Before deregulation of the American airline industry in 1978, cross-subsidization occured between low-cost air routes and high-cost air routes.
Consumers living in areas where air transport costs were high were subsidized by those living in areas where air transport costs were low.
Maximum prices were set in high-cost areas and minimum prices were set in low-cost areas, and while airlines lost money flying people from “the middle of nowhere” to “a further away middle of nowhere,” they made up the loss by charging more for flights from Los Angeles to New York, for example.
This policy of cross-subsidization provided Americans greater access to air transport but indiscriminately taxed people in high population areas to pay for services provided to people in low population areas.
So if you were poor and flying from Los Angeles, you could be paying for someone who was rich to fly from Sioux City, Iowa.
Why should you care about airfare prices prior to 1978?
Our current two-tiered tuition system works in a similar way.
The more units you take, the more money your education costs the state of California.
The funny thing is some of us take more units than others, creating two groups similar to those that existed in the airline market: (1) High-cost, high-unit students and (2) Low-cost, low-unit students. This wasn’t a big deal when Cal State University tuition was dirt cheap, but now it seems increasingly unfair.
The CSU is indiscriminately taxing people with a limited course load to subsidize the cost of people with a heavy course load.
At times, this policy may even result in a tax on middle income students to pay for excess units taken by upper income students.
More than half of CSU students don’t actually pay tuition because of financial need, leaving the other half primarily composed of middle and upper income students.
Worse yet, who’s likely to take more units?
A middle income student working 20 hours a week to pay for books and tuition or a high income student supported by his or her parents?
As tuition costs rise, the belief that some students can subsidize others at the benefit of the CSU is eroding.
Last semester, the 23-campus system implemented a soft 16-unit cap on enrollment.
The policy was later rescinded at Cal State Long Beach, but that was only because students avoided racking up excess units because of it.
The cap was successful but likely extremely inefficient.
The idea that a student willing to pay for extra units was barred from paying for them boggles my mind.
The cap may have allowed CSULB to stay solvent, but it likely artificially lowered demand for classes that people were willing to pay for.
The CSU cannot possibly know what the efficient unit cap on students would be, but if they charged students more for taking more units, then the market would allocate available units efficiently – those who valued them the most would be willing to pay for them. What we had with the cap was a sort rationing.
I’m not calling for privatization of the CSU. I’m just saying we should utilize efficient solutions to our budget woes while we wait for taxpayers to foot the bill for higher education – if they ever decide to.
Zien Halwani is a senior economics and philosophy double major and a contributing writer for the Daily 49er.
