Free college, like universal health care, is one of those things that exists in Europe that Americans love to idealize. In Europe, most universities are public and France, Germany, Sweden and Scotland do not charge fees to domestic students. But like health care, nothing is ever truly free. Free college is paid for with taxpayers’ money, which is always in short supply, often resulting in substandard services in the form of overcrowded classrooms and crumbling buildings. It’s common to scoff at the lavish facilities on American college campuses, but much of the spending on students is valuable. Rising spending per student is one of the main reasons why UK and US universities dominate global rankings.
Limited resources also mean rationing. And when capacity is limited, places tend to go to students from high-income families. They get better secondary education and appear more qualified when it comes to admissions to competitive schools. In Germany, about three-quarters of adult university graduates send their children to university, while only 25% of adults without a degree have children at university.
The figure below shows the share of the population (25 years and over) with a bachelor’s degree (or equivalent) in different countries between 2016 and 2020. Countries that offer free or very cheap university education have higher rates of graduation much lower than the higher cost US. and United Kingdom.
Maybe lower graduation rates would be good, because it seems like too many people are going to college anyway. But free university does not mean more vocational training. Germany briefly charged fees starting in 2006. But after much protest, it reverted to free university in 2014. Once the fees were removed, more students went to university, resulting in reduced the number of students enrolled in vocational schools.
The UK also offers a useful case study. Until 1998, the university was free for English students. At first, fees were modest, but they now exceed £9,000 a year (usually around $12,000 – more than many state schools in the US), which are funded by loans that graduates repay according to their income when they start working. One study found that imposing fees led to an increase in the number of students attending university; it narrowed the participation gap between students from high-income and low-income families and more resources were expended per student.
Meanwhile, Scotland has become free for Scottish and EU students (until the UK leaves the EU). A study by Lucy Hunter Blackburn from the University of Edinburgh finds that many low-income Scottish students ended up in more debt than their English peers because they had to get loans to pay for their living expenses. Until 2016, English students from low-income families could also get grants to pay for their living expenses (now living expenses are also covered by loans) while Scottish students had to take out loans or count on their family. She concludes that free tuition fees in Scotland represented a transfer of £20 million (at the time, $30.9 million) from low-income to high-income families. And while enrollment of students from low-income families has increased across the UK over the past 25 years, England has seen greater growth despite tuition fees.
Based on the European experience, free university is not the solution to finance education if we want a system that reduces inequalities and leaves students with little debt.
Free college may look different in the United States due to the large network of private institutions. We could limit free tuition to public universities and let private schools like Harvard and smaller liberal arts colleges continue to charge fees. In some ways, it would improve the education system — chances are that many private colleges, especially low-value ones, would close because fewer students would be willing to pay fees when they have a free option.
The only surviving private universities would have to offer very high value or have very large endowments. But fewer colleges leave fewer places for students overall, and even more competition for the few places available in high-quality public schools – especially for students who are barely qualified now, but end up benefiting of their education through much higher lifetime earnings. When it comes to completing and valuing education, Dynarski stresses that the quality of the school is what matters. Yet free college undermines quality because it means less spending per student and does not necessarily lead to higher completion rates.
Free college at public universities risks further entrenching inequality by worsening what is already a two-tier system in American higher education. Inequality will only be exacerbated if the high cost of free public education means there is less government money to subsidize loans to low-income students who want to attend good quality private schools that still charge fees. tuition.
One of the advantages of college for students from low-income families is the exposure they get to students from more advantaged backgrounds. A more disparate two-tier system undermines this process and further isolates our economy and our society.
The US higher education system, which charges fees and offers need-based aid and loans, is clumsy and often unnecessary. There needs to be more control over wasteful spending, tuition inflation, the way loans are structured, and schools that offer no value.
But the current system largely works and is better than most other countries. The overwhelming majority of college graduates are rewarded with higher lifetime earnings, and many Americans go to college. Going to free college would mean that students would still have a lot of debt to pay their living expenses and the quality of public education would decline. The best solution is to reform student loans and keep college fees.
More other writers at Bloomberg Opinion:
Five financial tips for new university students: Teresa Ghilarducci
Get a prenup before paying your spouse’s student loan: Erin Lowry
Tuition fees are too high but not increasing: Matthew Yglesias
This column does not necessarily reflect the opinion of the Editorial Board or of Bloomberg LP and its owners.
Allison Schrager is a Bloomberg Opinion columnist covering the economy. A senior fellow at the Manhattan Institute, she is the author of “An Economist Walks Into a Brothel: And Other Unexpected Places to Understand Risk”.
More stories like this are available at bloomberg.com/opinion