Who Should Pay for Higher Education?

Abstract

Policies that shift the costs of higher education from the taxpayer to the university student or graduate are increasingly popular, yet they have not been subjected to a thorough normative analysis. This paper provides a critical survey of the standard arguments that have been used in the public debate on higher education funding. These arguments are found to be wanting. In their place, the paper offers a more systematic approach for dealing with the normative issues raised by the funding of higher education. This approach is drawn from the political theory of John Rawls, whose view seeks to reconcile the values of equality, efficiency, and liberty. I show that, contrary to what we may think at first, an egalitarian approach like Rawls’ does not in principle rule out policies that shift the funding burden from taxpayers to students or graduates. Which funding policy that approach selects as most fair will instead depend on the likely impact on the lifetime income prospects of the worst-off group in society, and this is a question which will need to be settled by empirical evidence.