103.

At first, Brown University students might be proud that their school has eliminated tuition altogether for students whose families earn less than $60k a year. Diversity! Inclusivity! Other 'ities' that universities fell affinities for!

But wait until you get a little further down the press release, because this is where you learn Brown is raising tuition for everyone else, by a whopping 3.9%. The new cost of a Brown undergraduate degree: nearly $50k per annum.


But it's ok, you think, because poor(er!) people no longer have to pay it! In fact, this is correct. The people who must pay are American middle and upper-earners. And that's all part of a process by which America's middle class is becoming its new lower-class.

Many studies have decried that the gap between America's rich and poor is growing, and they're right. The reasons are manifold: immigration, education, outsourcing, global warming, El Nino, the list goes on. But the fine people over at Brown aren't just kicking the dying middle class, they're pre-emptively building it a coffin.

I'd like to get more technical. Economics who look at public goods (and in this case we're treating financial aid like a public good because it's being provided by a single source to a heterogeneous community through an income-based charge roughly comparable to a tax abatement program) have found that when people's preference for a good increases with income (think of the standard Demand curve rising up, up and away) the voter whose opinions win out is the median voter.

Political scientists call this the median voter theorem, and it has a lot of applications.

But what people are now beginning to realize is that the standard Demand curve for a public good doesn't work. In fact, people may have a U-shaped preference curve for a public good. Look at financial aid. The people who want more of it are the upper and lower-income earners. Not the middle class. Why? The lower-income earners want it because they get the benefits without paying the cost. The upper-income earners support it because of humanitarian reasons, but really because for the Hiltons and Ambanis of the world an extra 3.9% of $27k is so much chaff in the wind.

The people who bear the burden of the increase are the middle-earners. People who went to college, who make between $100- and $250,000 a year, who support 2 or more children through college, and who almost invariably pay the entire cost of tuition out-of-pocket. The sort of person the average humanities/communications/etc college graduate can look to become in the next few years.

What are they going to do about the extra 3.9%??

What's most likely is that they're going to start sending their kids to state colleges, a trend that's already begun but is very likely to continue. Even among the very smart kids I went to high school with (#11 in the US, yeah) many went to University of Maryland for free. Their parents simply couldn't afford private school.

The reason they couldn't afford it is because they were too rich for financial aid, too poor for tuition.

This may seem like a bogus dilemma. After all, the wealth of nations is meant to be recycled, even Adam Smith knew that. But in the meantime, what happens to America's middle class? The progressives, the taxpayers, the median voters, the so-called dreamers and occasional achievers of the American Dream? Is their economic relevance dying away? Are we going to become a nation of short order cooks and hedge fund managers, with little middle ground?