Joe Biden’s Free-College Plan Would Pay for Itself
By Anthony P. Carnevale and Jenna R. Sablan
Making college free would cost billions of dollars, but increasing access to higher education would yield substantial benefits.
The most noteworthy proposal for free college at the federal level, backed by former Vice President and Democratic presidential nominee Joe Biden, would start paying for itself within a decade by giving more people access to postsecondary education, which has become critical to career success. Economic opportunity has shifted to workers with education and training beyond high school, with 80 percent of well-paying jobs going to workers with at least some postsecondary education. Workers who would attain more education as a result of a free-college program and get higher-paying jobs would generate additional annual tax revenue that would surpass the annual cost of a free-college program within 10 years after its implementation.
Free-college programs have emerged as states and localities have attempted to make college more affordable. While currently there is no federal free-college program, proposals to make some types of postsecondary education at least partially free on the national level have gained momentum in recent years. In our forthcoming report, The Dollars and Sense of Free College, we examine the free-college plan adopted by Biden along with three other major free-college models and provide preliminary estimates of their costs and potential benefits.
In 2016, then-presidential candidates Sen. Bernie Sanders and Hillary Clinton struck a compromise — tuition-free college for everyone except students from families with annual incomes higher than $125,000. They were responding to progressives, who have argued that public higher education should mirror our universal tuition-free K–12 education system. They added the income cap to mollify moderates, who have argued that universal free college would be a giveaway to the rich.
In March, Biden endorsed a free-college plan similar to the Clinton-Sanders plan of 2016. Biden’s plan would enable students of all income levels to attend public community colleges in their home state without paying tuition. It would also cover tuition at four-year public colleges and universities for students with family incomes under $125,000. Students who receive other forms of financial aid, such as a Pell Grant, could use that aid to offset other costs of attendance beyond tuition, such as room and board, books, and transportation. The federal and state governments would share the expense of covering tuition, with the federal government paying 67 percent of the total cost and the states paying the other 33 percent.
In our forthcoming report, we estimate that the plan endorsed by Biden would cost $49.6 billion in the first year, with $33.1 billion covered by the federal government and $16.5 billion by the states under the proposed 2-to-1 match. It would save $8.6 billion in the first year compared to a plan that would cover tuition for all students regardless of income. In the 10 years beyond initial implementation, the total price tag for the Biden plan would reach $683.1 billion.
The costs of Biden’s free-college plan are substantial, but the potential benefits could be even higher. Increases in college attainment made possible by a national tuition-free program such as Biden’s could yield benefits totaling $1.2 trillion in the 10 years after implementation. This estimate assumes that more students would earn college credentials and get well-paying jobs that could lead to after-tax earnings gains of $866.7 billion and additional tax revenue of $371.4 billion. The annual benefits in tax revenue alone would start to outpace the annual cost of Biden’s higher education plan within 10 years after implementation (Figure 1).
By limiting eligibility based on family income, the Biden free-college plan would be more targeted toward lower-income students and more racially equitable than a free-college plan that only covers tuition after financial aid is taken into account. Twenty-nine percent of the funding from the Biden plan would go to students in the bottom income quartile, compared to 13 percent if a less generous tuition-free program was adopted that only covers tuition after existing financial aid is taken into account. Biden’s plan would also distribute funds more proportionally by race than other types of free-college plans, though more targeted funding would still be needed to ensure that underrepresented students receive the same benefits as White students.
Making public colleges and universities tuition-free would likely motivate more students — especially those who once thought college was too expensive — to attend their local or state college. At the same time, students who were attending a selective private university might realize that they can get a similar education for free at their state’s flagship university. As a result of these free-college incentives, we project that undergraduate enrollment in higher education could increase by 4 to 8 percent overall and by 6 to 14 percent at public colleges and universities in particular.
By removing financial barriers to attending college, a national free-college program could lead to benefits beyond additional earnings and tax revenue. These would include improved public health, increased civic engagement, and declining authoritarian preferences and attitudes.
Free college isn’t really free, but its value will start to outweigh its costs within a decade. Of course, financial aid is not the only support that students need to finish college and successfully transition to the workforce. For free college to succeed in helping more students attain a degree accompanied by a good job and a promising career path, students will need access to stronger counseling and support services. Students and taxpayers alike would also benefit from increased transparency and accountability of student outcomes by program and institution.
For more information about the models, costs, and features of the major free-college proposals, see the upcoming October release from the Georgetown University Center on Education and the Workforce, The Dollars and Sense of Free College.
Dr. Carnevale is director and research professor and Dr. Sablan is a former assistant research professor at the Georgetown University Center on Education and the Workforce. CEW is an independent, nonprofit research and policy institute affiliated with the Georgetown McCourt School of Public Policy that studies the link between education, career qualifications, and workforce demands.