THE BLOG
06/19/2012 05:08 pm ET | Updated Aug 19, 2012

Public vs. Private Goods

I am traveling in Asia this week where my university, Alliant International University, offers programs (in Hong Kong and Tokyo) and where we recruit a number of students each year to come to our California campuses.

On Monday I picked up a copy of the English language newspaper China Daily, and was struck by a cartoon on the editorial page. It shows a graduate in cap and gown staring at a tightrope strung from the edge of a cliff. There is a sign pointing forward that says "job." But the student has a huge ball and chain attached to his leg labeled "US Student Loans." Obviously he is not going to walk the tightrope with that weight attached to him.

Meanwhile, in last week's New York Times, Professor Luigi Zingales published an op-ed piece suggesting that student loans be privatized. He proposes creating a market like venture capital, in which graduates would pledge a portion of their future earnings as collateral. Just as venture capitalists take equity in new companies in the hope of getting a return down the road, they could become investors in the future success of college graduates.

And finally, both of these opinions showed up a time when the US Congress is deadlocked on how to do something that almost everyone agrees is a good idea: keeping interest rates on student loans from doubling on July 1. While they agree on the goal, the parties cannot agree on how to pay for it.

These three items are all evidence of a major shift in how we think about education. Historically, education has been seen as a public good. It was recognized both that democracy requires an informed citizenry and the economy requires skilled workers and leaders in order for the entire society to make progress. This is the theory behind our system of public schools and universities, tax exemptions for private universities, the GI Bill, student loan programs and all sorts of other public investments in individuals as well as institutions.

This consensus seems to be giving way to a new view -- that education is purely a private good. The question is no longer about whether it is good for society as a whole to be more educated, but rather it is whether each individual wants to bear the cost and risk of financing an education for personal gain. This shift has many consequences. First, it implies that the only "return" on education is an economic one; personal enrichment and the pursuit of knowledge for its own sake seem like quaint notions from some bygone time. Second, it means that the decision to pursue higher education is very different for students of different means and prospects. The playing field is becoming less level, not more. Third, it suggests that we no longer have a collective stake in whether each generation moves us forward in terms of new discoveries and deeper understanding of the world.

Needless to say, I find this all disheartening and discouraging. I certainly benefited from the availability of low-cost public financing for my education, and I believe we should be doing much more for today's students. At Alliant, we discourage students from taking on too much debt, but most of them must borrow something. As future professionals -- teachers, psychologists, lawyers and managers -- we encourage them to strive not only to improve their own lives but also to serve their communities. Collectively, Alliant students contribute more than 1 million hours of public service each year as an integral part of their education. While they pursue their ambitions, we all benefit.

Our global competitors such as China continue to regard education as vital to their long-term growth and development. They are rapidly and dramatically increasing levels of public investment in universities and individual students. It is clear from the China Daily cartoon that they find our predicament over financing higher education amusing. If that doesn't spur us to action, I don't know what will.