College as consumption

This piece in the (soon-to-be-gone) Ann Arbor News on the growth in the high-end student apartment market highlights something that often gets forgotten in discussions of higher education policy, which is that college represents both consumption and investment, with the relative proportions varying both across colleges and across students within colleges. For this reason, policies that subsidize the consumption aspects of college, such as income-contingent student loans, and policies that do not try to sort students based on their consumption-investment tradeoff, such as low posted price tuition levels for all students, may represent bad choices relative to policies such as high posted tuition prices combined with student loans available to all and grants and other financial aid aimed at disadvantaged students interested in college as an investment.

At the least, the fact that college has an important consumption role for many students needs to play a role in thinking about higher education finance and and higher education policy more generally. There is nothing wrong with college students having fun (and, indeed, much to recommend it) or enjoying lifestyle amenities, but there is little reason for the taxpaying public to subsidize these aspects of the experience.