Free Higher Education? Bad Idea Unless You Want Government to Restrict Access

US increased cost of college

The air is full of talk about the taxpayers paying for much if not all of the costs of getting college and university credentials. Little wonder. The cost of getting a four-year degree has been increasing at twice the rate of inflation for decades. In fact, the increase in lifetime income for getting a two-year degree over just a high school diploma, or for getting a four-year degree over a two-year degree, or for getting a post-graduate degree over a four-year degree have all been steadily increasing. It would seem that anyone with any ambition had better get as much education as possible, whatever the cost.

So, yes, the incentive to invest in ever more education has been rising. But there is another side to this story. During the 20th century, college grads made more and more money as the years went by. During this century, however, their compensation after taking account of inflation has been flat, while the cost of that education has increased. So they end up with the same income as their college-educated parents, but living at a lower standard of living—sometimes much lower—because of the debt they carry. The only ones whose income has been rising are those with post-graduate degrees, but their debt has been growing even faster. And then there are those who begin a two-year or four-year degree program and do not finish, who wind up with nothing but debt. Even for those who do succeed in the labor market, the debt they carry from their education more often than not makes it far harder than it used to be to start a family, buy their first home or purchase a car. There is increasing evidence that increasing student debt is slowing down the whole economy.

So, federal government to the rescue. Forgive loans, convert loans to grants, do whatever it takes to relieve the middle class and those aspiring to the middle class of this crushing burden.  It is an easy sell. Because the burden often is crushing, because the expense to the taxpayer can reasonably be characterized as an investment for the society as a whole rather than simply as personal consumption, because those who are offering this policy can point to countries that have provided free higher education for decades without any adverse consequences and because it’s fair, a way to enable the children of the middle class and the poor to catch up to the rich. What could be wrong with this idea?

Well, say some, we don’t have to make higher education free for everyone. Let the rich continue to pay full freight or something close to it. They don’t need another handout. In another version of this thinking, tie loan forgiveness to the earnings of the graduate, with those earning more paying back more. These ideas have merit and should be on the table, but they do not begin to get at what concerns me about the various versions of making college “free.”

Making college “free” for the individual and his or her family does not make it “free.” It simply shifts the cost to the taxpayer. Suppose that the costs of higher education per student continue to rise at double the rate of inflation. I will let you do the math. In time, college costs will gobble up the whole federal discretionary budget. In the medium term, virtually all young people will be unable to purchase a house, or a car or form a family because of the taxes they will have to pay.

Yes, I know. Some of the proposals that have been made are portrayed as affordable if they are paid for exclusively by taxes on the very rich. The trouble with this, as I see it, is, one, that others, no less earnest, want to use the same source to pay for leaving all our fossil fuel in the ground, incenting the development of alternative fuel sources or for the other expenses that will surely be associated with the environmental crisis we face. And then there is the cost of paying for the retirement and health costs of a burgeoning elderly population, as every member of the workforce must come up with more and more taxes just to keep the whole game going.  The reality is that the United States faces demographic and environmental challenges that are inescapable and enormously expensive and there will be fewer people in the workforce to pay for all this.  Soaking the rich to pay for free college sounds like the magical free lunch. But, as usual, there is no free lunch.

Which gets me to the point I really want to make. The underlying problem here is a productivity problem, not a budget problem. If the government makes more money available for higher education, that will continue, maybe even accelerate.

US increased cost of collegeBut there is no evidence that the value of that education has increased at all, on average. In fact, there is some evidence that it has declined. Students are getting less time in class. They have to spend more than four years to get a four-year degree because the courses they need to do it in four years are not available any more when they need them. They are getting access to fewer tenured, full-time faculty and to more itinerant instructors who are less qualified. A smaller and smaller proportion of the people that students’ tuition is paying for are instructional staff; more and more are in administration and non-instructional roles. We are paying more and more for less and less, if you think that “more” means more of what it means to be better educated.

The advocates for free or nearly free higher education say, well, other countries do it and their budget is not busted, so why can’t we? It is true that many countries provide higher education that is either free or heavily subsidized. But a great many Americans who want us to emulate them will be shocked and angry when they discover that, if we do emulate them, many who are now planning to go to college either will not get in or will not get beyond the first year.

In most of those countries, the money for college is not given to the student; it is given directly to the institution. The system is heavily regulated. Which university one is admitted to is determined by scores on national exams. The same is true for which program one can get into.  The government controls how many slots are available in each professional program at the graduate and post-graduate level. In some countries, many are allowed entry into the first year of college, but the number allowed to go on is much smaller and depends on how well a student does during that first year. In most of the advanced industrial countries, there are very few private institutions and they are widely regarded as inferior to the public ones. Because the government funds the institutions directly, it is in a much better position to control the costs by limiting access and to direct how the money is spent than is the United States government.

Oh, horrors, you say. We don’t want our government deciding how many students will go to college, what the criteria are for getting in, who gets to go to college, what programs will be offered and so on. I predict that, if the U.S. government, as a matter of policy, picks up the tab for higher education in this country, it will be only a matter of time before that is the kind of system we have in this country. That is because budget pressures will force the government to control our out-of-control costs. And that’s the way to do it.

What we really need to do is not to pour more money into the system but to fix the system’s productivity problem. The general education program in our community colleges, which half of U.S. students attend, is what is taught in high school in the top-performing countries. It should be taught in high school in the U.S.  Almost everyone in the U.S. is now saying that not everyone needs to go to college. But it is hard to find a parent who wants their son or daughter in a career and technical education program. That is because our career and technical education programs in both our high schools and community colleges are mostly designed for students who have a hard time demonstrating even middle school level literacy skills. If these students left high school with skills at the same level as their counterparts in the top-performing countries, our community college vocational programs would have to be redesigned with much more technical content and parents would feel much better about sending their children to them because they would offer much brighter futures.

If our education system was redesigned this way, it would be vastly more efficient. We would be getting vastly more for our money. Students would leave both high school and college with less debt and much better opportunities. If more than a dozen other countries can do this, there is no reason why we can’t do it.  Click here for a high level description of how they do it.

Let me put it another way. It is more expensive per student to provide a year of post-graduate education to a student than to a four-year college student, more expensive to provide a year of education to a four-year college student than a two-year college student, and more expensive to provide a year of education to a two-year college student than a high school student.  The program we are actually offering most of our two-year college students and the freshman and sophomores in our four-year institutions is pretty much the same program that is offered in high school in the top-performing countries. Something is very wrong with this picture. If we did as good a job of providing a high school education in high school as the top-performing countries do, we would save many billions of dollars. That does not mean we should then shut down our community colleges or our four-year colleges. Of course not. But we could expect them to teach a college-level curriculum, as that term is understood in the top-performing countries. We just might need fewer of them. And all those families and individuals who now go into debt to finance a college education would wind up with no debt at all to get the education they have to pay for now, because it would be provided in public high schools at no charge to the student.

But, if we just get government to pick up the tab for the current system, the institutions will take the money, the cost will balloon, and, when it does, government will ration education aggressively because it will have no choice. That will not be pretty.