Even proponents of student debt relief admit that this does not solve the main problem of reducing the cost of higher education. To that end, debt relief advocates like Bernie Sanders and education economist Sue Dinarsky have a long-term solution: free college.
Free colleges, like universal health care, are one of those things that exist in Europe that Americans like to idealize. In Europe, most universities are public, and France, Germany, Sweden and Scotland do not charge local students. But, as with healthcare, nothing is truly free. Free colleges are paid for with taxpayer money, which is always in short supply, and this often leads to substandard services in the form of overcrowded classrooms and crumbling buildings. It is popular to ridicule the luxurious amenities on American college campuses, but many student expenses are valuable. Increasing spending per student is one of the main reasons British and American universities dominate the world rankings.
Limited resources also mean rationing. And when capacity is limited, places tend to go to students from families with higher incomes. They receive a higher quality secondary education and appear to be more qualified when entering competitive schools. In Germany, about three-quarters of adult college graduates send their children to college, while only 25% of adults without degrees go to college.
The figure below shows the proportion of the population (aged 25 and over) with a bachelor’s degree (or equivalent) in different countries between 2016 and 2020. Countries that offer free or very cheap colleges have much lower graduation rates than the more expensive US. and UK.
Perhaps lower graduation rates would be appropriate, since too many people seem to be going to college anyway. But free college doesn’t mean more vocational training. Germany charged fees for a short time starting in 2006. But after much protest, she returned to free college in 2014. After they abolished fees, more students entered universities and this reduced the number of students enrolled in vocational schools.
The United Kingdom also offers a useful example. Until 1998, the college was free for English students. Fees were modest at first, but now they top £9,000 a year (typically around $12,000 – more than many public schools in the US), funded by loans that graduates repay based on their income when they start working. . One study found that charging fees resulted in more students entering the university; this narrowed the participation gap between high and low income students and more resources were spent per student.
In the meantime, Scotland has become free for Scottish and European (until the UK left the EU) students. A study by Lucy Hunter Blackburn of the University of Edinburgh found that as a result, many low-income Scottish students went into more debt than their English peers because they had to take out loans to pay for living expenses. Until 2016, underprivileged English students could also receive grants to pay for living expenses (living expenses are now also covered by loans), while Scottish students had to take out loans or rely on their families. She concludes that free tuition in Scotland amounted to £20 million ($30.9 million at the time) from low-income to high-income families. And while underprivileged student enrollment has increased across the UK over the last 25 years, England has seen more growth despite fees.
Judging by the European experience, free college education is not the solution to the problem of funding education if we want to create a system that reduces inequality and leaves students with little debt.
Free college may look different in the US due to the vast network of private institutions. We could limit free tuition to public universities and let private schools like Harvard and small liberal arts colleges continue to charge fees. In some ways, this would make the education system better: there is a chance that many private colleges, especially low-cost ones, will close because fewer students will be willing to pay tuition when they have a free option.
The only private universities that survive will have to offer very high value or have very large endowments. But fewer colleges leave fewer places for students overall and even more competition for the few places available in high-quality public schools, especially for students who now barely qualify but end up benefiting from their education through much higher earnings. throughout life. When it comes to completing and making the most of an education, Dynarski notes that the quality of a school matters. However, free colleges undermine quality because it means less cost per student and does not necessarily lead to a higher graduation rate.
Free colleges at public universities risk further perpetuating inequality, worsening the already two-tier U.S. higher education system. Inequality will only get worse if the high cost of free public education means the government has less money to subsidize loans for low-income students who want to attend quality private schools that still charge tuition.
One of the advantages of the university for students from low-income families is the acquaintance with students from more privileged families. A more fragmented two-tier system undermines this process and further divides our economy and society.
The US higher education system, which charges fees and offers need-based assistance and loans, is clumsy and often wasteful. We need to look more closely at unnecessary spending, tuition inflation, loan structures, and schools that don’t provide any value.
But the current system basically works and is better than most other countries. The vast majority of college graduates earn higher lifetime earnings, and many Americans go on to college. Going to a free college will mean that students will still have a lot of debt to pay for their living expenses, and the quality of public education will decline. The best solution is to reform student loans and keep university fees.
More from other contributors on Bloomberg Opinion:
Five financial tips for new college students: Teresa Gilarducci
Get a marriage contract before you pay your spouse’s student loan: Erin Lowry
College tuition too high but not rising: Matthew Iglesias
This column does not necessarily reflect the views of the editors or Bloomberg LP and its owners.
Allison Schrager is a Bloomberg Opinion economics columnist. A senior fellow at the Manhattan Institute, she is the author of The Economist Goes to the Brothel: And Other Unexpected Places for Understanding Risk.
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