The Distribution of Costs and Direct Benefits of Public Higher Education: The Case of California.

TLDR: The authors explored the general nature of income redistribution effects of the financing of public higher education in California and found that the distribution of subsidies actually favors upper-income families, since eligibility for the higher-subsidy institutions is positively related to family income level and since actual attendance among those eligible increases as family income rises.

Abstract: This paper explores the general nature of income redistribution effects of the financing of public higher education in California. The amount of available subsidy (full cost less student charges) varies dramatically among the three higher education systems-University, State College, and Junior College. Since eligibility for the higher-subsidy institutions is positively related to family income level, and since actual attendance among those eligible increases as family income rises, the result is that the distribution of subsidies actually favors upper income families. These subsidies are then compared with total state and local taxes paid. The results show that families with children enrolled in public higher education receive positive net transfers (subsidy less taxes paid) and that these net transfers are an increasing fraction of average family money income.