Money troubles interfere with the academic performance of about one-third of all college students, and a similar number of students regularly skip buying required academic materials because of the costs, according to a survey released on Thursday.
That's from the New York Times today. Also: "students who spend the most hours at paying jobs are, not surprisingly, those feeling the most financial stress."
Education is a public good. I've read my Max Weber and my de Tocqueville, so I get it, we're a country of the Protestant work ethic, the by-your-bootstraps American Dream. And for a while, it was possible to work your way through college. That's admirable, that's awesome, good for anyone who can pull it off.
But lighthouses don't get built and firehouses don't get funded only because people work really hard for them. Lighthouses and fire departments exist because the electorate pools its money, elects a government, and the government allocates all our money to public projects. It's entirely possible for the fire department to be privately funded through insurance: only the people who pay in get to benefit. We know people tend to underestimate the probability of infrequent occurrences, so many people who probably should will in fact not buy coverage. So then your neighbor's house catches fire, but he hasn't bought insurance, so the fire department doesn't come, and then everyone is out on the street watching the fire jump from home to home until an insured one goes up in flames, and finally the fire department drops by. But will they only selectively fight the fire on insured homes? That wouldn't really work, so you get free riding and moral hazard.
As the old adage goes, if you want less of something, tax it. So if you want more of something, subsidize it. The "but kids can work their way through college" defense of not giving everyone free higher education is a terrible one because it fails to accurately or fairly distribute costs to everyone who benefits. The current system also does a terrible allocation job: brilliant but poor students receive fewer degrees than optimal while more affluent students who won't benefit from them get more degrees than is efficient.
My point is, there are some goods where the transaction / coordination costs are high, and where free riding is rampant, that government administration is the only thing that makes sense. And higher education is one of those cases. Everyone benefits from a more-educated citizenry, but the costs fall mainly on students who, by the logic of being kids and students, are the least able to pay them. Ergo, government should subsidize higher education to a greater degree.