The Myth of Free Tuition

During the Democratic primaries, Hillary Clinton proposed debt-free college to counter an idea from Bernie Sanders for free college. Since she claimed the nomination, Clinton has been moving closer to some of Sanders’ proposals from their primary fight in an effort to reach his voters. One of those ideas includes free college, with some tweaks on the Sanders plan (namely, her “New College Compact” would have an income cutoff of $125,000).

College affordability looms large on the campaign trail, with young voters and their parents increasingly frustrated with runaway tuition prices at a time when family incomes are flat. The idea of free college is appealing for the simplicity and universality of the message in a day and age when economic success largely depends on a college degree. That’s why Clinton will likely talk about her tuition plan in her acceptance speech tonight.

Any free tuition plan requires states to pitch in and we know how well that has worked with Obamacare.  

The problem, as I and many other observers have pointed out in the past few months, is that tuition costs at public colleges are mostly controlled by the states and a direct result of how much money lawmakers dedicate to higher education. Any free tuition plan requires states to pitch in and we know how well that has worked with Obamacare.  

Beyond state sovereignty, there are three other substantial hurdles in getting any kind of free tuition plan through Congress:

It’s an uneven subsidy to states and students.

As Kevin Carey recently wrote in the New York Times, “tuition isn’t the same everywhere. It varies greatly, largely based on how much states spend on making college affordable.” Average public college tuition varies by more than 3 to 1 among the states, according to Carey, from less than $5,000 in Wyoming to over $15,000 in New Hampshire. The range of public investment is even larger, from $2,591 per student in New Hampshire to $14,412 in Alaska.

But it’s not only an uneven subsidy to states, but to individuals as well. The purchasing power of $125,000 differs greatly on the cost of living. Also income caps are often not politically palatable. People who make $130,000 and $150,000 vote, too, and they won’t be too happy to have to pay higher prices but not get anything additional in return from a college education.

In the 1990s, Georgia placed an income cap on its popular Hope Scholarship the first year, but by the third year dropped it altogether after political pressure from middle-income voters who also wanted to access free tuition at public colleges for anyone with a B average in high school. The same political pressure will probably come to bear at the federal level under any free tuition plan.

It won’t control runaway tuition prices.

In 1987, the U.S. Secretary of Education, William J. Bennett, suggested in a New York Times op-ed that increases in federal financial aid enabled colleges and universities to raise their prices.

The so-called Bennett hypothesis has been tested over the years by scores of economists with conflicting results, but there is widespread agreement among most higher-education observers that the presence of a huge new federal subsidy will drive up prices unless strict controls are put on tuition increases. As Andrew Kelly of the American Enterprise Institute has written, capping tuition at zero “limits college spending to whatever the public is willing to invest. But it does not change the cost of college.”

Also, tuition is only one part of the revenue stream for colleges and universities. In recent years, public institutions that have been limited by their state legislatures in raising tuition have turned to charging fees to students in an effort to raise money. Student fees that cover everything from athletics to technology are hidden tuition increases that probably won’t be covered by any free tuition plan.   

It doesn’t change the capacity of colleges and universities.

California public colleges enroll one of nine college students in the entire United States. But that doesn’t mean that every student who is qualified to get in to a California public college is admitted. During the most recent recession, the twenty-three-campus California State University system, for instance, slashed enrollment by 16,000 students.

Because tuition only covers a portion of the cost of educating students at public colleges, it’s unlikely campuses will suddenly expand their capacity to accommodate more students. And while public institutions educate about 80 percent of American students, the free-tuition plans are largely silent on what happens to the other 20 percent of students who go to private colleges.

In my nearly twenty years of covering higher education, I’ve seen plenty of good ideas die at the hands of lobbyists for private colleges. As the Chronicle of Higher Education pointed out this week, private institutions would be “first in line for harm” under any free tuition plan.

Free tuition might sound like a great idea in Clinton’s acceptance speech tonight, but like many policies that sound simple, there are plenty of unintended consequences to consider.

Jeffrey Selingo is author of the new book, There Is Life After College. You can follow his writing here, on Twitter @jselingo, on Facebook, and sign up for free newsletters about the future of higher education at jeffselingo.com.

He is a regular contributor to the Washington Post’s Grade Point blog, a professor of practice at Arizona State University, and a visiting scholar at Georgia Tech's Center for 21st Century Universities.

Cross-posted from the Washington Post.