In this week’s Democratic presidential debate, Bernie Sanders vowed to make college tuition free at public universities. It’s not such a crazy idea. With student debt at an all-time high, middle class families could use the relief. In several European countries, free public universities are the norm.
But it’s terrible economics because it doesn’t offer debt relief to students most in need.
Up until 1998, university tuition was free in the United Kingdom. Students also received grants to pay for living expenses. That worked fine when only 1% to 2% of the population went to university, but now more than 30% do. Universities needed to start charging fees, at first only a few thousand pounds. Now English schools can charge up to £9,000 ($13,900) in tuition, which is more than many Americans pay for public university tuition. Left-leaning Scotland still maintains public universities should be free and doesn’t charge fees to Scottish and European students (the English have to pay to go to Scottish universities).
But free tuition turned out to hurt poorer students more. Lucy Hunter Blackburn of the University of Edinburgh (full disclosure: I am a board member of their North American fundraising arm) estimates that the free tuition policy for Scots was regressive. While tuition is free, living expenses are not covered. Free tuition resulted in lower grants used for housing and students in need had to rely more on loans. Richer students, especially those who lived at home, got a huge subsidy. Poorer students, who needed to move to be closer to school, ended up with more debt.
Blackburn estimates the shift to free tuition amounted to a £20 million ($30.9 million) transfer from low-income to high-income families. The English system, in which fees are financed with family money and income-based loans and grants, turned out to be more progressive.
Free tuition also did not translate to increasing enrollment rates among poorer students. The number of students from non-professional families going to university increased all over the United Kingdom. But England experienced more growth despite charging fees. In America, free tuition can increase enrollment (pdf) among poorer students, but without adequate support and preparation many struggle and drop out without getting much value from college.
We often compare the high cost of American colleges to how much cheaper university is in Europe. But it’s not always a fair comparison. Most universities are public and students often live off campus with their families. When I went to college in the late 1990s in Scotland, there were no fancy gyms or spectacular student unions. Campus was where you went to class and your life and activities happened off-campus. The American college offers a more intense community experience. That may confer some social benefit, but it is not without a cost.
Free tuition certainly helps some people, but it is not the most efficient use of money if the goal is to increase access to university education and reduce the debt of poor and middle class families. Currently, the American university system is very progressive. The amount families end up paying is based on their income, which means richer students subsidize poorer ones. A free tuition model is more regressive because it gives richer students a subsidy and places a bigger burden on poor students by not helping them with the cost of living.
A price based on ability to pay shares the burden more fairly.