President Barack Obama recently opined that he would like “to see the first two years of community college free for everybody who is willing to work for it.” This important proposal from the president’s State of the Union Address has already gained support from Dr. Amy Gutmann, president of the University of Pennsylvania. Obama, Gutmann and I all agree that higher education has a high value. Yet we likely disagree on its price.
It is my opinion, based on front-line experience and training, that college education should decidedly not be free to students. There must be a price, even if it is a low one, on any college education.
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During my fall 2009 sabbatical, I taught a week-long course to university students in Paris. These students were enrolled in an international program with courses taught in France and the United States.
Our first day together was dreadful. My French students would not listen to me for five minutes in a row. They would not sit still, and they would wander in and out of the classroom at will. My outright ban on the use of cellphones during class nearly resulted in an international incident.
The next day, my students and I talked about these issues during breaks where they smoked (and I second-hand smoked). They peppered me with questions on what it is like to attend college courses in the United States. I told them that college professors in the United States are used to students being engaged and respectful of others during class sessions. Despite their masterful command of English, they stared at me as if I were speaking a foreign language.
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During our conversations, my students told me that higher education has a low cost, essentially free, in France. Suddenly, I understood. Because they did not pay for their education, why would I expect them to value it? They certainly valued their cellphones. A student was inconsolable when his cell hone fell to the sidewalk and shattered. (There was no ban during breaks.)
We used that incident and our in-class experience to compare and contrast the incentives provided by the prices of cellphones and education. To a person, they took care of their cellphone, invested in cellphone accoutrements, and bought various service plans from a telecommunications company named Orange.
I told them that they took care of their cellphones because “they had skin in the game.” They adored this new slang phrase. Because we were studying finance, I said that “skin in the game” is what we call an “equity” investment. Equity investors are owners. Owners value their property.
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Equity investments do not have to be large to provide incentives that generate desirable responses. Several academic journals in finance provide a small payment if one provides timely responses to requests to review a paper for possible publication. Some universities require that faculty pay the first $50 or $100 of the cost to attend an academic conference. With this small fee, there are likely to be fewer requests to attend these “valuable” conferences. Having the faculty put some equity into the process almost surely reduces the number of boondoggle trips.
Having an equity investment in higher education, even a small one, will provide an incentive for students to make sound decisions. Which courses should they take? How much effort should they put into their coursework? Should they attend class and pay attention? Their answers almost surely depend on whether they have equity in their education and how much.
Our system of public education through high school is not widely viewed as exemplary. Why bring arguably its worst feature — being “free” to its consumer — to community college?
Tags: education, colleges, community colleges, Barack Obama
Thomas W. Miller Jr. CONTRIBUTOR
Thomas W. Miller, Jr. is a professor of finance, holder of the Jack R. Lee Chair in Financial Institutions and Consumer Finance at Mississippi State University, and a visiting scholar with the Mercatus Center at George Mason University with its Project for the Study of American Capitalism and Financial Markets Working Group. (The views and opinions expressed herein belong to the author and do not necessarily reflect those of Mississippi State University.)
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