A few weeks ago, the IU College Democrats invited me to discuss the topic of free college tuition. Sadly, the event was cancelled due inclement weather. Here, I outline the comments I was expecting to present.
Overall, the idea of free college is a great one. In fact, excessive college tuition is perhaps the most pressing problem for US colleges and universities. Currently, we have a model where colleges charge quite a bit and then apply a discount via financial aid and scholarships. This system has a number of issues. The higher sticker price discourages students, even those who might get a needs-based discount. The bigger problem is that hundreds of thousands of students acquire debt for degrees of modest economic value. This money is best spent elsewhere.
Even though free college is promising, the idea has some problems you have to confront. Here are three such issues.
First, to provide the same services that you have today in a tuition free way, you need to produce more income. The University of Texas reports that 18% of their budget comes from tuition. Princeton reports a similar fraction. Texas and Princeton are well known name brands that get lots of support from donors, state, governments, and other sources. Smaller colleges rely almost entirely on tuition. The conclusion is simple. Free tuition means that either (a) someone else needs to provide a lot more money or (b) you will need to shrink the university in some way.
Second, don’t look toward state governments to provide more funds for their universities. The historical trend is to slowly reduce the proportion of state university budgets provided by the government. The reason is that state governments want to pay for other things, such as K-12 education, roads, and police. Given those budget priorities, higher education support will probably remain at the same level or decrease.
Third, free college tuition seems to be a very unstable model. For example, the entire University of California system used to be tuition free and is still, technically, tuition free. However, the growth of the UC system required it to charge “fees” that essentially became massive tuition bills. This pattern is not limited to the public sector. While some schools, like Berea College, focus on low-income students and charge $0, other schools have slipped from tuition free to charging tuition. Perhaps the best example is the Cooper Union in New York City. Originally designed to be accessible to bright kids in New York, they charged tuition after the school’s leaders screwed up its financial position. Ten years later, they are still charging tuition and *might* go to tuition free in 2028. In other words, when colleges are set up in a tuition free manner, the results are mixed.
Bottom line: Once again, as Uncle Milton used to say, there’s no such thing as a free lunch.
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