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April 25 2016

"Free" College Helps Those Who Don’t Need It

Patrice J. Lee

Policymakers are pandering to young people with proposals for free tuition at public institutions. The cost of college has risen faster than food, rent and gas over the past few decades leaving us more than r $1.3 trillion in student loan debt. However, proposals by President Obama, former Secretary of State Hillary Clinton and Vermont Senator Bernie Sanders are not the right solution.

New research from the liberal Brookings Institution finds that Sanders’s free-college plan would be costly and leave affluent families better off than it would middle-income and poor students. Sanders wants to eliminate tuition and fees at U.S. public colleges and universities that are paid for by taxing the wealthy.

When Brookings analyzed data on American college students from 2011-12 to assess whether eliminating tuition and fees would benefit some income groups more than  others, it found that families from the top half of the income spread would benefit more receiving 24 percent more in dollar value than students from the lower half of the income distribution. Poorer families would be left to shoulder more out-of-pocket costs than affluent families.

Families from the most affluent 25 percent only represent 11 percent of students at public colleges, but would receive 18 percent of the benefit from the Sanders plan. Meanwhile, the middle 50 percent of students would only get 33 percent of the benefits and the poorest quarter, which represents 14 percent, would derive 16 percent of the benefit. In hard numbers the impact is clear, students dependent on their parents or families and attending community college would save $1.8 billion in tuition costs and fees, but would have to pay an additional $4.5 billion for living expenses and college costs. 

Here's more from the report:

Free college, which does not address the non-tuition costs of attending college, also leaves families from the bottom half of the income distribution with $17.8 billion in annual out-of-pocket college costs that would not be covered by existing federal, state, and institutional grant programs. Devoting new spending to eliminating tuition for all students involves an implicit tradeoff with investing the same funds in targeted grant aid that would cover more of the total costs of attendance for students from lower-income families.

 …

The debate over free college is more likely to be resolved on political than on empirical grounds, but the  ultimate design of proposals to change how students and taxpayers pay for higher education should carefully consider their likely distributional consequences and the tradeoffs          between targeted and universal programs.

Sanders thinks that higher taxes can take savings away from wealthy families in this case. Decisions families make are not static though. If tuition is made free at public schools, students who planned to attend or who attend private schools would likely switch to public institutions to take advantage of the free tuition. The impact could be to make admissions more competitive and drive the costs higher. Less able students may not get into schools they otherwise would be able to attend. The costs of expanding student enrollment would be passed on to tax payers.

Progressives seem to think that the solution to making college affordable is throwing more money at the problem. The Federal Reserve of New York found though that for every $1 of federal aid (loans and grants), colleges and universities raise tuition by 55-65 cents. Colleges see no need to control costs when they have a guaranteed pipeline of cash from Washington. We need reforms that force colleges to be competitive and that offer more choices and alternatives to the traditional two-year or four-year degree. If public  K-12 education is not preparing our students for the rigors of higher education, why should we finance even more students into this failing system?

Independent Women's Forum is an educational 501(c)(3) dedicated to developing and advancing policies that aren’t just well intended, but actually enhance people’s freedom, choices, and opportunities. IWF is the sister organization of the Independent Women’s Voice.​
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