Free college in America is a bad idea. Just look at Europe
Even proponents of student debt relief will admit that it does not solve the central problem of crushing the costs of higher education. For that, debt cancellation proponents like Bernie Sanders and education economist Sue Dynarski have a long-term solution: free college.
They are right. If we’re going to increase the tax base to pay the nation’s students through debt cancellation, we might as well be more outspoken about it. Just be ready for the outcome. Not only would free college worsen the quality of America’s universities, currently the best in the world, and mean fewer resources for students, but it would also be more regressive and deepen inequalities compared to a system where students pay or take debts.
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.