Free College: This Country’s Best Investment in Its Own Future

Posted in: Education

One of the puzzling contradictions about higher education in America is that it continues to be a great individual investment even as it has become more and more difficult for individuals to afford. How is that possible?

Study after study shows that college is more than “worth it”—that is, the net-of-everything financial cost-benefit analysis shows strongly that the net present value of future earnings easily outstrips student costs (including debt and interest). At the same time, we know that student loan debt service is putting young people under increasing strain and causing them to delay or cancel life plans—marriage, children, home ownership, and so on.

This is a classic example of a timing problem. Eventually, everything will more than balance out for the young college graduate—not as well as it did for previous generations, but certainly better than it will for those who do not go to college. But eventually can be a very long time—much longer than it ever was before, and certainly long enough that it can seem to present an insurmountable barrier to today’s young people.

As a Baby Boomer, I find this both troubling and utterly strange. I came out of college debt-free, not because I was especially careful with money but because my father had died when I was a teenager, allowing me to receive Social Security survivor’s benefits. At the time, those benefits happened to be exactly equal to the tuition and fees for a highly selective college. Today, survivor’s benefits—even though they have been adjusted annually for inflation—would pay less than one-fourth of the expenses at my alma mater.

Is there a better way? Can we craft a careful approach to higher education that solves this problem without causing other, bigger problems? The answer is yes, and the solution is quite simple. Anyone who wants to attend college and is qualified to do so should not have to pay out of pocket at all. Yes, I will say it: free college!

The Objections to Free College: Moralism and More Moralism

With millions of young people (and their parents and extended families) faced with increasingly painful choices about whether they can afford to go to college at all, and how to pay for it if they decide that they can, politicians have taken notice. It is hardly a surprise that Senator Bernie Sanders’s strongest supporters are young people, because Sanders has the most aggressive plan to deal with student loan debt and to provide free college educations in the future.

That is not to say that Sanders’s fervent young fans are selfish; they are among those who are most committed to making sacrifices to save the planet, and they are deeply committed to advancing civil rights in a way that is not immediately in the self-interest of many of them. Even so, because they are living the nightmare of crushing educational debt, they are naturally excited by the idea that the system could be changed to allow them to have something resembling a normal life.

Proposals for free tuition and to reduce or eliminate debt, however, inevitably bump up against two related objections. One is purely moralistic, based on the idea that people should as a deep matter of personal ethics pay for what they receive and live up to their promises. The other is actually moralistic as well, but it is based on economic claims that providing free college (up front through a no-tuition system, or after the fact via debt forgiveness) creates bad incentives and gives benefits to the “wrong people.”

Here, interestingly, the “wrong people” argument is not racist or sexist or religiously bigoted. No, when economists and others argue that free college would benefit the wrong people, they are usually making a technocratic argument based on the ability to pay, which is a fundamentally left-liberal idea. Neoliberal thinkers recoil in horror at the idea that “everyone’s taxes” might be used to provide debt relief and zero-tuition education to “the children of the privileged.” Why, they ask, should tax revenues be used to provide an economic advantage to those who are already economically advantaged?

Having set up the argument as a tradeoff between the educated elite and everyone else, the moralistic tone becomes even more ponderous when we add in a picture of virtuous young college graduates who worked multiple jobs and forsook Spring Break and avocado toast so that they could build their own future. All hail the (few) perfect millennials!

Sarcasm aside, these arguments have infused the real-world debate about free or reduced tuition and debt relief. Earlier this summer, in “Who deserves free college? Nobody can agree on the qualifications,” a Washington Post reporter ran through the neoliberal arguments against free tuition and debt cancellation programs.

Notably, the article also quotes South Bend Mayor Pete Buttigieg, who spoke for the tepid incrementalists during the first presidential debate when he said: “I just don’t believe it makes sense for working-class families to subsidize tuition for billionaires. The children of the wealthiest of Americans can pay at least a little bit of tuition.”

The Case for Universal Benefits

The problem with neoliberals’ technocratic approach—crafting ability-to-pay criteria and other factors (such as residency requirements) to “optimize” the balance between costs and benefits—is that it is based on a reasonable premise run amok. If one believes that no lower-income person should ever pay even a dollar to help finance a benefit that might be used by a higher-income person, then everything that the government does will ultimately be tarred with the social opprobrium of being a “welfare program.”

This argument comes up frequently in the context of Social Security, which is one of the topics that I have studied in depth over the years. (See, for example, this academic article.) The argument from the neoliberals—which, I should be clear, is quite alluring (but quite wrong)—is that Social Security should be means-tested, because no one should expect “our taxes” to pay for Warren Buffett’s (or fill in the name of your favorite famous rich person) retirement benefits.

The problem with means-testing, again, is that people suspiciously view such an approach as evidence that the program is really designed to help poorer people. Social Security’s longstanding political success, by contrast, has depended on its being correctly seen as a universal program. Its design does in fact mean that the lifelong combination of taxes paid and benefits received will be progressive in the sense that the program redistributes from rich to poor (but only in a limited way that mildly compresses inequality without eliminating it), but it is very much a program that will—on purpose—also provide benefits for the richest people. Those benefits are capped and will not add up to much, but they do go to richer people.

And what about roads? Or public parks? Or national defense? Or fire prevention? Or the Centers for Disease Control? Or (and as a new Florida resident, this is particularly relevant to me) emergency management and weather forecasting?

All of those things are provided for free by the government and benefit wealthy people, too. Some of those programs necessarily benefit wealthy people more than non-wealthy people, simply because protecting property is going to be more valuable to people with more of it. Roads, too, are useful to people who have cars and can afford to drive them a lot.

The point is that nearly all of the things that government provides could be procured by private individuals, which means that providing them to richer people means giving them something that they could have afforded on their own. True, the net cost of providing things via the government is often much lower, simply because of the savings from large-scale purchasing and provision, but if one’s objection is what we might call “progressivism on steroids”—the weird variation of the ability-to-pay principle that holds that no rich person can benefit from public services at all—then it is not just Social Security or college education that would need to be effectively turned into welfare programs. Nearly everything would be.

And the larger point is that programs that the public thinks of as “welfare” are politically vulnerable, whereas programs thought to be universal are generally untouchable. When budget cuts come, the welfare programs are juicy targets for politicians.

The Case for Progressive Financing

But if everyone deserves free higher education, how do we pay for it? Sanders and Senator Elizabeth Warren each have a proposal to pay for their different plans (Sanders via a financial transactions tax, Warren with her tax on wealth in excess of $50 million), but the point is that these are both merely specific examples of progressive taxation.

Why does that matter? Because progressive redistribution does matter, and the public supports it. Even without the grotesque inequality that has re-emerged in the United States since (not coincidentally) the beginning of Ronald Reagan’s presidency more than a generation ago, Americans overwhelmingly support the idea that people should pay more in taxes as percentages of their income and wealth as they move up the ladder.

Indeed, I put the words “everyone’s taxes” in scare quotes earlier in this column when I described the objection to having government provide free tuition and debt relief to richer people. Why indeed should everyone’s taxes go up to support the already comfortable?

The answer is that the already comfortable will pay more in taxes as they benefit from the results of higher education. That, in fact, is a key feature of progressive taxation. As a person moves up in the world, they pay more to the government that provides the framework (contract laws, infrastructure, and so on) that makes their success possible.

So if a corporate lawyer’s daughter goes to college for free and ends up making a lot of money (because of that college education and because of the connections that her mother provides), she will pay back a lot of money to the government that made college available to her.

The point is that when the government provides people—all people—with benefits that cost money, it can collect the needed funds in a progressive way to pay for those expenses. Universalism at the front end need not mean universalism at the back.

“Everyone’s taxes” paying for rich people’s benefit? It will mostly be (as a matter of proportion) rich people’s taxes paying for their own benefits and those of the non-rich. Contra Buttigieg’s claim that “working-class families [would] subsidize tuition for billionaires,” billionaires would be subsidizing themselves, which is as it should be, and their taxes would help everyone else as well.

Moreover, this is not some anti-historical fantasy. Indeed, even during the years when I was able to attend a private college by using my Social Security survivor’s benefits to pay tuition, kids in California were still receiving an amazing education in that state’s extensive university system for only a tiny amount of money. Along with most states, California has subsequently moved away from that model, and that is a problem. Similarly, the university systems in the United Kingdom, Canada, Australia, and elsewhere have long been all but free—but they too are now falling increasingly under the neoliberal spell that has brought American college graduates such grief.

Overemphasizing Supposed Virtue Harms Everyone

Finally, what about that virtuous young person who toiled away and sacrificed, graduating without debt? As an initial matter, that person almost certainly benefited from scholarships and other indirect tuition reduction programs, which means that she did not “pay her way on her own.” Indeed, most universities’ full tuition does not cover the full cost, so this is not a matter of anyone paying full freight.

Even so, there are people who do more with less. What should we think about them? Should they not feel that if only they had known, they could have saved themselves a lot of effort and sacrifice?

I confess that I initially found this argument to carry a certain appeal. I could picture myself having that kind of bitter after-the-fact reaction. But this is where moralism meets realism, and we simply cannot base our public policies on the ultimately self-defeating realization that we should have adopted a good idea sooner than we did. That will always leave us frozen in place.

Interestingly, Senator Warren’s academic work addressed a similar issue in the context of bankruptcy law. She has said that she began her research confident in the belief that people who declare bankruptcy are morally deficient (my words, not hers) in the sense that they must be overspending and generally being irresponsible.

When she looked at the evidence, however, Warren found that people end up in bankruptcy almost always as a result of a medical crisis, losing their jobs, or (in the case of women) divorce. They were not, in other words, shiftless spendthrifts.

Now, Warren would surely concede that there are some people who are able to get through a medical crisis without declaring bankruptcy. And good for them. Maybe they were able to get help from family or an advance from a sympathetic boss. Maybe they simply gutted it out somehow.

But that is no reason now to say, “You know what? Some people are not ruined by high medical costs, so everyone who is destroyed by them should continue to suffer.” Yes, the people who helped others through a medical crisis might now say, “Gee, I wish this new program had existed back then,” but that is simply how change works. Using it as an excuse to do nothing elevates individual pique and resentment above social and economic progress.

The point is that higher education is very good for the people who benefit from it, but it is also good for everyone else. College is the ultimate “public good,” providing spillover effects that help the entire society. Making it free to attend and then recouping the money to pay for it through a progressive tax system is both smart and fair.

Posted in: Education

Tags: college, tuition