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Rick Perry’s Plan for $10,000 Tuition

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Texas governor Rick Perry, who has floated the idea that Texas might secede from the United States, has taken action to freeze college tuition and to impose performance standards on institutions of higher learning within the state.  As part of his overall program, according to a capitol newspaper, “he renewed his challenge for colleges and universities to offer bachelor’s degree programs costing no more than $10,000 for all four years of academic and book charges.”

Ironically, due to the success of the resource and technology industries in Texas, the University of Texas is one of the most endowed systems of higher education in the country.  Sen. Chuck Grassley (R-IA), a senior member of the powerful Senate Finance Committee, has called on universities with great endowments to start spending some of those funds to assist students in financing their educations in order to justify the tax exemptions these institutions enjoy.

Perry also addressed the low graduation rates that prevail among large university systems.  Remarkably, only 30% of students in the four-year institutions in Texas graduate in four years, with only 58% graduating in six years.  Incidentally, Perry himself graduated from Texas A&M University, where he was a member of the Corps of Cadets and was elected class social secretary and one of five yell leaders, with a B.S. in animal science.

Perhaps the governor experienced a gap in his education that might have colored his appreciation of what might be entailed in the provision of a Best in Class Education.  Texas A&M has a prestigious economics department, but he might have missed that course and graduated without being exposed to a prominent theory regarding the propensity of the costs of providing the elements of the so-called “Service Economy” to increase over time.

For example, a paper by Buera and Kaboski, of UCLA, entitled “The Rise of the Service Economy,” holds, according to its abstract, that, “Empirically, the importance of skill-intensive services has risen during a period of increasing relative wages and quantities of high-skilled labor.”  The authors find that this trend has persisted as prominence of the service sector has grown in the post-1950 economy of the United States.  They found a confluence of increased demand for highly skilled employees, an increase in the component of the GDP accounted for by highly skilled services, and an increase of 125% in the wages of college graduates to more than twice that of high school graduates.  (The period studied ended before the advent in 2008 of what is now known as the Great Recession.)

Therefore, the beginning of wisdom in the formulation of sound policy with respect to higher education may be to make a greater effort to match the education of students to their ability to contribute to the economy after graduation, rather than to assume that every high school graduate should immediately begin a course of university study.

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