North Dakota Doesn't Need A Tuition Entitlement


America has a higher education bubble. This is undeniable. As Investor’s Business Daily writes in an editorial today, government subsidies for higher education and tuition has created a glut of college graduates for which there just isn’t enough room in the job markets. Meanwhile because of seemingly bottomless government-created demand for higher education, the cost of getting a degree has gone through the roof.

It’s clear, to any rational observer, that the solution for higher education is to stop subsidizing higher education. We’re distorting the market and creating a bubble.

So it’s in that context that the legislature is about to consider a very bad idea. HCR3018, sponsored by House Majority Leader Al Carlson, would take $10 million from the state’s Legacy Fund and use it to fund scholarships awarded based on guidelines set by the legislature:

Beginning July 1, 2018, on July first of each year, the state treasurer shall transfer ten million dollars of the earnings of the North Dakota legacy fund to a special fund in the state treasury known as the legacy scholarship fund. Money deposited in the legacy scholarship fund and the earnings of that fund may be expended only by legislative appropriation for legacy scholarships. Legacy scholarships may be awarded as provided by law but only to recipients of a North Dakota school district high school diploma who meet academic performance and other minimum standards established by law. Legacy scholarships may be awarded only for attendance at North Dakota state institutions of higher education.

North Dakota graduates about 7,000 or so high school students every year, so this entitlement (assuming it’s given to all students, which it may not be) breaks down to about $1,400/student. Assuming that the legislature might apply some standards to who gets the money, we may be talking as much as $2,000 – $2,500 per student.

That’s not going to pay for the entirety of anyone’s tuition, but it’s a healthy chunk of tuition at most schools. But will it help?

No, of course not. As we’ve seen before, the more money the government makes available to subsidize tuition (be it through subsidized student loans or grants) the higher the price of tuition goes. Colleges know the market will bear more tuition increases when the government appropriates more money to subsidize tuition.

What Carlson and his co-sponsors are proposing will only exacerbate the higher education bubble.