Question

Tuition and fees do not pay the full cost of the education provided by UNC Charlotte. For Fiscal Year 2017, students' tuition and fees accounted for 32% of all revenues while state appropriations accounted for 36% of all revenues.

Why does the state pay for part of your education?

Answer 1

Education is good with positive externalities. Education provides various external benefits to the society through its multiplier effects. Because of the positive externalities, the social benefits of education is much higher than the private benefits of education. Therefore, in the absence of any government intervention, individuals tend to under-consume education and the consumption of education is below the socially optimal level of consumption. Therefore, the government pay for part of my education so that the private benefits become equal to social benefits and total consumption of education increases to the socially optimal level.