective discussion. Based on the culture and traditions in Scandinavia, many find it really hard to understand why it would be useful to have tuition fees, and thus put practically everyone who studies in serious debt by the time they are done with education. Thus, I would like to know:

Is there any reasonable ground (thorough studies on cost to society, overall well-being of people etc) or any indisputable historical origins behind why tuition fees were introduced for higher education?

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PS: I realise that the question is on the gray zone on being on-topic or not here on Ac.SE but given good, constructive and factual answers, it would be a good resource to people outside North American system.

Answer 1

What do you mean, "introduced"?

Someone has to pay for the teaching in any case. Students paying for their education has been the default option since at least Bologna in 1088, when the studies happened because enough people wanted to pay for such an education. It has continued to be the case throughout history, except for some prestigious universities that got sponsored by wealthy rulers or religious studies that got sponsored by the church estates. It must be noted that this sponsorship shouldn't be considered "public education" but is rather analogous to various current stipends/grants/etc, since these were meant for a very small number of individuals, not as education for masses.

It's not that USA has "introduced tuition fees" - instead, some countries, like the Scandinavian countries mentioned, have comparably recently (historically speaking) introduced free higher education for everyone, but USA hasn't (yet?) introduced that.

Who are the actors here?

As for most questions about society, you can't really talk about "THE motivation for X" without being explicit about WHO has that motivation.

The core actor here is the people who actually decide on exact amounts of tuition, i.e., the people who manage the (often private) universities, not their students, faculty, parents or politicians. For them, there are at least four valid reasons for having tuition fees:

1. That's income that they can use for whatever needs, so tuition is better than no tuition in that sense; even if they have other funding as well, most education institutions would prefer a larger budget;
2. It filters out people based on their motivation - in any university setting, you don't want students who are "just visiting", as they disrupt the motivation and learning of others. Recent data from MOOCs with no barriers of entry show that this creates a large class of people who join just to try it out, since no real commitment of resources is required; that's okay for a MOOC, but disruptive in the 'classic' university environment, where you need to limit the number of students to whatever number you can afford do service properly.
3. It filters out people based on their ability to pay - that's generally considered an inappropriate/illegal/evil goal nowadays, but back when the system was implemented, maintaining the separation of classes was an intentional goal (e.g. Numerus Clausus policies even in 20th century), not just a random byproduct of policies; your school and degree would have a better reputation if low-class "undesirables" would be kept out of the classrooms. A currently relevant argument is that diplomas are in some sense a Veblen good, where being affordable means less demand as you're believed to be cheap, thus automagically worse.
4. They can't handle any sudden drops in income. Much of university expenses are fixed - building maintenance and tenured faculty won't become cheaper if you suddenly lose 20% of your income; so any cost reductions must be accompanied by a large influx of money (from whom?) or be a slow process of reducing volume - either teaching much less students, or doing much less to teach them.

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There's no market pressure to reduce tuition

In a reasonable market there are downward pressures on price and demand - customer ability to pay and customer price sensitivity. Recent changes in USA and some other education markets have greatly reduced those pressures.

The wide availability of student loans has resulted in a situation where people are buying education that they can't really afford - paying large amount of money (that they're borrowing) for even those education programs that won't actually have a "return on investment", while not having the spare resources to pay for it as a "hobby expense" for improving themselves. The impact of this is yet into the future, as student loans are maturing and the related bankruptcy cases are (and will be) rising.

And, more relevant to this question, student loans remove the visible difference between cheap and expensive university programs. Universities don't compete on price, since people don't choose them based on price. Some people do, but the majority of students don't think in a manner "oh, I can't afford a $40k tuition in a better university, so I'll apply only to $20k ones" in the same way as they would when purchasing, say, cars for the same amount; since the loans mask the direct impact on their daily budget. This means that universities have little motivation to lower their prices, as being cheaper won't gain them much, and being expensive doesn't restrict them from getting the good students they want, since the good students will get loans/stipends anyway.

Answer 2

I agree with some of the other people answering this question that there isn't a single, definitive reason for this approach, but here are some factors that play a role. Note that I'm not defending or endorsing these factors, just describing them.

1. People in the U.S. are very attached to private universities, in a way that is not true in many countries, and these universities differ from each other dramatically. For example, you can attend universities with all sorts of non-mainstream religious affiliations, as well other philosophical or practical approaches. (You can decide you'd like to study alongside hippies, or that you'd like to attend a 24-student college in which all-male students run a farm in addition to studying.) There's a widespread belief in the U.S. that this diversity provides benefits that would be difficult to achieve through public universities. If you want lots of universities not run by the government or even primarily dependent on government funding, then that biases things towards a tuition-based model.

2. It's sometimes felt that heavily subsidized higher education is not in fact egalitarian, since the students being subsidized are already relatively well off on average. Instead, the model used by some wealthy universities like Harvard is to charge the rich a fortune, charge the middle class a moderate amount, and let the poor attend for free. That model has some serious drawbacks (for example, there's a lot of haggling over personal circumstances and what people can really be expected to pay), but it's not crazy. Of course public universities can follow a similar policy, or the government could handle it more abstractly via progressive taxes. However, this often doesn't fly in a U.S. context, since there's widespread opposition to taxes or redistribution, while private institutions are allowed to do whatever they like (nobody is required to attend Harvard).

3. Public universities in the U.S. are organized at the state level, rather than by the federal government (with just a handful of exceptions, such as the military academies). This works pretty well in terms of local control over educational policy and spending: if Michigan wants an amazing public university and New Hampshire is only willing to pay for an average one, then New Hampshire can't vote against the University of Michigan's budget. However, there's a major problem, namely that it is very easy to move between U.S. states (since there are no language barriers and few cultural barriers). This leads to two fears: that people will live in low-tax states but move to states with cheap but excellent universities for college, and that students will move to other states after college (taking the economic benefits of their subsidized education with them). These fears can be addressed in various ways, such as residency requirements, but there's no absolute solution that's not draconian. The fear of being taken advantage of plays a depressingly large role in some discussions of funding public education.

Answer 3

It should be noted that in the US, universities evolved in a very different manner than in Europe. The first universities were not sponsored by the state—inasmuch as there was no formal government (Harvard was established in 1636. well before much of the formal mechanisms of government were imported from Great Britain). As a result of this, most of the early colleges in the US were private schools, which needed to support themselves based primarily on external financing, as no government funding was readily available (or, in some cases, even possible).

Of course, given that private schools were charging tuition fees, it was of course reasonable for public schools to also charge some sort of tuition fee when they opened.

Answer 4

The history of tuition fees in the UK is well documented. Up until 1998 there were no tuition fees. The Teaching and Higher Education Act in 1998 instituted a £1000 tuition fee based on the Dearing Report. The Higher Education Act in 2004 introduced a variable tuition fees up to £3000. This was largely panned as politically motivated and I don't know if the decision was based on any type of formal review. In 2010, in response to the Browne REport the government allowed universities to increased tuition fees up to a maximum of £9000 in exceptional circumstances. Most universities chose to set their tuition fees at £9000. In all cases there has been both substantial criticism and support for the changes to the tuition fees.

Answer 5

One aspect that is not touched upon in the comic you link to is that the student is the one who captures most of the benefit of higher education, starting at better job prospects and a higher expected salary, but also covering exposure to new ideas, the possibility of a better life in the ancient philosophical sense, and four years of partying for the less philosophically inclined.

People who, for lack of interest, lack of ability or anything else, do not partake of higher education will only profit from higher ed by having better-educated neighbors (and the rather nebulous promise of "a strong, stable state, ready for the future"), which seems like a lot less than what those neighbors themselves get.

That said, it seems like the burden of proof for why the community at large should pay for the benefit of those that actually do go to college through higher taxes should be on those that argue for a socialization of these costs.

Frankly, this seems like a rather obvious point, whether you agree with it or not. That the comic you link to does not even make a token effort to address it is... disappointing.

Answer 6

Hopefully we can all agree that higher education must be funded somehow. There are two main ways of doing this. Government spending (taxes) or tuition fees (students pay). There are many possible reasons to prefer one system over the other and I suspect the decision is largely political/ideological.

I think the main reason the US system has high tuition fees is a social/political one. The US is generally more politically conservative than Europe and favours small government and low taxes. If you accept this approach it necessarily prevents spending large amounts on higher education. In this respect you could equally ask why the US does not have free healthcare and lower levels of social security than many places in Europe.

The main criticism of tuition fees is that they are unfair as they disadvantage poorer students and place people under a heavy burden of debt. However systems can be setup where this is not necessary the case, at least to a significant extent. For example in the UK student loans are only repaid after earning £XXXX (~£20,000) per year and are written off if not paid after 30 years. In this case the debt could be view more like a tax. This system is not perfect as it puts lots of the burden (for written off debt) back onto government and the current UK system is possibly unsustainable.

The argument for tuition fees is that the state paying is not really fair either. Many people do not go to higher education, either due to academic grades or more vocational interests. Is it really fair that their taxes pay for higher education they will never use. I realise this is the case for many things taxes pay for but in most other cases such as healthcare or unemployment benefits the main beneficiaries are the less well off. For higher education the beneficiaries are likely to have higher than average earnings over their lifetime and so should pay for that out of their pockets.

Answer 7

European and American university fee structures arose out of two different sets of historical circumstances.

In medieval Europe, university graduates generally went into the service of either the "State," (government) or Church, both of which were major sponsors of universities. In essence, the State and Church subsidized the education of people who would end up working for one or the other (plus a few that wouldn't). Because of this "tradition," university education in Europe is largely state-subsidized even though people often don't go to work for the state nowadays.

In America, university education was more of a private transaction, and people would either put themselves, or more likely, their children through college, without obligations to potential employers such as the state of church mentioned above. In time, the Federal government saw the value of an educated populace and made available loan programs for students. A few branches of the government (e.g. the armed forces) will pay for the education of students who would serve several years with them.

Answer 8

One aspect that is not covered in the responses here is that there's a considerable difference between the "sticker price" of private universities and what actual students pay. For example, at Harvard, families making less than $60,000 will actually pay no tuition. Yale and Stanford offer similar programs.

Most private colleges offer some form of tuition reduction based on financial need so it ends up that only a select few (international students and the very rich, mostly) pay full price.

Much of this is possible by the tremendous growth in private college endowments. At last reckoning, Harvard's endowment was $32 billion dollars.