One response to California's budget crisis has been to consider raising fees at public universities, such as the $960 and $472 fee hikes now being considered for the University of California and California State University systems, respectively. Some are claiming those changes would make the sky fall, especially by squeezing out large numbers of students, particularly poor ones, and sacrificing the benefits to Californians from a better educated populace. However, that disaster scenario is unconvincing.

University attendance would see only a small effect from the proposed tuition hikes, although there is also talk of directly limiting enrollment. The primary reason is that at public universities, fees are a small part of the total cost of education. Books, supplies, and room and board must also be financed. But far more important for most are the earnings foregone by going to college, which dwarfs public university fees.

Therefore, an increase in public university fees would make only a small dent in the real cost of attending universities to students. Further, they are to be accompanied by increased aid for students from lower income households. As a result, the effect on educational opportunity would be small, particularly given that student fees cover only about 20 percent of the cost of providing their educations.

There is another reason to expect that the proposed fee changes would do little to squeeze the poor out of college. One reason for Pell Grants, Stafford Loans and other forms of student aid now available was to increase college attendance by lower income students. They actually made little difference. Families above the median income still send about twice as many children to college as lower-income families, just as in 1970. If larger reductions in the financial cost of higher education did little to increase enrollment of low-income students, smaller tuition increases will not lead many to leave.

In addition, because students from higher-income families attend universities in far larger proportions, most of the subsidies actually go to students from above-average income families. The greater support for each low-income student is swamped by enrollment demographics. Further, as economist Edgar Browning put it, "Subsidies to higher education effectively benefit the brightest and most ambitious young people, and this group will, on the average, have the highest lifetime incomes even without assistance."

Beyond this, the earnings payoff to higher education has been increasing in recent times. Students should be willing to borrow the extra expenses to pay for college. With the prospect of such great returns, educational opportunity does not require added subsidies; it only requires access to loans, which are already easily available.

Higher wages that result from university training do not provide much in the way of benefits to the other Californians who foot most of their bill, either. Most students would have gone to other schools if subsidized state universities were unavailable. The better-trained people those schools turn out must also be paid for their more valuable services, so that they, not society, capture the vast majority of value of their training. And many graduates will move out of state. Similarly, the cultural benefits of added education primarily accrue to students themselves, rather than to society.

Since students reap the vast majority of the benefits of such training directly, the "benefits to California" argument cannot justify maintaining the existing public subsidies for higher education. Further, education subsidies, to the extent they increase college demand, go in large part to education providers in better wages and working conditions, a point Adam Smith made more than two centuries ago.

There may be some difficult to articulate and measure social benefits to justify education subsidies. But current tuition subsidies are very large, and especially given the current budget meltdown, reducing them won't be a disaster for California. It will not decimate education or unduly burden students. And many budget balancing alternatives are far more harmful.

-- Gary M. Galles, of Camarillo, is a professor of economics at Pepperdine University, Malibu.