Secondary and Tertiary education and opportunity: Why fund them differently?

Note:  Eric has written a much much better and more detailed post here – my post is just a knee-jerk expression of how I consider the issue, and the types of broad principles we need to think about.

One thing I missed during the election was the debate about whether government should pay for tertiary education.  There were a number of people saying “we pay for kids to go to secondary school, why not pay for them to go to university?”.

We have to be clear about why we treat these things differently in order to answer this question – it isn’t just about cost, it is about equality of opportunity.

We fund secondary education as we believe it constitutes a minimum level of education and investment in ALL individuals in New Zealand – a level that is required to give people a fair crack at life and civic engagement. Some parents also decide to have additional tuition to regular secondary education, like Chemistry tuition Singapore, to give their children extra opportunities when entering a college.

We do not believe that tertiary education is required for all roles, all types of engagement, and for all people.  As a result, we are instead subsidising a group of people who will undertake this type of education (and receive the return associated with this investment) by taxing those who are not interested in this type of higher level study.  In other words, it is a transfer of resources from people on lower incomes who are less willing/able to take on higher education to those who (over their lifetime) will be on high incomes.

Secondary school education is paid for (and correspondingly compulsory for a long period) to offer opportunities.  Tertiary education is not as heavily subsidised, as we are generally against regressive income transfers.  We already subsidise it to a LARGE degree on the basis of assumed spillovers, and we offer interest free loans on the basis of “equalising opportunity” – but larger subsides would largely be a transfer to the rich hidden in the language of “transformational change” … just like industrial subsides to capitalists.  I find it perplexing that people view such regressive transfers as “left wing” ….

6 replies
  1. Seamus Hogan
    Seamus Hogan says:

    Matt: `and we offer interest free loans on the basis of “equalising opportunity”’.

    I totally agree with your post but for this clause. We offer loans on the basis of “equalising opportunity”; making those loans interest free is exactly the kind of regressive transfer that you note should not be thought of as left wing.

    • Matt Nolan
      Matt Nolan says:

      You are 100% right – I agree. We offer the loans for opportunity reasons, the fact that the interest rate is artificially low is a transfer.

      I was writing in a hurry 😀

  2. Paul Walker
    Paul Walker says:

    Surely a simple rule would be: Whoever gains the benefits pays the bill. Now I can believe that there are “social returns” to pre-tertiary education but it seems less likely that tertiary education offers much in the way of such returns. Here most benefits are private, thus the difference in funding.

  3. Chris
    Chris says:

    I am a huge fan of the German system, and honestly believe that we’re halfway there with our polytech/university division. I’m saying this because I’m quite sick and tired of dealing with disinterested students who seem to think that the small amount they pay equates to an entitlement, and who don’t realise that they’re 75% subsidised by taxation for their education. Now, I believe tertiary education should be free. But at the same time, I don’t believe it should be considered a right and open to all. It’s not. It’s a privilege. If it were a right then closed courses wouldn’t exist. But they do.

    Entry to university should be restricted, because the problem is that most of the people who go aren’t going for reasons for economic benefit to themselves, they’re going to gain the cultural capital involved in a university degree, or they’re going because they have nothing else to do. That is, ‘first one in my family to attend university’. Which is great, unless you just waited until you were 20 and walked into a low entry barrier course without any prior education. All you did was add to the watering down of university education, because if funding is per capita then low entry barrier degrees are afraid to lose people, because they lose funding and they look bad. The current system is just loaded with perverse incentives.

    It’s not like NZ society gives people with those degrees many options, either. There are barely any postgraduate transfer courses in things like law or accounting that don’t cost tens of thousands a year in tuition – for which no loans are available – and which offer a professional route to skilled graduates from outside the discipline (like the UK, for example). The current system benefits no-one. Not the individual, who’s either a good student entering a job market flooded with bad graduates all competing for the same jobs and embellishing CVs, or wider society, who now has a bunch of graduates floating around with useless degrees who can’t pay off their loans with bartending jobs. We don’t need yet another recruitment agent with a C degree in media studies. And I don’t need those people sitting in my classes and messing around with their phones and disrupting the work of the 30% or so who are capable and do care.

    If, on the other hand, university entry was restricted and the per capita funding model was got rid of so that every course effectively became a closed course, the people who just went because they had nothing else to do, they’d be funneled into those professional level qualifications at polytech, or, they’d get work.

    The requirement to have a degree for all kinds of ridiculous things is dragging industries down. They don’t learn much job relevance at university. I worked in finance for a long time, but I didn’t do a finance related degree. But what I noticed was that those people who did degrees, they didn’t really have a clue. They’d been taught nothing about business. And yet, emerging from the university system with a BAcc, they were somehow on paper more valuable than I was.

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