Economics

Free College Tuition?

It’s one of Joe Biden’s ideas, but a look at other countries shows that taxpayers footing the bill doesn’t work all that well

Oxford University’s Oriel College. Image Credit: Chris Ratcliffe/Getty Images

President-elect Joe Biden wants public colleges and universities to abolish tuition for students with a family income below $125,000 a year. It may be one of his worst proposals.

The idea of sending kids to college “for free” has been on the wish list of progressive economists and political theorists for decades. They take their cue from countries around the world that already provide tuition-free college, but a close look at these examples shows that most “free college” systems are not free at all. What’s more, the countries that do offer free or almost-free tuition to attract more low-income students end up with a less equitable system. In addition, when colleges are more dependent on the government and less on customers, there’s a danger that the quality will suffer. There’s no reason to think a move toward free tuition in the U.S. wouldn’t fall into the same traps.

Most countries that claim to offer a free college education undermine that promise by levying a range of fees, or they charge some students tuition but not others. Inviting all comers to attend college for free is a very expensive proposition for governments and their taxpayers, so countries such as Ireland and France charge high, non-tuition fees for items such as registration, sports programs and campus transportation. Often, students also face stiff bills for room and board and books. This enables governments to maintain the pretense of free tuition while raising a steady stream of revenue from students.

Using a different strategy, countries such as Russia, Poland and Pakistan operate dual-track systems. Some enroll high-achieving students tuition-free while requiring others to pay the full freight for the same education. Lower-achieving students end up subsidizing the high achievers. In Russia this results in most students paying tuition even though the Russian constitution states that free higher education is guaranteed.

In reality, only a handful of countries provide a truly free college education for their citizens. These include Argentina, Cuba and the Nordic countries, but Sweden and Denmark charge tuition for international students, creating the beginning of a dual-track system.

Aside from how free a college really is, these systems often suffer from the same problems as other free or low-cost government services, such as health care and housing: restricted access and poor quality. Sir John Daniel, a former president of the Canada-based Commonwealth of Learning, described higher education systems as an iron triangle—cost, access and quality. Daniel noted that attempts to improve one of the components usually means damaging one or both of the others. No tuition, therefore, can lead to colleges admitting fewer students. This can be especially detrimental to low-income applicants if admission is determined by test scores or the ability to work the system through connections or an insider’s knowledge of how the process works.

No tuition can also hurt quality as colleges compete with other government services and obligations for funding. This chart displays data from 12 developed countries with well-regarded university systems and compares their QS Higher Education System Strength Rankings with the share of higher education costs covered by their government. The data show a negative correlation between higher shares of public funding and education quality. Although correlation does not necessarily mean causation, the data lend support to Daniel’s iron triangle theory.

Several studies on higher education systems clearly show the impact of changes in tuition on access and enrollment. Since the 1990s, Australia and England have changed their systems for funding higher education, leading to tuition increases. In both countries, enrollment has continued to rise even as tuition soars. In two decades England moved from charging no tuition to charging some of the highest tuition rates in the world.

Contrary to what proponents of free tuition would expect, England has not only seen greater enrollment, but also greater equity in higher education. One study found that England’s shift has led to more funding per head, rising enrollment and a narrowing of the participation gap between advantaged and disadvantaged students.

In contrast, the newly elected socialist government in Chile in 2014 pledged to phase in free tuition based on family income, with the goal of covering all students by 2020. One study, however, found that 20% of low-income students previously enrolled would now be denied admission because without colleges adding more seats, the higher demand from wealthier students was crowding out low-income ones. These students had been receiving financial aid, so the change didn’t help them and had the potential to only hurt them. Far from achieving increased affordability and accessibility, free tuition pushes college further out of reach for the poorest students, owing to the greater competition for placements.

Two European countries where higher education funding changed dramatically are Germany and Ireland. Before 2005, public universities in Germany were free, but after a constitutional ruling that year, seven of the 16 German states started charging tuition. The result: no significant change in enrollment in these seven states. Ireland abolished tuition in 1996 with the objective of enrolling more disadvantaged students in college. The policy failed: eliminating tuition did not make it easier for them to attend universities.

New York has also found that free tuition has not helped low-income students after it became the first U.S. state to offer four years of tuition at all public colleges. The program started in 2017 but it’s not taking new applications now because of the huge loss of state revenue during the pandemic.

Lower quality, a higher bar for getting admitted, more taxpayer money poured into already bloated college budgets. If Biden decides to push ahead with his plan for “free” tuition, he most likely won’t achieve his goals, and students may end up getting what they “paid” for.

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