By Colin A. Knapp, Ph.D. Department of Economics, University of Florida Adjunct Scholar, The James Madison Institute

View Full Brief: An Evaluation of Florida's Bright Futures Scholarships in a Fiscally Constrained Era (PDF)

Foreword By Robert F. Sanchez Policy Director, The James Madison Institute

In a free-market economy, the true value of goods and services is generally evaluated in terms of the return on the recipients’ investment of time and money. “Buyer’s remorse” may occur when the recipients conclude that the value of the goods or services they obtained was not worth the time or money they invested.

A curious form of buyer’s remorse is now evident among some of the recent college graduates taking part in the so-called “Occupy Wall Street” protests in major cities around the nation. Many of these graduates complain that earning a college degree has left them jobless and deeply in debt. Indeed, the total amount of money owed on student loans now rivals the nation’s total credit card debt.

This situation has begun to raise questions about the long-held assumption that providing every high school graduate with an opportunity to earn a college degree is as much a part of “the American dream” as the assumption that everyone should own a home — another assumption now being re-evaluated in the wake of the housing bubble.

Indeed, some policy makers are beginning to wonder whether there is also a higher education bubble abetted by generous public subsidies of college students. In state capitals, where the recession has forced a serious and ongoing re-evaluation of spending, the degree to which the taxpayers subsidize college students has come under review.

This is not to say that the taxpayers’ investment in higher education is without benefit to the public. Obviously society has a need for the trained professionals — doctors, teachers, scientists, engineers, and so on — who earn their credentials in college. Most graduates also benefit economically in the long run with lifetime earnings far exceeding those whose schooling halted prior to college.

Given the societal benefits,Florida’s taxpayers have generously assisted college students with each of the three primary costs involved in obtaining a degree: tuition and fees; living expenses; and forgoing or delaying full-time employment and the start of a career for four or more years.

First, level of tuition and fees in Florida’s public universities, state colleges, and community colleges remains well below the national average, even after recent increases. Moreover, many students also receive generous subsidies through scholarship programs such as Bright Futures — the subject of this study — and through Florida’s pre-paid scholarships that — although funded by the students’ families — lock in past tuition rates that are substantially lower than the rates prevailing today.

Second, with regard to living expenses, which are another major factor in the cost of college,Florida’s taxpayers have been especially generous. The university system has expanded, with main campuses and/or branches now located throughout the state. Meanwhile, many of Florida’s long-time community colleges have recently become state colleges that offer baccalaureate degrees in selected high-demand fields such as nursing. As a result of the growth in the university system and the creation of state colleges, virtually all high school graduates in Florida now reside within less than hour’s commute to a public university or college campus offering studies leading to a baccalaureate degree. Most of these institutions even offer on-line courses that minimize the cost of commuting to and from their campuses. As a result, many students in Florida have the option of living at home during their college years rather than shouldering the additional burden of living expenses and travel costs associated with residing in a distant “college town.”

Finally, there is the expense of delaying one’s career and devoting four or more years of one’s life to attending college. Fortunately, the employment opportunities during and after college have improved because of the expansion of Florida’s university system into major urban areas such as Miami, Tampa, and Orlando. At the midpoint of the 20th Century, Florida’s three public universities were located in small towns — one in Gainesville, two in Tallahassee— and Florida had only three “junior colleges.” The vast expansion of both systems throughout the state and especially into major urban areas with diverse economies has greatly improved the opportunities for college students to find a greater variety of internships, part-time employment, and career mentoring while they’re pursuing a degree. Moreover, when they graduate, they may find additional job opportunities that do not entail relocating out of state. When they remain inFlorida and use their skills here, it averts the “brain drain” that the Bright Futures scholarship program was designed to minimize.

In sum, Florida’s taxpayers have done a lot to make obtaining a college degree affordable. Because both society and the students benefit, the relevant question is one of balance. To what degree should taxpayers subsidize college students? How much “skin in the game” should the students have?

This study provides an evaluation of one facet of that issue: Florida’s Bright Futures Scholarship Program. It is big and expensive. Some critics have called it “a middle class entitlement” because many of the Bright Futures recipients are from families with incomes and assets that are markedly above the state average. Defenders argue that the recipients must earn their scholarships by taking rigorous college-prep courses, earning excellent grades, and performing many hours of “community service” while still in high school. Indeed, motivating high school students to higher levels of achievement was also a goal of the program. Many Bright Futures defenders also note that there are numerous need-based grants and loans for college students — including some students who are arguably ill-prepared for college level work, who require remedial courses, and who research indicates often drop out before completing a degree and nonetheless wind up owing thousands of dollars in student loans. Therefore, the Bright Futures defenders argue, maintaining at least one “merit based” based program is a way to bet the taxpayers’ money on students with better odds of succeeding in degree programs whose graduates ultimately provide valuable benefits to society.

In this study, Dr. Colin Knapp of the University of Florida weighs the costs and benefits of the Bright Futures program in light of the ongoing re-evaluation necessitated by the state’s fiscal problems. In his recommendations, Dr. Knapp suggests ways that the costs could be brought more in line with the benefits while not entirely ending the program.