Free college tuition is a lovely, but dangerous idea

"Free college tuition" is rapidly becoming a rallying cry in the permanent presidential campaign which now drives all policy discussions. It is easy to understand why. Tuition and fees in both the public and private sectors of higher education have been climbing much more rapidly than inflation and family income for over four decades. Even families well up in the middle class are finding the cost of higher education increasingly prohibitive, greatly limiting educational choice and opportunity. Higher education debt has become one of the largest debt categories for individuals and families, and is negatively impacting career choices, initial home ownership, automobile purchases, etc. The heart of the American Dream- educational and economic mobility-is threatened. 

This issue of educational and economic mobility is indeed critical,and deserves to be at the center of  serious policy discussions. The problem is that free college tuition,as catchy and simple and attractive as the idea is, is not a viable solution to that problem in any proposal that I have seen.

Many objections have been raised to the goal of free tuition, but I would like to focus here on one simple objection: economic reality. The stumbling block is the conveniently ignored difference between price and cost.

Tuition is of course, the price charged to the student for the product of education. Existing proposals for free tuition do not address the cost of producing the education, other than to say that the government (state and national) will cover the cost so that students see a price of zero. But who determines the cost that the government must cover? The colleges - the same colleges that have increased tuition at roughly twice the rate of inflation over four decades. "Free tuition" simply removes the admittedly weak brake provided by push-back from students and parents outraged by these steady increases.

Thus free tuition alone is a recipe for bankrupting governments rather than parents and students- recall that tuition increases over the past few decades have outdistanced increases in health costs and we know what that is doing to government budgets! A sustainable free tuition approach will require an offsetting program of cost control of production of the education.  But what is the cost of production of the education? Higher education institutions have concealed the true cost of education for so long (for both good and bad reasons) that status quo definitions have taken on a certitude that makes them virtually unchallengeable within the academy.

I discussed some of the issues involved in calculating true educational cost in a previous post Cost allocation in the research university. We in higher education use a budgeting form called fund (sources of revenue) accounting rather than the more common cost (where spent) accounting, and as a consequence we have little or no data that helps us to understand the cost of a specific activity. The underlying difficulty is that colleges and universities typically have multiple missions, e.g. education, research, community service, business outreach. Many of these very worthwhile missions (including the very costly area of research) do not have associated revenue streams sufficient to cover costs, which must therefore be covered elsewhere in the budget. Since the education fund typically has the largest revenue  (either from tuition or state allocation), this is a great place to look for needed resources. As a consequence, over the years we have created certain fictions for public consumption regarding the importance of these other missions for the educational mission - with essentially no educational outcomes data that support these claims.  We just need a rationale the educational fund to support these other meritorious but underfunded missions. The analysis in the linked post above suggests that a very large fraction of what is publicly described as "cost of education" is in fact cost sharing for these other missions.

Thus, for "free tuition" to actually be sustainable, there would have to be major changes in relationship between educational institutions and their funders. Detailed studies would need to be carried out to determine what activities of the college actually contribute to educational outcomes, with only those being attributed to "cost of education". As a consequence, funders then would have to come to grips with the reality that some potentially very important non-educational programs are currently underfunded, and consciously prioritize and appropriately fund those programs.  In a rational world, funders would also need to have data showing that the programs they were supporting were using the most effective pedagogy for the most efficient learning, and had appropriate support services to minimize costly drop-outs, etc. All sounds unlikely to me!

Comments

[Richard Featherstone]

Good point Dr. Armstrong. Another problem is that most people assume that a free tuition system will allow them to make choices on what school to attend. But when the state and/or national government foots the bill, they will inevitably tell you where to go. It's good to read a blog post from you again.