Free college in America could worsen quality and inequality
PremiumEurope’s bad experience with this idea should caution US idealists
Even fans of student debt relief will admit it doesn’t solve the core problem of crushing higher education costs. For that, debt-forgiveness proponents such as Bernie Sanders and education economist Sue Dynarski have a long-term solution: free college. They have a point. If we’re going to burden the US tax base to pay for college students through debt forgiveness, we might as well be more upfront about it. Just be prepared for the result. Free college will not only worsen the quality of US universities, currently the best in the world, and mean fewer resources for students, it would also be more regressive and could deepen inequality compared with a system where students pay or take on debt.
Free college, like universal health care, is one of those things that exist in Europe that Americans love to idealize. In Europe, most universities are public. France, Germany, Sweden and Scotland don’t charge locals fees. But like just health care, nothing is ever really free. Free college is paid for with taxpayer money, which is always in short supply, and that often results in lower-quality services. More spending per student is one big reason why British and US universities dominate global rankings.
Limited resources also means rationing. And when capacity is limited, places tend to go to students from higher-income families. They get better secondary education and appear more qualified when it comes to admissions.Data shows that countries that offer free or cheap college have much lower graduation rates than the US and UK. Perhaps this would be fine, but free college doesn’t mean more vocational training. Germany briefly charged fees starting in 2006. But after protests, it gave up in 2014. Fee removal put more students in university but reduced vocational-school enrolment.
The UK also offers a useful case study. Until 1998 college was free for English students. At first fees were modest, but they now exceed £9,000 per year, financed with loans that graduates pay back based on their income after they start work. One study found that charging fees resulted in more students attending university; it narrowed the participation gap between students from high- and low-income families and more resources were spent per student.
Meanwhile, Scotland went tuition-free for Scottish and European (until the UK left the EU) students. A study by Lucy Hunter Blackburn of the University of Edinburgh estimates that the result was many low-income Scottish students ended up taking on more debt than their English peers because they had to get loans to pay for living expenses. Until 2016, English students from low-income families could also get grants to pay for living expenses while the Scottish had to take loans or rely on their families. She concludes that free tuition in Scotland amounted to a £20 million transfer from low-income to high-income families. And while the enrolment of students from low-income families increased all over the UK in the last 25 years, England experienced more growth despite charging fees.
Based on the European experience, free college is not the solution to financing education if we want a system that reduces inequality and leaves students with little debt.
Free college might look different in the US because of its private institutions. We could limit free tuition to public universities and let private schools such as Harvard and other liberal arts colleges charge fees. In some ways that would make the education system better. The only private universities that would survive would have to offer very high value or have very large endowments. But fewer colleges leaves fewer spots for students overall, and even more competition for the few places available at high-quality state schools . When it comes to completion and getting value out of education, Dynarski points out that the quality of the school is what matters. Yet, free college undermines quality . Free public universities risk further entrenching inequality by worsening what is already a two-tier system in US higher education. Inequality will only be exacerbated if the high cost of free public education means there’s less government money to subsidize loans for lower-income students who want to attend good quality, private schools that still charge tuition.
One of the benefits of university for students from low-income families is the exposure they get to students from more privileged backgrounds. This would be set back too. The US higher education system, which charges fees and offers need-based aid and loans is clunky and often wasteful. There needs to be more scrutiny over needless spending, tuition inflation, how loans are structured and schools that offer no value. But it largely works and is better than most other countries. Free college would mean students would still have debt to pay their living expenses and the quality of public education would fall. The better solution is to reform student loans.
Allison Schrager is a Bloomberg Opinion columnist covering economics.
Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less