Saturday, May 28, 2005

Scholarships for All Who Need Them

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Higher education should be free to all students who want to learn. It's best for the students and very definitely best for the country. All that would take is scholarships for all who are willing and capable of working hard at learning. Initially, this would cost lots of money.

Write letters to George Bush and the Republican leaders of Congress. Tell the Republican politicians this would vastly increase the wealth and well-being of the whole country.

I base my proposal on the experience we had with the G.I. Bill of Rights after World War II. The US Government subsidized higher education. I believe that the intention was to express gratitude to the veterans and mainly to keep them busy. There was a fear after the armistices were signed that the economy would fall back into the pre-war depression and massive unemployment.

The results exceeded all expectations. The massive investment in educating millions of poor and low income people resulted in tremendous increase in personal income and consequent tax collections. The Government's investment was paid back many times over. The nation experienced decades of economic expansion and the United States became a super super power. It was all derived from intellectual capital.
The U.S. simply had many more smart superbly educated (in all fields) people than any other country - it’s that simple.

Somehow, that lesson has been forgotten and our edge is slipping. Tuition is increasing at public and private colleges and universities and incomes, adjusted for inflation, are declining. Finding the money for college and graduate school is becoming more and more difficult for all except members of the upper middle and upper class.

All that I was advocating was that the Federal Government should make a super-smart business decision. Provide scholarships to intelligent, motivated sons and daughters of poor and working class and middle class parents so that they may attend college and graduate schools. Just as after WW II, these youngsters would vastly increase their earnings and pay back the Government's investment by paying much more in income tax than they would have if they only had a high school education.

Disclosure: There was a G.I. Bill during and after the Korean War and I was a beneficiary. I was already a college graduate so I used the Government money to help me with graduate school. The Government paid me about $5,000 in subsidizing my MBA. I can attribute a lifetime increase in income of about $500,000, very conservatively. Assuming a 20% marginal tax rate, the Government got back $100,000 on a $5,000 investment. That’s a rate of return of 30% a year for 43 years. The Government made a brilliant decision.

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