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College handouts to the rich

If I asked you to help pay college tuition for youngsters from wealthy families in Potomac, Md., or McLean, Va., my guess is you would not be enthusiastic.

But if you are taxed in Maryland or Virginia, you are already helping those kids out, thank you very much. If you live in Maryland, you’re doing a lot more of it than you were eight years ago, thanks to Democrat Gov. Martin O’Malley.

And you’re doing it through a policy that this most liberal of governors frequently boasts of: keeping in-state tuition low at the University of Maryland at College Park and other state schools.

States across the country subsidize higher education for their residents by paying the difference between in-state tuition rates and what a college education really costs.

“We are subsidizing affluent people,” says Sandy Baum, an expert on higher education finance and a senior fellow at the nonprofit Urban Institute. “Young people from affluent families are much more likely to go to college, and more likely to go to four-year colleges, and more likely to go to the flagship colleges.”

And flagship colleges are where the subsidy is largest. Wallace Loh, the thoughtful president at College Park, said during a recent visit to The Post that in-state tuition plus fees at College Park (now $9,400) are well below the median of peer research universities. Meanwhile, the state appropriates $19,000 for each Maryland student to help pay for that student’s education, he said. Does this represent sound policy?

I have been asking governors and state university presidents about this for years, and usually they don’t want to touch the issue. Taxpayers believe they are owed a bargain in return for the taxes they pay, and politicians don’t want to disappoint them.

Loh was careful to say he is not proposing a change in Maryland’s model, which he said is the province of its politicians. But he was less skittish than many of his counterparts in laying out the stakes.

“Should we do a little more redistribution in order to make this opportunity available to all people, which is the great equalizer in a democracy?” he asked. “I think the country is at risk if it doesn’t apply opportunity to its talented kids regardless of their income … especially when the face of the country is changing, when there are so many people who have come from abroad.”

The subsidy for the rich hidden within in-state tuition mirrors other entitlements that are defended by both parties as lifelines for the struggling middle class. Billions of dollars in tax deductions for mortgages, charitable giving and state and local taxes, for example, go to the wealthy, and people from President Obama to conservative economist Martin Feldstein have proposed targeting those more sensibly. Congress hasn’t wanted to touch them, either.

The mortgage deduction wouldn’t have to be eliminated to make the policy more rational, and the same goes for subsidized in-state tuition — which, as Baum argues, serves the vital public purpose of encouraging broad access to higher education.

Fred Hiatt is The Washington Post’s editorial page editor.


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