President Obama on Friday proposed making two-year public community colleges tuition-free. The program, called America’s College Promise, would give an estimated 9 million students an average tuition savings of around $3,800 a year. But as the late, great economist Milton Friedman said, “One of the great mistakes is to judge policies and programs by their intentions rather than their results.” What will the results of this audacious plan be? At this point it’s too early to tell, but it’s not too early to raise some questions:
- How much will it cost and who will pay for it?
The Obama Administration liked to use the word “free” to describe the plan. In reality it won’t be free at all, the tab will simply be picked up by taxpayers in one way or another. And just who are those taxpayers? Well, given that 80 percent of community college students work while attending classes, and presumably the other 20 percent of those students are going to school with a goal of entering the workforce, the taxpayers are the very people who will receive the benefit. In other words, it’s more of a loan than a “free” program.
The real issue is the size of the tab, which is in dispute. Initially the White House repeatedly refused to provide an estimate of the cost (not a good sign at all), but finally broke down and said it will cost around $60 billion over a decade. Even that seems low, some middle school math tells me that 9 million students a year times an average tuition of $3,800 would result in a $34.2 billion annual cost once the program is in full operation. That would be a ten-year cost of $342 billion, nearly six times the government’s estimate.
- What impact will this have on the higher education marketplace?
Some simple economics demonstrates that even a $342 billion price tag is likely a dramatic understatement. After all, when a good or service becomes free you have a lot more consumers willing to give it a shot (what’s the risk besides the opportunity cost?). The same goes for community college. If taxpayers are footing the bill you can bet that a lot of students who would have entered the workforce may decide to take classes, and a lot of students who would have otherwise taken out loans to attend a 4-year institution will decide to complete two years for free at a community college and then transfer later.
But then what happens? If demand for community college services are going through the roof then you can bet those institutions will raise costs; first, because they’ll now be competing with other community colleges for top-notch students and will need to make investments in amenities; second, because the market will allow them to without any negative repercussions on demand; and third, because why not, after all the cost to the students is being paid by the government.
All told, this plan creates a ton of upward pressure on tuition prices, which will inexorably create another entitlement we can’t pay for. Unless that is, President Obama just hasn’t shared his ideas on how to combat all this. Then again, given his track record, we’re not exactly going to hold our breath while waiting for details.
- Who will this plan really help?
Okay, I’m cheating a little bit here because we already kind of have the answer. It’s going to help middle class families, not the students from disadvantaged backgrounds, who were presumably the target for the proposal. Here’s National Review’s Reihan Salaam to explain why:
It turns out that in 2011–12, “net tuition and fees at public two–year colleges ranged from $0 for students in the lower half of the income distribution to $2,051 for the highest-income group.” That is, net tuition and fees were $0 for students from households earning $60,000 or less while it was $2,051 for students from households earning over $106,000.
In other words, the federal government already has a program specifically targeted at low income families to help offset higher education costs – the Pell Grant program. That, in conjunction with charitable grants and college scholarships, has already made two-year college “free” to those who may not otherwise be able to afford it. So by making the benefit universal, you’re really not changing the incentives for poorer families so much as you are for wealthier ones. Perhaps that’s not a bad thing, but it’s clearly not what the White House was aiming for.
- Even if the plan does manage to help offset tuition prices, what about all the other costs of college?
Tuition is a large part of the cost of going to college, but it is not the only, or even the biggest hit to students’ wallets. For instance, the average annual cost of textbooks and supplies at a two- year public college is $1,168, room and board for a commuter (someone who doesn’t live on campus) is another $8,887, transportation averages another $1,606 and other miscellaneous expenses total up to $2,127. All told tuition makes up less than a quarter of the total expense of going to a two-year college. The president’s proposal will alleviate some of the burden, but will it be enough to change the financial equation for lower income families?
These questions are just the tip of the iceberg. Unfortunately, it’s become clear that President Obama has no intention of providing any reasonable answers. Just as he did with his proposal for “free,” universal Pre-K his chief aim is to make a political splash, walk away, and then point fingers at Congress. As Ed Morrissey writes for HotAir, “It’s merely a construct to show Obama Cares About You, while at the same time giving the media another ‘Republicans Are Just Flint-Hearted Meanies’ narrative to push. This is what passes for leadership in the Obama era.”