Is Free College Really Free?

Jan 5, 2017
Originally published on January 5, 2017 1:11 pm

"Free" is a word with a powerful appeal. And in the past year or so it has been tossed around a lot, followed by another word: "college."

Both Bernie Sanders and Hillary Clinton spent a lot of time talking about free tuition. And this week, the promise has been taken up by one of the largest public university systems in the country: New York state's.

Gov. Andrew Cuomo unveiled a proposal that would offer free tuition at state-run colleges for students from families earning less than $125,000 a year. Called the Excelsior Scholarship, his plan — which needs approval by the Legislature — would grant full rides to qualifying students as long as they attend one of the state's public two- or four-year colleges.

Cuomo's proposal, in the lexicon of "free-college" policymaking, is what's called a "last dollar" program.

As NPR Ed explained this summer, that means students who are already eligible for federal Pell Grants must use them to pay for school. After that money is gone, the state pledges to fill in the gap.

This method is the cheapest for the state, since students can draw on federal money first before taking state aid. With this type of plan, a larger share of funds from the new program is likely to go mainly to families who are relatively well off.

As Robert Kelchen, a higher education scholar at Seton Hall University, explains on his blog:

The benefits of the program would go to two groups of students. The first group is fairly obvious: middle-income and upper-middle-income families. In New York, $125,000 falls at roughly the 80th percentile of family income — an income level where families may not be able to pay tuition without borrowing, but college enrollment rates are quite high.

The other group that may benefit, says Kelchen, are lower-income students who are enticed by the clarity of the promise of "free."

But New York's proposal, like others, is likely to be controversial.

In reality there's no free college, just as there's no free lunch. The real policy discussion is about how to best distribute the burden of paying for it — between individual families and the public at large — and, secondly, how to hold down the cost of providing it. All while leveraging the power of "free" responsibly.

Fueling a bubble

For many conservatives, the answer is simple. An education makes individuals richer, and individuals should bear the cost. "The state should not subsidize intellectual curiosity," said Ronald Reagan, back when he was running for governor of California. In recent times, the conservative position is perhaps best expressed by economist Richard Vedder, director of the Center for College Affordability and Productivity.

In his books, articles and public appearances, Vedder argues that federal student aid is creating a bubble that allows colleges to raise prices indefinitely, and the only way to stop the cycle is to cut off public funding.

Kevin Carey, now the director of the higher education policy program at the nonpartisan New America Foundation, made pretty much the same argument in the New Republic in 2012. He compared public universities to apple vendors:

You, the apple vendor, look at the situation and say, "Hey, the market price of an apple is still $1. Wouldn't it be great if I could charge $1 for apples, but still get 40 cents from the government for every apple I sell?" ... So you start raising prices by 3, 4, or 5 percent above inflation annually.

In a world with no public subsidy at all for education, the only option left for free tuition would be something like the Starbucks plan — large corporations or wealthy donors footing the bill. And that kind of "free" comes, generally, with a significant catch — like requiring students to work for a certain employer.

The public piggy bank

At the other end of the political spectrum are those who see a large public obligation to pay for the education of citizens, to promote democracy, meritocracy and equal rights, among other things. They just can't agree on how.

Once upon a time, public university in this country actually was free, for the most part. In the 19th and early 20th centuries, from New York to California, states opted to charge no tuition or nominal fees.

Here's the catch. Until World War II, college was also pretty sparsely attended. In 1940, only about 5 percent of the population, most of them white men, had a bachelor's degree. And the U.S. was the most educated nation in the world! The small numbers made tuition relatively cheap to subsidize.

But starting with the GI Bill, the United States moved to a new model of "mass" higher education. The expansion continued through the 1960s, with the Higher Education Act of 1965 establishing federal student-aid programs.

Suddenly, most high school graduates — men, women, black, white, new immigrants — aspired to a college degree. In defiance of the laws of economics, as the supply of college graduates went up, so did the demand for them, year after year. A college degree pretty much always meant you made more money.

Graduates also paid more taxes, so the government got its money back in the long term — $6 for every dollar spent on the GI Bill, by some estimates.

No such thing

Starting in the 1970s, there was a backlash to all this free money. In the economic slump, federal and state subsidies to higher education tightened. Enrollments declined. Loans, which were cheaper for the government, began to replace grants.

Public universities responded to the decreased state subsidies by raising tuition. They responded to the increased availability of loan financing by raising tuition. They responded to the continued robust demand for higher education by raising tuition. They responded to the pressure to expand, adding new programs and majors and building bigger campuses, by raising tuition. Since 1978, public university tuition has climbed every single year, two or three times faster than inflation. Average student loan debt for a bachelor's degree: $29,400.

Sara Goldrick-Rab of Temple University sums up the results of all this in a paper she wrote for the Lumina Foundation:

Talented students are forgoing college because of the costs, students who start college are unable to complete because they cannot afford to continue, and even students who finish degrees may not realize all of the expected returns because of sizable debt burdens.

The United States is no longer the most educated nation in the world — it's the 12th. Most of the countries ahead of it have lower-cost public university options than the U.S. Perhaps most damning, the high cost of college in this country helps ensure that in too many cases, wealth trumps merit.

The success rate in college for the lowest-achieving but highest-income students is slightly better than the success rate for the highest-achieving, lowest-income students.

Found money

Out-of-control college costs are hurting the most vulnerable. There are many different efforts to pacify the giant octopus.

The new proposals bank on the fact that the federal government already spends lots of money on student aid: $47 billion in grants a year, $101 billion in loans (which are repaid), and another $20 billion in tax credits. The total of state, federal and private money going to defray the cost of tuition — that's distinct from state appropriations directly to institutions — is $247 billion per year.

Seems like with that kind of dough, there ought to be ways of buying better access and more equity.

There's substantial evidence that low-income students are less likely to even aspire to college because they think it's too expensive. It affects things like their choice of math classes as early as sixth grade.

That's why so many of these programs have the word "promise" or "hope" in the name. The student-aid bureaucracy is complicated to navigate. "Free college" is a promise everyone can understand.

Redeeming America's Promise calls for offering a full scholarship to a public two- or four-year college to every academically qualified student from families making no more than $160,000 a year. Part of the money, they say, could come from Pell Grants and tax credits, which would no longer be needed. (This math has been challenged).

Goldrick-Rab, a scholar who studies access to higher education, argued in her paper last year for the Lumina Foundation that the federal student-aid budget would and should go to pay for two years of universal free public college for all comers, including books, supplies, even a living stipend for those who need it.

The fine print

Unfortunately, most attempts to defray the cost of college come with unintended consequences.

For a good example, look no further than Georgia's HOPE Scholarship. This statewide program, dating from 1993, offers high school graduates who meet certain requirements scholarships at a state university. At one time, about a dozen states had created similar models.

According to this early look at the impact of the HOPE program, by Susan Dynarski for the National Bureau of Economic Research, "Georgia's program has likely increased the college attendance rate of all 18- to 19-year-olds by 7.0 to 7.9 percentage points."

Not too shabby. However, "the evidence suggests that Georgia's program has widened the gap in college attendance between blacks and whites and between those from low- and high-income families."

Wait a minute. So a free tuition plan, instead of helping low-income and minority students, actually left them further behind? Yes, and that result has been seen in other states. It happens because these state programs require certain high school GPAs and test scores, and require that students maintain a certain GPA in college. And proportionately more middle-class white kids meet those bars.

Nothing left to lose

Most of the conversations about free college, as we've seen, are really about moving around piles of government money and other funds.

Some folks are starting to talk about whether we can meaningfully lower the cost of delivering a college education, instead of or in addition to paying for it differently. Most of those conversations have something to do with technology.

Some thought Massive Open Online Courses would be the Holy Grail: free, high-quality college for everyone! But in that case, "free" led to lower commitment. Completion rates for MOOCs hover around 5 to 7 percent.

Blended programs, which are self-paced and combine online learning with assistance from real people by phone or in person, seem to be able to hold down costs and get good results at the same time. Like Western Governors University, a nonprofit whose teacher-prep program was the National Council of Teacher Quality's first-ranked program in the country in 2014. It manages to charge less than the average public university without taking any public subsidy.

The unique thing about education, and what makes it so hard to control the price, is that it's not just a service or a good. It's a process, and the learner takes an active role in creating its value. A college education may never be free, but for many people it will remain priceless.

A version of this story was published on NPR Ed in June 2014.

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