NCPA - National Center for Policy Analysis

Free College Subsidizes the Wealthy

July 1, 2015

During his State of the Union address, President Obama proposed universal free community college. Senator Bernie Sanders (I-VT) recently proposed tuition-free college and Hillary Clinton is expected to announce a plan for debt-free college in the coming weeks.

On average:

  • College graduates earn 83 percent more than high school graduates.
  • Graduates earn an estimated $10,000 more a year than non-graduates. 

These returns to human capital investment are enough to justify the $27,000 of debt, on average, that graduates accrue.

Even though taking on debt to get through college is worth it, the way student loans are structured is often unsustainable. Most graduates do not immediately obtain a high-paying and stable job upon leaving school.

Advocates of free tuition often point out accessibility for low-income students. However, free college wouldn't just make college affordable for low-income students, it would also subsidize the upper class. More than 56 billion of the $70 billion it would cost to eliminate tuition would go to families with above-average incomes. If this policy's goal is to increase accessibility, there are better ways to spend $70 billion.

Public policy should focus on reducing the cost of education not subsidizing it. This could be done by insisting that schools that take federal aid keep costs in check, or by letting innovative models for higher education lower the relative value of brick and mortar schools.

What will not work is free tuition. While Senator Sanders likes to use the word "free" when discussing his plan, he must realize taxpayers would foot the bill to subsidize college costs.

Source: Patrick Holland, "Free College Would Help the Rich Not the Poor," Economics21, June 23, 2015.

 

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