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Originally published Tuesday, January 25, 2011 at 3:39 PM

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Guest columnist

A better business plan for Washington state's public higher education

Guest columnist Dan Jacoby takes issue with the recent recommendations of Washington's Task Force on Higher Education Funding because they will adversely impact students. He offers other suggestions for how better to fill industry's need for Washington's college graduates.

Special to The Times

THE poverty of ideas advanced by Washington state's Task Force on Higher Education Funding is matched only by the wealth of its corporate members. Among them: representatives from Microsoft, Boeing, Alaska Air and The Washington Biotech and Biomedical Association.

To put our troubled state higher-education system on a sustainable path that expands the supply of degree holders, the task force would allow universities to raise tuition when state funding runs low, and establish a voluntary scholarship fund for which donors receive business-and-occupations tax credits.

Unfortunately, the report shows no sign that its members know or care about the impact upon students. The task force appears to be betting on its recommendation that "universities develop action plans to meet goals and reduce costs."

Students can expect to pay more precisely when the state economy is in desperate shape. Business is merely encouraged to pitch in, while receiving tax credits for its "charity." Why should we accept this? Because, as the task force puts it, Washington state ranks "6th in jobs that require postsecondary education or special training," especially those involving science, technology and math.

One alternative is to find ways to have businesses pay for the right to hire state-trained workers. Some will argue that business already pays for training through high wages. However, they do so only after future workers have assumed the financial risks of their education. Students who don't find good jobs are out of luck, just like the half million masters and Ph.D. students working for near subsistence wages as on-call professors in underfunded colleges across the country.

Unfortunately, a credential race has reduced the dollar value of degrees for many graduates. The College Board reports that in 2008, the median full-time wage for male baccalaureate holders over 25 was $65,800, while fully 25 percent earned less than $44,000. Among women, the corresponding figure was below $34,000.

Earnings trends for workers with high-school- and community-college degrees have dropped over the last 30 years, and college earners are threatened by the same prospect. Ultimately, the Higher Education Funding Task Force reflects the bottom line of Washington's corporate employers.

The 2009-2010 state report on financial aid reveals that despite a commitment to hold students "harmless" from rising tuitions, last year unserved aid-eligible students rose from 4,751 to 7,200. Additionally, rather than raise the income threshold for assistance, awards were reduced for students nearest the cutoff. No analysis has been provided to indicate that the task force's new recommendation will better protect low- and moderate-income students.

Higher education often serves as the first leg of a professional apprenticeship. However, unlike traditional apprenticeships in which employers pay their trainees, professionals now must fund their own education. Fresh ideas to preserve our dwindling upward social mobility are truly needed.

Germany and Australia suggest two radically different approaches that might yet be adjusted to meet U.S. circumstances. In Germany, a dual education system exists in which more than half of the youth benefit from apprenticeships overseen by business chambers and unions — the latter being necessary to ensure that training meets not only the needs of employers, but also those of workers.

In Australia, the state assists students in financing education by providing income-contingent loans that make repayment proportional to the economic benefit students receive from education. One advantage of these ideas is that they could be used to invest in our state's human capital by requiring user fees or developing guaranteed loan programs rather than taxes.

In their current form, neither model can be fully grafted upon Washington state. Each might be better advanced if our corporate citizens pushed the agenda to the national level as a matter of interstate commerce. Even so, alternatives do exist to move us beyond our current high-tuition, high-aid policies.

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Dan Jacoby is a University of Washington Harry Bridges Chair of Labor Studies, emeritus. He currently teaches economics at the University of Washington, Bothell within its Policy Studies Program

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