College tuition will stifle Montana’s economic growth in the 21st century, and we will not be able to compete in the world market. Economists tell us we must have more and more college graduates to remain competitive. We need to enroll more and more students whose parents did not attend college. In 2020, in the world’s advanced economies the surplus of low-skill workers will be 35 million and the shortage of medium- and high-skill workers will be 18 million. Our world-wide competitors are rapidly building tuition-free higher education.
Developing natural resources is fine as long as it doesn’t replace the development of human resources. Israel has one of the world’s most innovative economies and a standard of living well above those of its oil-rich neighbors. Perhaps God was thinking ahead when he led the Israelites to the one part of the Middle East without natural resources. When you don’t have resources, you become resourceful. Relying on coal to fuel the economy is a delusion; coal mines are closing. Coal can’t compete with gas in the 21st century free market. We must rely on our people.
Our forebears deeded us tuition-free higher education, but our generation has – legislative session after legislation session – cut funding and imposed and then raised tuition until less than 18 percent of the university academic program is supported by public funds. The burden has fallen onto the students. Very few of them have the approximately $24,000 it costs in tuition for four years on the university campuses. For the first time since World War II the enrollment at the Missoula campus has dropped.
The average student is told to borrow money. Since World War II our Montana economy has benefited from college graduates buying a home or starting a business with a loan from a local bank. Now, any surplus money they may have is paying off a student loan to an out-of-state bank. College loan debt is now over $1 trillion.
In 2011, the U.S. Department of Education spent $1.4 billion on student loan collections and guarantees. Fifty eight percent of the 1.8 million borrowers whose loans became due in 2005 had not received a degree. Because they can’t raise the money they are dropping out or they are defaulting. Over half of that 58 percent were delinquent. In 2009, the default rate on student loans for B.A.’s was 3.7 percent; for those with some college but no degree it was 16.8 percent. In October 2012, the unemployment rate for people with a B.A. was 4.1 percent, and for those with some college but no degree it was 9.8 percent. In 2010, the average earnings of Americans ages 25-34 employed full-time with a
B.A. was $45,000; for those with some college but no degree the average earnings were $32,000.
One-fifth of the American work force has some college but no degree. Their jobs are going away or have gone away. The U.S. economy has lost more jobs to robots than it has to moving jobs overseas.
What do we need to do? We need to return our university and community college systems to zero tuition. To do that (for the university system) will require approximately a reduction of $1,000 per student per year for six years or $500 a year for 12 years.
Where to get the money? There is no more economically productive use for part of the present budget surplus than to cut tuition. But, we need a long-term commitment. Texans created a resource depletion tax on the oil companies to pay the people of Texas for the resource that was being taken away and used it for a university endowment. We can do it with coal, gas and oil. We can restore the upper bracket tax cut many of us got a few years ago and keep our money here instead of sending it to Wall Street.
The cost of tuition is pricing the universities out of the reach of more and more potential students, and the publicly funded university system as we have known it for the past 60 years will collapse. We are headed toward learning what it is like to be a third-world country.
Robert O’Neil of Kalispell is a former member of the University of Montana President’s Advisory Council. He is also a former chairman of the budget committee at California State University, Fresno.