Explaining Free College Tuition and What’s Wrong Higher Education in America

The issue of free college tuition, thrust to the forefront of the national agenda as Obama announced his plan for free community college, has maintained a prevalent position in the media ever since. What’s more, this issue will likely play a pivotal role in the upcoming 2016 presidential election, with candidates like Bernie Sanders calling for an extension of free tuition to traditional, four-year universities.

Sanders’ plan is chiefly reflective of the idea that all students deserve access to affordable, quality higher education — and that other countries are doing at better job of this than the U.S. “Countries like Germany, Denmark, Sweden and many more are providing free or inexpensive higher education for their young people,” Sanders said, attempting to place his plans for reform in a global context.

US vs. the Rest: Why is higher education available at cheaper rates in other countries?

As expected, the answer is complicated, and is largely reflective of cultural and structural nuances inherent within different countries. For instance, in Denmark’s system, where students are paid $900 a month to attend college, taxation in Denmark far outnumbers the U.S. — Denmark citizens pay over half their income in taxes. Sweden also promises students free tuition, but graduates incur average of $19,000 in student debt to cover living expenses. In Germany, cultural differences lead to a very different college experience for university-goers compared to U.S. students. German students typically commute from home, and campuses often lack student-life amenities like the gyms and student resource buildings commonly found in the U.S

In the United Kingdom, undergraduate degrees usually cost an average of $9,000 per year, with a handful of universities charging a maximum of $13,440 per year. This price range is considerably different in the United States, where universities can cost anywhere from $9,410 for state universities to $32,405 for private colleges. A possible explanation for the difference in cost for these two systems may be rooted in student enrollment numbers; in the U.K. roughly 33% of students attend university, whereas over 65% of students opt to attend university in America.

Given all these contributing factors, it would be negligent not to acknowledge U.S. university rankings with respect to their global competitors. According to the Times Higher Education’s ranking of the top 25 universities in the world, 17 are currently found in the United States, 6 are found in the United Kingdom, and the remaining 2 are found in Canada and Switzerland, respectively. In the US New and World Report, 53 U.S. schools were ranked among the top 100 world universities. The closest competitor was the U.K with 8 schools.

The Call for Free Tuition and the Public’s Response

Sanders’ proposal for free tuition for all students attending public four-year universities is projected to cost $75 billion dollar per year — a cost Sanders suggests should be levied upon Wall Street stock, bond, and derivative trades. Other breaks for students would include a substantial cut in student loan interest rates, with an additional ability to refinance rates to match changes in the market.

Proponents of Sanders’ plan have largely framed the call to eliminate the cost of higher education as a necessity for job security. “In a global economy, when our young people are competing with workers from around the world, we have got to have the best educated workforce possible. And, that means that we have got to make college affordable,” Sanders of his College for All Act in 2015.

The public’s response to proposals for free tuition have been mostly positive, with 65% of Americans agreeing “no student should have to borrow money to pay tuition at a public university.” This position, however, has proven to be highly partisan issue. A recent poll shows 82% of Democrats support Sanders’ plan, in comparison to only 38% of Republicans.

The reaction among political opponents to Sanders’ proposal has not been widely publicized — a negligible response not indicative of a lack of disagreement but rather the fact that most policymakers consider free college tuition to be so politically unfeasible that it’s not worth addressing. Beyond standard impracticality, other critics assert that free tuition will serve as a blank check to universities, failing to hold them accountable for tendencies towards extravagant spending. Heightening accountability is key for those who argue colleges have become more concerned with enrolling students than effectively preparing graduates for careers.

Other adversaries claim that free tuition would do nothing to improve the representation of lower-income students among college graduates. Because Pell Grant financial aid packages currently cover the cost of tuition (and in some cases, include additional aid for living expenses) for low-income families, they suggest free tuition would primarily benefit upper-middle class Americans. Instead, critics argue low-test scores to be the defining factor keeping poorest Americans out of college, a phenomenon that could be better solved by concentrating funds at earlier stages of educational development.

Who’s to Blame for the Status Quo?

Believe it or not, college tuition hasn’t always been this high, and student loans haven’t always been the second most common source of household debt. According to reports, the class of 2014 graduated with an average of $33,000 in student debt. In 2008, this number was $23,000. According to Robert Samuels, President of the University Council-American Federation of Teachers, tuition rates have been inflated to subsidize merit-based and financial aid currently offered to students. And he’s not wrong. For example, take Loyola Marymount University, a private university in Los Angeles, California. The estimated cost of attendance here amounts to almost $60,000. However, a high school GPA over 3.9 might reduce these costs to zero — leaving other students to pick up the tab.

However, this phenomenon doesn’t entirely explain why college tuition has been rising 3–4% above the inflation rate in recent years. Some suggest inner-collegiate competition has driven universities to spend heavily on administrative and elaborate construction projects, eventually passing costs to students in the form of higher fees. This might help suggest why half of today’s students take out loans to cover the cost of education, while only 30% of students did in the mid-1990s.

Other explanations point fingers at poor economic conditions responsible for chronic underemployment among college graduates. Since 2001, higher percentages of students have been reporting underemployment — a trend that reached an unprecedented 44% in 2014. Understandably, students working either part-time or lower-paying jobs may have a harder time repaying student loans.

So why are students unable to find jobs even when they’re armed with a degree? Some say its plain and simple — just because more people are attending college (which is true, this number has been steadily rising for decades) doesn’t necessarily mean the economy will have more jobs to fill. In fact, the law of supply and demand suggests the very opposite: if college graduates are supplied at a higher rate than what the job market demands, jobs will be scarcer and pay less in the long run.

Other critics also contend that many liberal arts-based degrees just don’t translate into well-paying careers post-graduation. And…they aren’t really that far off base. A 2014 pay scale college salary report lists STEM (Science, Technology, Engineering, Math) majors as 23 out of the top 25 highest earning majors for 2014. Ranking 77th is English, 82nd Humanities, 83rd Anthropology, 95th Sociology, and so on.

The Cost and Benefits of Associated with Higher Education

Despite a rather high likelihood of incurring debt, the primary reason 65% of today’s high school graduates choose to attend college is due to the apparent high return of a college degree. Essentially, this is the idea that the payoff from a college diploma results in a substantially higher income than one would stand to make without a degree.

These sentiments have also been used as rational for recent education policy, where higher education is repeatedly cast as the ultimate public good. When launching his initiative for free nationwide community college, President Obama remarked, “A post-secondary degree or credential is no longer just a pathway to opportunity for a talented few; rather, it is a prerequisite for the growing jobs of the new economy.”

And yes, President Obama is correct in saying that college graduates tend to make more in a lifetime. The expected lifetime earnings of a college grad relative to a high school graduate are 1.13 for ‘some college’, 1.27 for an Associate degree, 1.65 for a Bachelor’s degree, 1.96 for a Master’s degree and 2.43 for a Doctoral degree.

Yet, it is also here where some experts express their disagreement.

Laurence Kotlikoff, a professor of Economics at Boston University, argues the yields of a college degree are actually far less than we expect. His research demonstrates how a student who receives her medical degree and goes on to become a general practitioner has surprisingly similar spending power mid-career to that of a plumber with no post-secondary education. This is due to the fact that the opportunity cost of lost earnings, coupled with student loans that accompany each year of higher education eventually add up, lowering the return on this investment that so many Americans have put their faith in. So, while Kotlikoff admits a Doctoral degree generates higher future income, a student wouldn’t be that much worse off without undergoing the trouble of medical school.

So, is Free College Tuition Really Feasible?

As always, some say yes, some say no. But before answering this for yourself, however, it might first be helpful to understand the differences between ‘higher education’ and ‘college’. What Bernie Sander’s refers to in his call for free college tuition are traditional, four-year universities. Alternatively, ‘higher education’ is a much broader, all-encompassing system that includes community colleges, technical colleges, four-year universities, and graduate schools. The reality is, an undergraduate degree is only a small slice of the pie in a bakery full of options; Sanders’ plan only addresses one facet of a multifaceted system.

Besides the expected lament of the $75 billion price tag, most opponent’s consider Sanders’ plan for free college tuition a partial solution disguised as a catchall approach. For some students, attending a full-time university is not an option, or simply does not meet their interests. Instead, other pathways to higher education through vocational training, technical degrees, and other certification programs may be a better fit, while still leading to career options in high paying industries.

Yes, nearly everyone concedes that student loans have grown out of hand and graduates should not be entering the workforce saddled in debt. However, a closer look at the system proves there are many more problems with higher education — rendering Sanders’ free tuition a Band-Aid approach to a gaping wound.