The Romney Plan for College Affordability

Andrew Sabl quotes a 1994 interview with Ann Romney in the Boston Globe wherein she explains the material deprivation she and Mitt undertook in their student days, when both were so poor and jobless they had to support themselves by selling shares of stock that Mitt had been given by his dad:

They were not easy years. You have to understand, I was raised in a lovely neighborhood, as was Mitt, and at BYU, we moved into a $62-a-month basement apartment with a cement floor and lived there two years as students with no income. It was tiny. And I didn’t have money to carpet the floor. But you can get remnants, samples, so I glued them together, all different colors. It looked awful, but it was carpeting.

We were happy, studying hard. Neither one of us had a job, because Mitt had enough of an investment from stock that we could sell off a little at a time. The stock came from Mitt’s father. When he took over American Motors, the stock was worth nothing. But he invested Mitt’s birthday money year to year—it wasn’t much, a few thousand, but he put it into American Motors because he believed in himself. Five years later, stock that had been $6 a share was $96 and Mitt cashed it so we could live and pay for education.

Mitt and I walked to class together, shared housekeeping, had a lot of pasta and tuna fish and learned hard lessons.

LOL factor aside, this is a model of college affordability that I like. The standard liberal program of open-ended tuition subsidies strikes me as problematic on both efficiency and equity grounds, giving students and colleges little incentive to think about cost effectiveness while arbitrarily allocating public subsidy to the relatively affluent subset of the population who go to college. On the other hand, there’s a clear need for some kind of leveling to create a society with some kind of fair opportunities. Ann Romney looks back on this as a time of relative deprivation, but imagine if she and Mitt hadn’t had George Romney’s wealth and the strong social ties of the Mormon community to fall back upon? What about a smart but legitimately poor kid whose extended family is more a source of trouble than support—how’s he supposed to get by?

A relatively open-ended lump-sum grant given to young people as a high school graduation gift could be an attractive option. You can use it to pay for college. But you could also roll it over into a retirement account. Or use it to launch a business. Or as the down payment on some real estate. And we could say that whatever you still have on hand at the age of 25 becomes yours to use as a totally unrestricted grant. Go spend it on some (increasingly cheap) cocaine if you like. The idea is to ensure the affordability of higher education while preserving the idea that higher education providers should be able to offer low prices as a meaningful selling point to people. The federal government could even offer up a guidebook on how to live frugally and support yourself on your stock nest egg—Ann Romney could share some of her pasta recipes.