April 13, 2023
The objective of universal social benefits provided without charge to all comers may be disparaged as radical and impractical, but the idea of the common school — a system of free, non-sectarian education open to all children — goes back to the founding of the United States.[1] The movement to establish such schools took off in the first half of the 19th century. However, it was primarily limited to elementary schools until the high school movement began in the early 20th century.
Separation of the inclusive K-12 component of US education from college and apprenticeship systems is arbitrary. If K-12 instruction ought to be universally available, there is no sound reason to stop short of post-secondary education (PSE).
If educational attainment is limited to elementary and high school for nearly half the US population, the workforce, and the people overall will be ill-equipped to reap the benefits of productivity, growth, and economic innovation that are sweeping the globe. The earnings premium enjoyed by college graduates would continue to be denied to a great share of young Americans.
Thomas Jefferson understood universal education as a requirement for an educated citizenry that would be qualified to govern itself. An educated citizenry was especially pressing because the American Revolution created a type of government that was novel for its time. Under a republic of representative democracy, as opposed to autocracy, there is a more significant premium on informed citizen participation. The social hazards of the current social media environment, awash in toxic misinformation, place an additional urgency behind expanding public education to include PSE.
In a 19th-century economy that was predominantly agricultural and dominated by slavery and its legacy, there was little connection between young people in typical households and universities’ elite student bodies, who attended school to join what passed for American aristocracy. Today, PSE is a prerequisite for intelligent citizenship and the availability of many professional careers.
A more productive economy implies a more highly-educated populace. Not incidentally, the demands of national economic growth and the urges of reformers bring to the surface the priority of including women and people of color in expanding public education.
Beyond the need for gender and racial inclusiveness, the accessibility of higher education, particularly in terms of required out-of-pocket costs, has implications for equality in terms of income and wealth. An inaccessible, narrow higher education system helps to reproduce existing disparities in class, gender, and race; these disparities reinforce the anti-democratic imbalances of political power in the US. Conversely, a robust system of PSE cleansed of the disparities plaguing public K-12 education holds the promise of advancing racial justice.
In general, the value of education is incontestable, though claims for its power to erase racial disparities altogether, especially in terms of wealth, need to be evaluated critically.[2] The underlying factors in structural racism, and its counterparts concerning gender, are not so easily remedied.
The struggle to extend the common school model waxes and wanes. There are efforts to contract it, striking at the heart of traditional public schools and demands to expand it. The greatest counter-movement was white families’ abandonment of public schools in the Southern states following the Supreme Court’s Brown vs. Board of Education ruling in 1954 prohibiting racial segregation in local public schools. Another was the campaign for school privatization that began in earnest around 1995.[3] Most recently, there has been a wave of attacks[4] on school boards for purportedly exaggerating concerns about racism, homophobia, and transphobia.[5]
US PSE enrollment growth began to reverse after 2010. There is also a concern about decreasing completion rates. The limited student loan relief implemented by the Biden Administration is at risk of Supreme Court termination. High levels of student loan indebtedness can slow enrollment, exacerbate failure to complete, and discourage re-enrollment. National progress towards growing, well-financed PSE is in question.
How would “free college” be likely to unfold? This paper defines free college as public, state government-based higher education systems — universities, colleges, and trade schools — where students pay nothing out of pocket for tuition. It is expected that such systems would take advantage of existing federal support for students.
Since the theme of this essay is the political feasibility of incremental progress towards free college, progress will depend to some extent on means testing. (The current free-college plan from Senator Bernie Sanders and Rep. Pramila Jayapal limits aid to families with annual incomes under $125,000.)
Without a doubt, there is the administrative expense associated with means testing that would ideally be dispensed with. Means testing is usually proposed ostensibly to reduce program costs, but in actual cost estimates, it typically does not save much money. The real motivation is political reservations about universality.
Facilitating zero tuition at private schools raises a raft of problems. Private colleges cannot and should not be free, though support for students in such institutions remains practical and relevant.
While the media is replete with stories of private-tuition sticker shock, in the public sphere the situation is quite different. The College Board reports that net of the assortment of financial aid that is currently available, community colleges, on average, are already free.[6] In other words, the net tuition and fees confronting students are already zero. Moreover, increasingly, states facilitate transfer to four-year institutions for those who have attained the two-year Associate’s Degree.
A democratic transformation of post-secondary education means restoring enrollment to its positive trend and eliminating tuition and fees at four-year public institutions.
This paper first describes the current array of subsidies for PSE, noting actual existing examples of free college. Next, it considers the extent of attendance and the financial burden of PSE. Finally, how to expand such support to achieve a desirable level of universal access in the context of public sector finance is discussed. As noted above, successful exit from PSE matters as much as entry into it.
The principal takeaways from this paper’s argument are:
For basic fairness and political tenability, any increased commitment to higher education must be matched by equivalent efforts to facilitate entry into well-paid occupations that do not require a college degree. Thus, making college free should be coupled with a robust apprenticeship system that provides instruction for those pursuing careers in skilled trades. Apprenticeships are left for a follow-up, though this paper will discuss community colleges and for-profit schools that offer such training.
Concern about entry to PSE must also consider a successful exit in terms of completion rates. The trend in completion has been anemic, and some characterize it as a crisis.[7] Stagnant completion levels could be worsened by dwindling and inadequate financial support.
An immediate objection to free college, or any significant expansion of the non-defense public sector, is the cost to public budgets, debt, and ultimately to taxpayers. The budget contexts at federal, state, and local levels are discussed later in this paper.
The details of public budgets are arcane to most people. The more common, popular objection is on fairness grounds. Those who have already paid for college education may claim it is unfair to exempt new students from personal costs.
The logical basis for this complaint is easily debunked. The implication is that any new policy that does not apply retroactively is unfair as long as there are people who would have benefitted from it in the past. On these grounds, few policy changes could ever be fair. A non-retroactive tax cut would be unfair because people who had previously paid the greater level of tax might not benefit. It is also incontestable that many who have completed their education effectively received subsidies of one sort or another. This history is as old as higher education itself.
Another leading objection originated in a famous criticism of student aid offered in 1987 by President Ronald Reagan’s Secretary of Education, William Bennett. His enduring criticism attributed rapidly growing tuition levels to “greedy colleges.”[8] The charge is that aid to students is absorbed in tuition increases, with neither any associated improvement in instruction nor in students’ financial well-being. Bennett’s claim has been the subject of extensive literature, discussed further below.
Finally, objections to any sort of higher education support are founded on crude anti-intellectualism, typified by a recent remark by Rep. Lauren Boebert implying that student debt relief amounts to the promotion of “lesbian dance theory” and other distasteful, “woke” components of the college curriculum.
As described in the following section, subsidies for PSE have been ubiquitous for decades. Expansion in different forms has occurred routinely. When assistance is focused on those of limited means, it tends to be disdained as welfare, though typically, the same criticism is not made when aid is provided to the middle class or to the wealthy.
The passage of time may obscure the substantial history of subsidies for college education in the US. It is common for those objecting to public benefits for others to fail to appreciate the benefits they have received. The political scientist Suzanne Mettler describes this as “the problem of the submerged state.”[9]
The founding of public universities required state government funds, the source of which was typically regressive state tax systems propping up a meager menu of public services and benefits. Private universities catering to elite families have relied on charitable contributions that are tax-advantaged since 1917.[10]
Public support for PSE took giant leaps after World War II with the Servicemen’s Readjustment Act of 1944, or “G.I. Bill”; the National Defense Education Act of 1958 (spurred by the Soviet Union’s successful launch of its Sputnik satellite), and the Higher Education Act of 1965. The latter made loans and grants available to a mass base of individual students.[11]
The G.I. Bill typified a US counterpart to what historians of Europe call les trentes glorieuses, in reference to the blooming of social democracy and economic recovery in Western Europe, especially France, in the three decades after World War II.[12] In the US and Europe, this golden age of increasing economic equality and prosperity, founded on rapid economic growth and an expanding public sector, seems to be receding in the rear-view mirror.
On top of the dawn of widespread past aid to students is the generational bias in the cost of PSE. It is commonplace that pursuing a college degree, required for entry into highly-paid professions, was much less expensive for the Baby Boom generation than it has become for subsequent generations.
In some notable cases, sufficient subsidies were applied to grind down tuition to zero. One storied example is the City University of New York.[13] Another was the extensive state system of California. In most other states, the tuition at public universities in the past was achingly low compared to current levels.
Free college, in the sense of heavily subsidized PSE, is also ubiquitous in the present. The Peterson Institute reported that 15 states and 350 local governments provide some type of free college.[14] Nor is free college confined to blue states. Indiana eliminates tuition to students in public institutions, subject to family income thresholds. Other states have reduced tuition in community colleges.[15] According to the Campaign for Free College, nine states have free-college-tuition programs with few eligibility restrictions, and another 23 have programs with income, merit, geographical or programmatic limitations.[16]
Fairness objections to free college flounder because most current and former college students already enjoy subsidies for PSE. Expansion of subsidies is a difference in degree, not in kind.
A tax expenditure is a provision of tax law that enables an individual or corporation to reduce its tax liability due to some particular circumstance that does not apply to all taxpayers. In this way, the federal government effectively spends billions annually to subsidize higher education for relatively well-off families through different offsets to federal income tax liability. By 2021, there were eleven such benefits for higher education.[17] Three of the largest in dollar terms are due to tax credits, tax exclusions, and qualified tuition programs.
Tax credits — reductions in income tax liability — are available for certain education expenditures, such as tuition. Tax exclusions include the exclusion of various forms of grants, scholarships, and tuition reductions from taxable income. In qualified tuition programs, taxpayers may set aside funds in anticipation of education expenses. The funds are tax-advantaged because their earnings are not subject to tax.
The Office of Management and Budget estimates that education-related tax credits cost $15 billion in 2022, income exclusions cost $6 billion, and qualified tuition programs cost $3 billion. Accounting conventions underlying such estimates may differ, and other analysts have estimated that education-related tax credits cost as much as $25 billion a year.[18] To some extent, tax expenditures for higher education entail cash payments to families that exceed actual tax liability —in federal budget accounting jargon, “outlay effects.” Education tax credits’ impact on enrollment, a leading justification for aid, is contested.[19]
One factor limiting the impact of tax credits on enrollment is their distributional bias in favor of middle-class families. Students in lower-income families who are more on the fence between enrolling and not enrolling would be more susceptible to a nudge from a usable tax credit.
Typically, tax units only realize the benefits of a tax provision after filing taxes in the year after paying for tuition and other allowable expenses. Those of limited means who cannot borrow ahead of their tax savings may be unable to benefit from such a program.
State and local governments have maintained long-standing support of public universities and community colleges. No one who has come through such systems can claim to have been denied public support. A more recent development has been the growth of state-level 529 plans. These schemes provide state income tax breaks to parents and other adults who save money for a child’s college education.
State government aid relative to student levels has declined since 1990.[20] Meanwhile, net tuition, compared to enrollment, rose steadily after 1990. In gross dollar terms, total state government spending grew roughly six percent annually from 1993 to 2008. After 2008, the rate of growth was less than four percent. Dean Heller of the American Council on Education estimates that state government outlays declined between 2001 and 2011 after adjusting for inflation.
Some state programs now cover all or nearly all out-of-pocket tuition costs. Tennessee’s program covers all out-of-pocket tuition costs for in-state resident students in public community college and two-year programs. Known as the Tennessee Promise, it was enacted in 2015. The Kalamazoo Promise in Michigan is a first-dollar program for families resident in the Kalamazoo, Michigan school district.[21] New York’s Excelsior Scholarship is a similar program, limited to families with annual incomes up to $125,000. Analysts at the Urban Institute have criticized the Excelsior Scholarship for providing inadequate benefits to low-income students.[22]
The most extensive program is the federal government’s Pell Grant, which is need-based. Annual outlays for the Pell Grant in 2021 were about $27 billion. Student loans are the other primary source of federal support. Presently some 43 million persons retain loan obligations incurred to finance PSE. Total debt is estimated at $1.6 trillion. The latter figure is an overstatement because a substantial share of outstanding debt will be subject to default. In addition, under proposed Biden Administration policies, a share of this debt could be officially forgiven. Defaulted debt is not a burden for individuals except to the extent of collateral financial damage. Insofar as income-based payments and limits on the lifespan of payments prevail, as under the Biden Administration policies, the implied foregone loan principal lost through default amounts to a grant by another name.[23] Classification of such a grant as taxable income would be financially stressful for many ex-students.
While state support has declined, it remains that, by many avenues, the sticker price of college overstates the financial burden on students and their families. Only about half of college students pay the list price—published tuition rates—for college. Further reductions in the burden on families are readily available without radical systemic changes.
Colleges are generally either two- or four-year degree-granting institutions, and public sector, private and non-profit, or private and for-profit. Figure 1 shows the proportions of these categories of enrollment in 2022.
Figure 1
From 1980 to 2020, US enrollment in degree-granting institutions (Figure 2) climbed from 10.5 million to 15.9 million, an increase of over 50 percent. Over this same period, the population of 15- to 24-year-olds hardly grew. From 1985 to 2015, the percentage of 18- to 24-year-olds enrolled in a four-year college rose from 27.8 to 40.5 percent.[24]
Figure 2
The share of women among students grew steadily after 1985. In 1970 it was less than half. Presently women outnumber men in every institutional category of PSE. By 2022, 60 percent of students were 18- to 24-year-olds, and 59 percent were women.
In 2022, 13 percent of enrollees were Black, 19 percent were Latinx, 7 percent were Asian, and 1 percent were Native American.[25] Since 2000, the percentage of Black and Hispanic 18- to 24-year-olds enrolled in college has increased significantly. Enrollment rates declined significantly among Pacific Islanders and Alaskan Natives.[26]
Figure 3
By the most recent, admittedly simple measures, the composition of enrollment by ethnicity and race corresponds to the population. The share of Hispanics enrolled in college is lower than the Hispanic share of all 18- to 24-year-olds. In a reparations framework, we would want the share of African-Americans enrolled in college to exceed the African-American share of young adults overall.
The most recent data for 2021 and 2022 can be misleading with respect to longer-term trends since the COVID-19 pandemic was associated with reductions in enrollment. From the spring of 2020, when the pandemic began, to the spring of 2022, college enrollment is said to have crashed. The decline over this period was approximately four percent, with losses concentrated among undergraduates seeking associate degrees, many of whom would have attended community college (public two-year institutions).
The enrollment decline in 2020-2022 pales in comparison to the halt in enrollment growth after 2010, as visible in Figure 2. After more or less continuous increases from 1985 forward, enrollment growth reversed, starting with declines in 2011 that continued through 2020. Over this period, the number of 15- to 24-year-olds, bracketing a high proportion of college students, decreased in absolute numbers by more than two percent so that the reversal could be associated to some extent with underlying demographics. The other noteworthy factor is the gradual labor market recovery after the Great Recession of 2007-2009. While not an especially rapid or robust recovery, improving job opportunities could have induced more people to opt for immediate earnings over going to school to boost their longer-term employment prospects. As in the 2020-2020 decline, the longer-term decline after the Great Recession was greatest among those seeking associate degrees in public, non-profit two-year colleges.
At the same time, changes in enrollment composition between 2019 and 2022 could signal the vulnerability of college access to increases in national economic distress. The prominent change in the ethnic and racial composition of enrollment is the increase in those identified as Hispanic, nearly doubling as a share of total enrollment, from 10.4 percent in 2002 to 19.5 percent in 2018.[27] Black enrollment increased marginally in percentage terms, with a decline in white enrollment absorbing most of the increases in other categories.
Evidence exists that college completion rates have declined. It would stand to reason that as enrollment grew, the proportion of relatively less-prepared students would grow. The burgeoning expense of college could also cause some to interrupt their education. Failure to complete is greatest among students receiving Pell Grants. In any case, the share of those completing their degree grew by much less than enrollment. David Deming’s recommendation for greater attention to remediation and mentoring services is on point.[28]
Since PSE is held to enhance lifetime earnings, and by implication, national productivity, it seems reasonable to strive for enrollment to climb by another 50 percent over the next forty years, which would mean another eight or ten million students. With no change in per-student costs, that would mean a 50-percent increase in public funding for PSE. Over forty years, that would come to annual compounded growth of roughly one percent.
At the same time, we could expect similar upward pressure on costs, aside from enrollment levels. With GDP growth typically exceeding two percent annually and labor productivity playing a central role, the de facto universalization of PSE is not wildly ambitious in economic terms. The expansion of PSE should increase productivity and GDP growth. As usual, politics would be a different matter.
Tuition is the “sticker price” of college for prospective students and their families, but the costs incurred by colleges typically exceed its sticker price, while what students pay is often less than that price. Colleges receive revenue from other sources that enable them to reduce average tuition below their costs. Selected students have the benefit of discounted tuition. When we speak of cost in this section, we refer to the “production cost” of educational institutions providing whatever services they provide, gross of subsidies or other outside support. From this base, we can consider trends and the sources of growth.
A basic distinction is between current costs of instruction — personnel, the depreciation of physical plant, materials consumed in the course of teaching — and the costs of administration, wrap-around services (restaurants, recreational facilities, cultural activities), and long-lived investment in structures and other durable capital assets.
As mentioned previously, the classic assault on colleges began during the administration of Ronald Reagan. In 1987, his Secretary of Education, William Bennett, accused schools of taking undue advantage of aid to students by swallowing growing aid into equally growing tuition, with no improvement in services provided.[29] His explanation for this growth was a vague “lack of focus and purpose,” facilitated by an absence of accountability.
Bennett tried to justify the Administration’s policy on loan programs on the grounds that a “market-based interest rate” would incentivize students to select schools more carefully. Of course, lesser aid levels ought to foster no less discriminating choices in light of the vast number of potential schools available. Presumably, invoking the word market was hoped to connote enhanced efficiency in students’ choices.
Dean Heller’s review of the empirical literature on the relationship between student aid and tuition finds a lack of evidence for large effects and mixed evidence for small effects.[30] The most likely location of impact is in private, for-profit institutions.
As noted above, colleges and their students received a wide variety of financial supports, not all of which necessarily would have the same effect on tuition, or any effect at all, for that matter.
Robert Archibald and David Feldman[31] highlight three leading causes of cost growth: 1) general “cost disease” afflicting the service sector as a whole; 2) particular growth in the compensation commanded by highly educated college workers, chiefly research scientists and professors; and 3) rising quality standards in PSE.
Cost Disease: The cost-disease notion goes back to the work of William Baumol, who pointed out that faster productivity growth in manufacturing relative to services pushes up costs per unit of output in the service sector. Service industries must compete with manufacturing for equally skilled labor. However, given the nature of services, these workers cannot increase productivity or reduce output costs as rapidly as workers in the manufacturing sector.
The classic example is that now, as it was a hundred years ago, it still requires one orchestra to perform a Beethoven symphony. Many service outputs, such as haircuts, require no fewer workers than they did years ago. Cost disease particularly afflicts public services provided without charge to the immediate consumer, implying less market pressure on prices. Figure 4 shows the contrast in the growth of prices for goods versus services, and Figure 5 shows the particular growth in higher education compared to other selected categories.
Figure 4
Figure 5
Highly Educated Workers: Cost disease applies with a vengeance to highly educated professionals who may qualify for very high compensation outside of academia. As noted above, Figure 5 shows price changes for individual expenditures. While the trend for higher education understates the cost of higher education — workers in PSE can command higher salaries outside PSE — the premiums for physicians and legal services compared to essential household spending items point to faster growth at the higher end of the salary scale.
PSE Quality Standards: Experts will command higher compensation as the standards of expertise in particular fields continuously increase. For instance, in 2022, a university would not be content with a professor teaching the same curriculum that prevailed twenty years ago in their field.
Other potential causes of rapid cost growth include administrative bloat, expanded wrap-around services, and federal student subsidies. A higher subsidy for students could be swallowed into the tuition they face without changing the quality of instruction received or the cost of providing that instruction.
It is helpful to consider financing in three separate categories:
First, public funds that institutions use to provide tuition discounts for students.
Second, tuition defrayments that institutions award to individual students—typically grants and scholarships that reduce students’ net costs (“out-of-pocket tuition”). Payments to students that reduce out-of-pocket tuition are called last-dollar programs. Aid in this category is limited to tuition charged to the student. Payments to students that are applied irrespective of grants or scholarships are called first-dollar programs. Money under first-dollar auspices left over after tuition is paid may be used by the student for living expenses. Benefits that fully cover tuition and living expenses have been called “debt-free” programs since they eliminate the need to borrow to attend college. Of course, a family with the resources to cover all costs need not take on any additional debt. In this case, such a program is more aptly seen as a wealth transfer.
Third, student loan debt held by former students. Legacy debt is outside the scope of this paper, though its impact on enrollment and completion going forward remains salient.
As noted previously, a change in subsidies in any of these categories may or may not flow through to the student or affect tuition rates. Aid that is swallowed in tuition hikes need not finance improvements in instruction. They may simply increase an institution’s bottom line. In the case of for-profit colleges, this means its principal executives and others with ownership stakes benefit. Even in non-profit institutions, an increase in resources may redound to the benefit of its top officials, prestigious professors, and football and basketball coaches in the form of very high salaries and other perks.
Subsidies that benefit current or prospective students may not affect the financial status or behavior of ex-students. However, such benefits could affect the interests of ex-students in re-enrollment. The converse is more conceivable. Expectations of future debt burdens could affect the enrollment decisions of prospective and current students.
Erasing pre-existing debt is no less an issue of wealth redistribution than of education policy. On the latter count, a substantial amount of debt is held by ex-students who failed to complete degrees and who might return to school under more favorable personal financial circumstances. Others might choose to supplement their credentials with further education attainment. Hence, legacy debt remains an element of PSE policy.
This paper has focused on free college in terms of reducing tuition and fees going forward. For the sake of expanding enrollment and completion, debt relief is also relevant, although not a focus of this paper. Relief can encourage current students to stay the course and open the way to re-enrollment for those debtors who failed to complete their studies. In August 2022, the Biden Administration announced a student debt relief plan for student loan borrowers in families earning less than $125,000 a year.[32] The plan forgives up to $20,000 of student loan debt for most borrowers. For borrowers who have not received Pell Grants, about 40 percent of all borrowers, the amount forgiven is capped at $10,000. In February 2023, the Supreme Court heard arguments in two cases challenging the plan. The Court is likely to issue a decision by June 2023. The Congressional Budget Office estimated that a total of $430 billion of debt would be canceled out of a total of $1.6 trillion held by 35 million persons.[33] About fifteen million borrowers will come away debt-free. It should be noted that the $430 billion pertains to a forty-year time frame, not as is customary in Federal budget analysis, to a single fiscal year or even ten years.[34]
Two countervailing factors should be considered in considering the costs of any aid system. First, an expansion of any program could replace outlays in related programs. Second, increased educational attainment increases students’ lifetime earnings and, consequently, their tax liabilities. The “sticker price” of any aid program or program expansion in these respects is an upper bound of long-term cost.
Of course, take-up rates and costs can be underestimated. Increased aid could attract additional students and increase costs. Some cost estimates fail to consider enrollment growth, while most ignore the earnings and tax payment effects. The latter neglect of ‘supply-side’ benefits, in contrast to the treatment of tax cuts, is a common bias in the analysis of public spending.
Here are some current leading proposals for tuition assistance.
The American Families Plan.[35] The sponsor was the Biden Administration. It provided free tuition at community colleges, historically black colleges, and tribal colleges for families earning up to $125,000 a year, among other PSE initiatives. The cost was estimated at $306 billion over ten years.[36] In its current budget proposal, the Administration proposes more limited additions to funding to reduce tuition costs.[37]
The College for All Act.[38] Sponsors are Senator Bernie Sanders and Rep. Pramila Jayapal. The focus is on public universities for families earning less than $125,000 annually. The bill would eliminate tuition and fees and increase Pell Grants for eligible students. A tax on stock transactions fully funds the total cost of $2.2 trillion over ten years. (In 2020, Sanders and Senator Elizabeth Warren proposed debt-free schemes.) As such, the College for All Act entails no increase in budget deficits.
America’s College Promise Act.[39] Originally proposed by the Obama Administration, its most recent sponsors are Senators Tammy Baldwin and Patty Murray and Reps. Bobby Scott and Andy Levin. CBO estimated this plan at $59 billion over ten years.
Higher Education Matching Grant.[40] Under the auspices of the Hamilton Project and the Brookings Institution, David Deming proposed a new federal grant to state governments that would match state spending for instruction in public institutions on a one-to-one basis up to $5,000 per student. The idea is to expand resources for instruction without additional cost to the student or institution, emphasizing services aimed at increasing completion rates. Depending on behavioral impacts, the program’s annual cost ranged from $39 to $43 billion.
Treating aid for PSE like Medicaid has a number of virtues.
A moment’s thought reveals the impracticality of making private college free. On average, tuition at private colleges is nearly four times higher than at public ones. At the same time, some elite private colleges have amassed huge endowments that could finance free tuition at their choosing. The idea of a flat grant to individuals that can be applied to tuition is more politically tenable. It could be means-tested, either directly — at some administrative cost — or indirectly, by being classified as taxable income. The grant could be pitched at the average cost of tuition in the public systems.
The centrality of state government in this context stems from the current logjam in current federal policy. By contrast, as noted above, states have already made separate, uneven progress toward free college as defined in this paper. While a complete national reform would be preferable, piecemeal state reforms are more within reach politically. If free-college advocates reject the path of incremental reform, they may deal themselves out of practical support for free college.
The headline cost of free college programs to the federal budget runs well under $100 billion a year.[41] In fiscal year 2022, total federal outlays are estimated at $5.9 trillion. Hence the incremental percentage increase in outlays would be no more than 2 percent. How seriously should we take an incremental increase in outlays of 2 percent? In 2019, before the pandemic, the federal budget deficit was $984 billion. Adding free college would have increased it by less than 10 percent.
Moreover, any such increase is likely an upper bound for cost in two respects. First, an extensive, new program would offset other costs in the federal budget related to higher education. Second, educational attainment is usually found to increase lifetime earnings, and higher earnings imply higher-than-otherwise tax liability to both federal and state governments. To some extent, any increase in support pays for itself, at least in part. Some estimates have programs paying for themselves within a decade.[42] Non-defense domestic spending can have a positive, “supply-side” impact that is routinely ignored in federal budget accounting.
Naturally, clamors for free college ought to be welcomed everywhere, but such uprisings cannot be conjured out of thin air. Incremental expansion of existing efforts is most likely at the state level. Victories in a state heighten pressure on neighbors to follow suit. We would like state governments to compete in these terms.
The advantage of proceeding this way is that gains can be made without national coordination. Advances can be achieved in individual states by taking advantage of local political opportunities. There is no “all-or-nothing” constraint.
Success in such endeavors makes more plausible a sweeping, national reform in keeping with the Sanders/Jayapal model, following the “laboratories of federalism” history in such fields as social insurance. On the other hand, insistence on a single, national approach and rejection of anything short of that effectively puts advocacy outside the bounds of state politics and perhaps ordinary national politics.
A decentralized, state-based approach would not be well-suited to addressing currently existing, outstanding student debt. In that case, federal reform is required.
There is always competition for resources in state budgets. As noted above, all other state government spending categories suffer from a competitive disadvantage compared to matching rates for Medicaid spending. The matching grant approach described above would put PSE spending on a level playing field.
At the same time, most state tax systems are regressive. As such, they present opportunities for revenue growth through progressive tax reform. States with progressive tax systems, such as California and New York, can tax many high-net-worth families who can easily afford higher taxes. Even recognizing the reality of state governments’ budget constraints, finance is not an economic obstacle to free college.
“A Bill for the More General Diffusion of Knowledge, 18 June 1779,” Founders Online, National Archives, https://founders.archives.gov/documents/Jefferson/01-02-02-0132-0004-0079. [Original source: The Papers of Thomas Jefferson, vol. 2, 1777 – 18 June 1779, ed. Julian P. Boyd. Princeton: Princeton University Press, 1950, pp. 526–535.]
“What Is Free College and How Much Would It Cost?” Peter G. Peterson Foundation, July 15, 2021. https://www.pgpf.org/blog/2022/06/what-is-free-college-and-how-much-would-it-cost.
“What's in President Biden's American Families Plan?” Committee for a Responsible Federal Budget (blog), April 28, 2021. https://www.crfb.org/blogs/whats-president-bidens-american-families-plan.
Archibald, Robert B. and David H. Feldman, “Drivers of the Rising Price of a College Education,” Policy Report, Midwestern Higher Education Compact, August 2018.
Archibald, Robert B. and David H. Feldman. Why Does College Cost So Much? Oxford University Press, 2011.
Arnsberger, Paul, Melissa Ludlum, Margaret Riley, and Mark Stanton. "A history of the tax-exempt sector: An SOI perspective." Statistics of Income Bulletin 27, no. 3 (2008): 105-35.
Baker, Dean, “Student Loan Forgiveness and Really Big Number Syndrome,” Center for Economic and Policy Research, September 27, 2022. https://cepr.net/student-loan-forgiveness-and-really-big-number-syndrome/
Bennett, William, J. “Opinion: Our Greedy Colleges.” The New York Times, February 18, 1987, sec. Section A. https://www.nytimes.com/1987/02/18/opinion/our-greedy-colleges.html.
Carnevale, Anthony P., Jenna R. Sablan, Artem Gulish, Michael C. Quinn, and Gayle Cinquegrani. "The Dollars and Sense of Free College." Georgetown University Center on Education and the Workforce (2020).
Congress.gov. “H.R.2861 – 117th Congress (2021-2022): America’s College Promise Act of 2021.” April 28, 2021.https://www.congress.gov/bill/117th-congress/house-bill/2861
Congress.gov. “S.R.1288 – 117th Congress (2021-2022): College for All Act of 2021.” April 21, 2021. https://www.congress.gov/bill/117th-congress/senate-bill/1288.
Congressional Budget Office. Costs of Suspending Student Loan Payments and Canceling Debt. Author(s) Phillip Swagel. Washington D.C.: GPO, 2022. https://www.cbo.gov/publication/58494 (Accessed 03/28/2023)
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Deming, David J., “Increasing College Completion with a Federal Higher Education Matching Grant,” The Hamilton Project, Policy Proposal 2017-03, April 2017.
Dickler, Jessica. “Free College Is Now a Reality in Nearly 30 States.” CNBC, April 8, 2022. https://www.cnbc.com/2022/04/08/free-college-is-now-a-reality-in-nearly-30-states.html.
Gorman, Linda. “Who Benefits from Federal Tax Credits for Higher Education?” The Digest. No 4. National Bureau of Economic Research, April 2015. https://www.nber.org/digest/apr15/who-benefits-federal-tax-credits-higher-education.
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[1]“A Bill for the More General Diffusion of Knowledge, 18 June 1779,” Founders Online, National Archives, https://founders.archives.gov/documents/Jefferson/01-02-02-0132-0004-0079. [Original source: The Papers of Thomas Jefferson, vol. 2, 1777 – 18 June 1779, ed. Julian P. Boyd. Princeton: Princeton University Press, 1950, pp. 526–535.]
[2] Hamilton, Darrick, and William A. Darity. "The political economy of education, financial literacy, and the racial wealth gap." (2017): 59-76.
[3] Richards, Craig, Rima Shore, and Max B. Sawicky. "Risky Business: Private Management of Public Schools." (1996).
[4] Rogers, J. & Kahne, J. with Ishimoto, M., Kwako, A., Stern, S.C., Bingener, C., Raphael, L., Alkam, S., & Conde, Y. (2022). Educating for a Diverse Democracy: The Chilling Role of Political Conflict in Blue, Purple, and Red Communities. Los Angeles, CA: UCLA’s Institute for Democracy, Education, and Access.
[5] Sawicky, Max B. “How the Critical Race Theory Scare-Mongering Failed in Virginia.” The New Republic, August 30, 2021. https://newrepublic.com/article/163467/critical-race-theory-loudoun-county.
[6] Ma, Jennifer and Matea Pender. Trends in College Pricing and Student Aid, 2022. College Board, 2022. https://research.collegeboard.org/media/pdf/trends-in-college-pricing-student-aid-2022.pdf
[7] Deming, David J., “Increasing College Completion with a Federal Higher Education Matching Grant,” The Hamilton Project, Policy Proposal 2017-03, April 2017.
[8] Bennett, William, J. “Opinion: Our Greedy Colleges.” The New York Times, February 18, 1987, sec. Section A. https://www.nytimes.com/1987/02/18/opinion/our-greedy-colleges.html.
[9] Mettler, Suzanne. The submerged state: How invisible government policies undermine American democracy. University of chicago Press, 2011.
[10] Arnsberger, Paul, Melissa Ludlum, Margaret Riley, and Mark Stanton. "A history of the tax-exempt sector: An SOI perspective." Statistics of Income Bulletin 27, no. 3 (2008): 105-35.
[11] Heller, Dean E., “Does Federal Financial Aid Drive Up College Prices,” American Council on Education, 2013.
[12] Judt, Tony. Postwar: A history of Europe since 1945. Penguin, 2006.
[13] Sherwin, Amanda. “Could CUNY Be Tuition Free Again.” Gotham Gazette. 2016. https://www.gothamgazette.com/topics-newestopinions/6444-could-cuny-be-tuition-free-again.
[14] “What Is Free College and How Much Would It Cost?” Peter G. Peterson Foundation, July 15, 2021. https://www.pgpf.org/blog/2022/06/what-is-free-college-and-how-much-would-it-cost.
[15] Helhoski , Anna, and Colin Beresford. “States with Free College Programs.” NerdWallet, March 8, 2022. https://www.nerdwallet.com/article/loans/student-loans/tuition-free-college.
[16] Dickler, Jessica. “Free College Is Now a Reality in Nearly 30 States.” CNBC, April 8, 2022. https://www.cnbc.com/2022/04/08/free-college-is-now-a-reality-in-nearly-30-states.html.
[17] Crandall-Hollick, Margot L., “Higher Education Tax Benefits: Brief Overview and Budgetary Effects, Congressional Research Service, R41967, May 26, 2021.
[18] Crandall-Hollick, 2021.
[19] Gorman, Linda. “Who Benefits from Federal Tax Credits for Higher Education?” The Digest. No 4. National Bureau of Economic Research, April 2015. https://www.nber.org/digest/apr15/who-benefits-federal-tax-credits-higher-education.
[20] Archibald, Robert B. and David H. Feldman. Why Does College Cost So Much? Oxford University Press, 2011.; Archibald, Robert B. and David H. Feldman, “Drivers of the Rising Price of a College Education,” Policy Report, Midwestern Higher Education Compact, August 2018.
[21] Peter Peterson Foundation, 2022.
[22] Scott-Clayton, Judith, C. J. Libassi, and Daniel Sparks. "The Fine Print on Free College: Who Benefits from New York's Excelsior Scholarship? An Essay for the Learning Curve." Urban Institute (2022).
[23] Looney, Adam, “Biden’s Income-Driven Repayment plan would turn student loans into untargeted grants,” The Brookings Institution, September 15, 2022.
[24] Deming, 2017.
[25] Hanson, Melanie. “College Enrollment & Student Demographic Statistics” EducationData.org, July 26, 2022, https://educationdata.org/college-enrollment-statistics
[26] Hussar, Bill, Jijun Zhang, Sarah Hein, Ke Wang, Ashley Roberts, Jiashan Cui, Mary Smith, Farrah Bullock Mann, Amy Barmer, and Rita Dilig. “Chapter 2 Postsecondary Education.” Essay. In The Condition of Education 2020. (NCES 2020-144), 120–41. Washington, DC: National Center for Education Statistics, 2020. https://nces.ed.gov/programs/coe/pdf/coe_cpb.pdf.
[27] Hanson 2022
[28] Deming, 2017.
[29] Bennett 1987
[30]
[31] Archibald, Robert, & Feldman 2018
[32] Rubin, Gabriel T. and Julia Carpenter, “Student-Loan Forgiveness: What to Know About Biden’s Plan and the Supreme Court Case: President’s debt cancellation proposal faces legal challenges,” The Wall Street Journal, February 28, 2023. https://www.wsj.com/articles/bidens-student-loan-forgiveness-plan-who-qualifies-and-how-much-debt-will-be-canceled-11661362340
[33] Congressional Budget Office. Costs of Suspending Student Loan Payments and Canceling Debt. Author(s) Phillip Swagel. Washington D.C.: GPO, 2022. https://www.cbo.gov/publication/58494 (Accessed 03/28/2023)
[34] Baker, Dean, “Student Loan Forgiveness and Really Big Number Syndrome,” Center for Economic and Policy Research, September 27, 2022. https://cepr.net/student-loan-forgiveness-and-really-big-number-syndrome/
[35] The White House, “FACT SHEET: The American Families Plan, April 28, 2021, https://www.whitehouse.gov/briefing-room/statements-releases/2021/04/28/fact-sheet-the-american-families-plan/
[36] “What's in President Biden's American Families Plan?” Committee for a Responsible Federal Budget (blog), April 28, 2021. https://www.crfb.org/blogs/whats-president-bidens-american-families-plan.
[37] Office of Budget and Management. (2023). Budget of the U.S. Government Fiscal Year 2024. U.S. Government Publishing Office. https://www.whitehouse.gov/wp-content/uploads/2023/03/budget_fy2024.pdf
[38] Congress.gov. “S.R.1288 – 117th Congress (2021-2022): College for All Act of 2021.” April 21, 2021. https://www.congress.gov/bill/117th-congress/senate-bill/1288.
[39] Congress.gov. “H.R.2861 – 117th Congress (2021-2022): America’s College Promise Act of 2021.” April 28, 2021.https://www.congress.gov/bill/117th-congress/house-bill/2861
[40] Deming 2017
[41] Peterson Foundation 2022
[42] Carnevale, Anthony P., Jenna R. Sablan, Artem Gulish, Michael C. Quinn, and Gayle Cinquegrani. "The Dollars and Sense of Free College." Georgetown University Center on Education and the Workforce (2020).
