George Leef questions the spillover benefits of higher education subsidies. Knowledge and skills are not public goods even though some people in society benefit from them.  The focus of his discussion is on how much of the spillover can be captured as a private benefit to the investor in human capital.
What especially raised [the Century Foundation's Richard] Kahlenberg’s hackles was that [Chicago finance professor Luigi] Zingales “conceptualizes higher education as an almost purely private good.” Bad idea, Kahlenberg says, because “we are all ‘beneficiaries’ to some extent when other members of society are better educated.”

Kahlenberg’s idea is one of those progressive shibboleths that sound so nice that they usually go unchallenged. We need to challenge it. Is it true that we all benefit when people become “better educated” and if so, does it follow that government ought to fund higher education in whole or in part?

Let’s start by drawing a distinction between training and education.  People spend time and money to develop competencies in producing goods and services, in return for which they expect to be paid. People learn how to do surgery, how to install drywall, how to fix computers, how to sell insurance, how to write novels, how to teach English, and countless other kinds of work. Some of their training may be done in formal education settings, but much of it occurs on the job.

Because they intend to use their skills to make a living, individuals have a very strong incentive to find the optimal degree of training. The government does not need to intervene to tell a lawyer, for example, that she ought to become better trained. She will figure out the point at which the cost of additional study and training exceeds the benefit from it.

The same is true for all other professions and occupations. People will invest in the “human capital” needed to succeed in a field, weighing costs and benefits to find the optimal point. There is no need to subsidize their investments.
The gravamen of Mr Leef's argument is that a classroom and an on-the job environment are equivalent in developing human capital.  In the case of lawyering, that may not be the case, depending on the propensity of the apprentice's mentor to instill an understanding of professional ethics as limits to be pushed, or as constraints, the respect of which makes the services of the lawyer more valuable.  To grant that possibility, however, does not imply a public benefit to be captured through public subsidies to the law colleges.
In short, there is no need for government subsidies for training. Think back to the time before any such subsidies. In colonial America, the people had access to highly skilled workers, craftsmen, and professionals. The government’s role: none at all.

So, what about education?  Let’s say that education comprises all the non-training aspects of college: learning to write a good essay, learning about history, about our culture, about science and scientific method, about mathematics, about literature, and so on. Isn’t society better off if more people absorb more of all that?

Again, the individuals who absorb that learning may be better off. A student, Pete, who takes a good college course on, say, British literature, may very well benefit. Perhaps he uses his knowledge to impress a girlfriend; perhaps to get a question right on Jeopardy; perhaps to enlighten others and recommend fine books.  Pete benefits from his education and some others probably do, too. It’s a prodigious stretch, however, to say that society benefits. Good for Pete that he chose to spend his time and money learning about literature, but there is no reason why the citizens at large should be taxed to help him pay for it.
Yes and no. On the one hand, in the colonial era the craftsmen began their career as apprentices, in an institutional arrangement inherited from the guilds -- themselves state-sanctioned monopolies -- and perhaps the financial aid for the apprentice was in the form of an indenture -- an outcome Mr Kahlenberg fears, although one that his essay draws unsupported analogies to.  On the other hand, perhaps the spillover benefits are a product of elementary school, and sociopathic aspiring lawyers and hedge fund managers received inadequate development of their consciences from an early age.

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