Originally Posted by
WillJ
Elite universities have been moving in this direction for years and, if the trend continues, they'll get to your proposal in the not-too-distant future. Here are some thoughts:
1. This is a form of taxation on wealth and income...i.e. the more you have and make, the higher the price you pay. If you want higher taxes on wealth and income, then this is one way to do it.
2. As with all taxation, it's important to ask who really pays the tax ("incidence" in economics-speak) and who benefits from the benefits funded by the tax. A lot of kids from rich families go to elite colleges, so they will pay higher tuition fees. Most poor kids do not go to elite colleges, so they will not benefit from cross-subsidies from rich-ivy-kids to not-so-rich-ivy-kids. It will be the small subset of poor kids who go to elite colleges who will benefit.
3. "Poor kids" who go to elite colleges are, in the long-run, not the poorest of the poor. Elite colleges tend to cherry-pick (quite reasonably, I suppose) kids from poor families that a) would have done pretty well anyways and b) almost all graduates from elite colleges are not poor from a life-cycle perspective. Put differently, the beneficiaries of this policy are not poor!
4. There is some legitimate concern that college financial policies negatively affect family savings and income. Elizabeth Warren got asked on the hustings by an irate father who had saved in advance to pay for his kids' college expenses about why his profligate neighbor, whose income had been similar to his but who had not saved, should be rewarded by having his loans forgiven. It's not a crazy question. Relatedly, Marin Feldstein did a study a number of years ago that found (always subject to critique, mind you) that college rules significantly reduced parents' savings. I don't think that problem has gotten any better in the past 30 years.
5. College tuition is pretty much the only service you can purchase in the US where the price you pay is explicitly linked to your income and wealth (outside of things like loans where the cost-of-service is linked to those things).
Just to be clear, I am neither endorsing nor critiquing your proposal.