The U.S. Needs More Colleges
The idea of free college, one of the pillars of Bernie Sanders’ unsuccessful presidential bid, hasn't been discarded in the wake of the 2016 election. Just this week, New York Governor Andrew Cuomo released a plan to make all public colleges in that state free for residents whose families earn less than $125,000 a year.
The policy isn't all that radical. It’s actually pretty similar to what selective private schools such as Stanford and Harvard already do. At those schools, students from rich families subsidize those from more modest backgrounds (like mine). In New York’s case, a lot of the subsidy will also come from foreign students, who pay full sticker price.
Nor would Cuomo’s policy be likely to have a huge effect. Public university tuition is already fairly inexpensive for most students from low- and lower-middle-income backgrounds:
After adjusting for inflation, two-year public school tuition for low-income kids has risen only 4 percent since 1999. Tuition is probably already quite a bit lower than the opportunity cost of working less or not working at all during the college years (a cost that free college plans don’t address).
Making public schools even cheaper for lower-income kids isn’t a bad idea, but it does represent tinkering at the margins. And that tinkering doesn’t come free, of course -- colleges, now receiving more state money in the form of tuition waivers, will raise their sticker prices (though states sometimes try to address this with price caps). So in addition to the transfer of wealth from rich and foreign students to poor ones, there will be a transfer of taxpayer money to university administrators and professors.
More sweeping free college schemes at the national level would mean more such transfers. Free college, as an economist would tell you, isn’t actually free.
But there’s an even bigger limitation to the free college idea. As long as the number of available college spots remains roughly fixed, reducing the price of college will have only a very modest effect in creating broad-based economic opportunity.
In an unfettered market, spots at universities are rationed by price -- those who pay, get to go. But in a world of price controls, the limited supply of college education has to be rationed by some other mechanism. That mechanism, inevitably, is grades and test scores. Lower-income students who do well in high school -- such as me, once upon a time -- will get a free ride to a brighter future, while those who don’t put up the requisite numbers will be left to the dubious mercy of the high-school-only job market.
To me, that doesn’t seem like a huge improvement. Yes, students who get better grades generally get more out of college, since they tend to have a stronger educational ethic and to be smarter in the first place. But in today’s polarized job market, a nerd-ocracy seems only slightly more desirable than a plutoocracy. We should figure out a way to deliver a brighter future to the kids who don’t quite get a top SAT score.
My recommended solution is to focus on increasing the number of college spots available. Those could be four-year university slots, or vocational education -- a mix of both would probably be best. But the key is that supply should go up.
One way to do this is to make public schools expand their number of students they admit. A second way is to actually build new universities, especially in underserved areas of the country. My favorite idea is for the federal government to create a national university system, similar to those that exist in most other advanced countries. States could also get into the vocational education business, and increase the number of community colleges. But new four-year universities would have the added benefit of research, which could help struggling regions revitalize.
All these solutions would require hiring more professors, lecturers and administrators (though I think the latter should be kept to a minimum). Increasing the supply of college wouldn't be free. But compare that to tuition subsidies, which also cost money but don’t actually increase the number of college-educated Americans. The case for increased supply seems clear.
More supply would also help push down the sticker price of college, making it cheaper to subsidize tuition for the poor. Supply and demand don’t always work, but it seems reasonable to at least give it a try. Falling college enrollment means that demand for higher education is probably price-sensitive -- if we provide more openings, tuition will be driven down and enrollment might recover.
So instead of making college free, maybe it would be better to first focus on building more colleges instead.
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