Monday, May 07, 2018

Income Caps

I’m glad to see that Maryland is joining the list of states either rolling out or seriously considering a free community college program.  (New Jersey’s new governor has declared support, but with a phase-in that’s scheduled to take three years, so we don’t have it yet.) But the announcement reminded me of a feature that many of the plans include that may come to haunt them: income caps.

At the risk of annoying some people with whom I usually agree, I’m philosophically opposed to income caps for free community college.  It’s for the same reason that I’m philosophically opposed to income caps for public libraries or parks.

The theory behind income caps is straightforward enough.  Students from families with incomes above x are able to pay their own way, so why subsidize them?  Why not direct scarce resources to people with greater need?

I’ll offer a few reasons.

The first, and most basic, is that imposing an income cap turns a benefit of citizenship into a marker of need.  American political history is rife with examples of programs identified with the poor becoming poor programs. Income caps generally aren’t indexed to inflation or other taxes, so they tend to move downward in real terms over time.  

In any given budget year, upward adjustments for inflation feel like giveaways.  But over time, if you don’t keep up, the programs lose effectiveness.

The second, which is related, is that income caps imply that the benefit is charity, rather than earned.  In a tight budget year, charity gets targeted as “nice to have, rather than essential.” But tight budget years are precisely when programs like free community college matter most.

Income caps also fail to take notice of expenses.  An income level that may seem extravagant in a low-cost state may be fairly modest in a high-cost state or region.  Relatedly, they fail to take notice of family size. A family with several kids in college, but $5000 over the income cap, may be much more strapped than a family with one kid in college and $5000 below the cap.  And that’s before even considering local property tax burdens, family medical expenses, the local cost of housing, and the like.

Income caps generate political animus among people just over the cap.  Tell someone making $1,000 “too much” that she’s on the hook for $5,000 tuition, and you’ve made an enemy for life.

Income caps assume constant levels of income, which is decreasingly true in an economy marked by both gigs and churn.  They also fail to account for wealth, as opposed to income, so they don’t even screen out wealthy folks living on previously-accumulated money.  

And then there’s the paperwork.  “Prior-prior” or not, the paperwork is a massive deadweight cost, and a serious deterrent to many low-income students who wouldn’t be otherwise affected by a cap.

Finally, there’s the inexorable fact that in our system, prestige and wealth are closely related.  If community colleges are going to get the academic respect they deserve -- by which I mean, have their credits accepted in full upon transfer -- it would help to draw from all economic strata.  That may be cynical, but it’s true.

Yes, removing income caps could make the initial sticker price of a program slightly higher.  But it would make the program politically sustainable, simpler to run, and easier to communicate.  That would benefit low-income students disproportionately.

I’m unbothered by the prospect of Zuckerberg’s kid getting free tuition at a community college.  If anything, that would attract political and philanthropic support from powerful people to ensure that the college is strong.  That support would benefit everyone here. And I’d much rather spend money on instruction and student support than on more staff to do income verification.  

None of this is intended to shoot down Maryland’s proposal; even as it stands, it’s a massive improvement over the status quo.  But Maryland could, if it wanted, make the program even better by making it simpler. Free means free, no matter who you are.