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March 01, 2006

Finally: A Government Subsidy I Approve Of.

Amazing really, finally, someone has come up with a government subsidy that I fully approve of. Surely the one I really desire (reduced price Guinness and bacon to middle-aged redhead expats with freckles) cannot be far behind?

Actually, in all seriousness, this does look like a good idea.

It took just a few paragraphs in a budget bill for Congress to open a new frontier in education: Colleges will no longer be required to deliver at least half their courses on a campus instead of online to qualify for federal student aid.

As you may or may not know much of the US education system is funded through the students themselves taking out loans to pay for it. There’s a variety of such federally funded programs, Pell Grants, Stafford loans and blah de blah blah.

The previous restriction, that such subsidized loans would only be made available to students attending a college where 50% or more of tuition was on campus was a barrier to entry, an implicit subsidy to the old way of doing things. We’ve got this shiny new internet thing and the rule was an obvious brake on the ability to exploit it to deliver education more cheaply.

Having said that, looking at the way the change was actually made, yes, it’s business as usual, lobbying, campaign contributions, opposition from those who lose their privileged position, those gaining from access to that privilege being in favour. Bismark about sausages and law comes to mind again.

But why am I in favour? Apart from the obvious thing, that now online and campus based universities are now competing on a level playing field? Partly because of the Baumol Effect which John Quiggin explains so much better than I could. Improving productivity in services is difficult, much more so than in manufacturing. Thus as average productivity rises, bringing up average wages with it, services become relatively more expensive to manufactures. The only way out of this is to apply new technologies, more capital perhaps, to service provision. Which is precisely what things like online education do. Great.

The NYT piece also points out that there is an increased possibility of fraud. Quite, the important question being whether the cost of that rise is greater or lesser than the benefits offered by the new system.

But there is of course a more personal reason. Part of my income comes from writing little pieces for websites that advertise such private universities. Yes, Timmy does keyword articles as well as the more fun stuff. Freelancing tends to be like that, take what you can get. As an example of that sort of thing there’s the EQSQ blog, based on discussing the "male" "female" and "balanced" brain ideas of Simon Baron-Cohen. (Yes, comments are policed there....and yes, he is Ali G’s cousin.)

So, students at online universities get access to the same subsidized loans for their education as those at more traditional campuses. The net gets used more as a method of delivering education, online universities thrive, more keyword articles have to be written to attract students and some of that lovely Federal money eventually ends up in Portugal, funding bacon and Guinness for redhaired middle-aged expats with freckles. What’s not to like?

(It’s OK, no, I haven’t really sold out my principles so cheaply. More an example of how subsidies do garner political support. From those who benefit. Yes, I do write such keyword articles but no, I don’t think there’s a good reason for my being subsidized by the Feds.)

March 1, 2006 in Academia | Permalink


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