Why Young Adults Shouldn’t Bite on the Bait of Free Tuition Promises

Do you remember President Obama’s big splashy push from the State of the Union to make community colleges tuition free? Yea, us neither. Despite all the big initial talk from the White House, and the rounds of stories that dissected the plan from every angle, including two stories from us (here and here), it barely gets discussed anymore. President Obama very publicly dropped his disastrous plan to tax college savings accounts, but it seems like he’s content to let the community college proposal whither on the vine. The administration has made the calculation that it’s better to just not talk about it rather than try and defend it.

But Bernie Sanders, the socialist senator from Vermont and far-left presidential candidate, apparently didn’t take the hint. Sanders doesn’t just want to offer free two-year tuition to a community college, he wants to make in-state tuition free at all public colleges and universities.

Some are already prophesying that this could lead to a groundswell of Millennial support that could sweep the little-known senator into the White House. As Scott Bixby writes for PolicyMic:

Sen. Bernie Sanders wants your votes, millennials — and with the introduction of his latest bill, he may have just clinched them. . .

Sanders’ bill could make debt-free college the new 2016 litmus test for millennial voters. Lowering the cost of higher education was the single most important issue that would have increased turnout among Democrats in the 2014 elections, according to polling conductedby the Progressive Change Campaign Committee. An ideal bill, according to a paper by the PCCC and the think tank Demos, would feature federal aid to states to lower the cost of college tuition, need-based aid to qualified students and other cost-cutting efforts like standardizing transfer credits and eliminating physical textbooks.

At its core the bill does address an absolutely critical problem facing not only young adults, but every American: the soaring cost of college. This blog has detailed time and time and time again the tremendous debt burden being borne by an entire generation of young people who are being squeezed by soaring tuition and a poor job market. There is no doubt that the cost of a higher education is climbing well beyond the rate of inflation (dwarfing both the pre-collapse housing bubble and health care in terms of growth), leaving many young adults to either eschew college or take on unsustainable debt burdens.

But is offering free tuition the solution to the problem? Not even close, for at least three reasons:

  1. It would be a windfall to affluent families:

As Matt Bruenig explains in an indispensible post, the college tuition problem is much more nuanced than the generalized issue I laid out a few paragraphs ago. That’s because there is not really “one college tuition,” but a huge range of prices that people pay based on grants and scholarships that are tied to family income. As a result, the tuition and fees for the poorest quarter of college attendees has actually fallen since 1992, while the two upper income quartiles has borne the brunt of the increases.

Now, that may not be a bad thing in and of itself, but Bruenig also finds that offering free tuition is unlikely to change the income composition of college. Don’t believe him? Just look back to the 1970s when college tuition wasn’t nearly the problem it is today, yet student populations were even more disproportionately affluent. Taken together, that means that wealthier families will actually be the ones to see the windfall of any plan to make college tuition free.

  1. The cost of college will soar

Sanders’ public option would change who writes the final check to the college, but in doing so it would create perverse incentives that would raise the cost of college, and thereby raise the burden on the true financier: taxpayers. Right now, at least to some degree, colleges are forced to compete based on price. Given two institutions of the same quality a rational family will typically choose the less expensive option.

But in a tuition-free world the demand for a higher education could soar at the same time that the incentive to keep prices reasonable is eliminated. This means that colleges will be competing solely based on the quality of their faculty and the number of their amenities. In other words, prepare for an arms race in shiny new buildings (state of the art gyms, chef-inspired dining halls, and teched-out classrooms) that may not have any impact on the quality of the education being offered, but could serve as an allure to new students.

And since the government has promised to pick up the ever-higher tab, taxpayers (also known as college graduates) will be picking up the tab for the education they thought was free.

  1. Quality would suffer

The price of a higher education is one of the few ways we have to allocate scarce educational resources, i.e. high quality teachers. But since the price signal is eliminated the market gets flooded with students, which will surely lead to a rash of new colleges and universities attempting to enter the fold. This not only dilutes the limited amount of educational talent we have, but also dramatically expands the cost to the federal government. At that point the only check on quality and quantity is aggressive administrative controls at the federal level, which generally tend to end up ineffective, arbitrary or result in shortages. Oddly enough that’s exactly the situation that has happened in Germany, one of the models that Sanders holds up as the ideal. As Charles Lane writes for the Washington Post:

Overall, German institutions are considered good, not great; few show up on global “top 50” lists, for what that’s worth.

Germany also rations access to higher ed through tracking — selecting a college-bound minority at an early age while putting everyone else on course to less-exalted training. This is one reason that fewer German youth finish college than do American youth, despite not having to pay tuition. At the same time, Germany tends to accumulate “eternal students”; its now-abandoned recent experiment with charging tuition was an attempt to make them either graduate or leave.

Is that really a system we want to emulate? I sure hope not.