Commentaries
Free College for All Is Not the Best Way to Expand Access

By Eric Johnson

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October 02, 2015

Access to higher education has emerged as a major campaign issue this year—a heartening development. But the proposals for free or debt-free college being touted by Hillary Clinton and Bernie Sanders fail to address some of the biggest problems in higher education access.

College is already free for a great many students. Tuition and fees at most community colleges are low enough to be covered by federal Pell Grants and other forms of aid for low-income students, and many of the country’s best public and private universities offer generous support to families of modest means. In fact, many lower- and middle-income families pay very little to attend prestigious schools such as Duke, Davidson, or the University of North Carolina at Chapel Hill. 

Even students from prosperous families are given a break at universities with large endowments, both public and private. Some schools offer financial aid to families with incomes well into the six-figure range.

So when politicians promise free or debt-free college for all, they are likely suggesting greater subsidies for the families that are least in need of help. While this has undeniable political appeal, creating a new entitlement for middle- and upper-income families is not the most effective way to encourage more college attainment.

A wealth of national research shows that students from middle- and upper-income families already attend college in significant numbers, and those who graduate with debt do just fine. An excellent study by economists at the Brookings Institution found that student loan repayments as a percentage of income have remained largely flat over the past two decades, making most college debt a reasonable and sustainable investment for those who graduate. 

Much of the increase in overall debt, and almost all of the “six-figure” debt cited by candidates, is driven by graduate and professional school degrees, not undergraduate loan burdens.

There are some good aspects to the Democratic campaign plans, particularly some sensible reforms to federal loan programs. Right now, federal loan programs actually profit from students rather than subsidize them, with relatively few borrowers enrolled in income-based repayment or debt-forgiveness programs. That has left the Department of Education in the awkward—or, perhaps, enviable—position of charging 7 percent interest on student loans while mortgage rates hover somewhere around 4 percent.

The Clinton plan would allow borrowers to refinance at lower rates and opt into an income-based repayment system, capping monthly payments at 10% of discretionary income. That would certainly help alleviate the burden for large borrowers.

But focusing on college debt only nibbles around the edge of one of the biggest problems facing higher education: the students who drop out without earning a degree. 

For the most part, students who graduate from a reputable baccalaureate program are not facing a “debt crisis”—in general, they are making sound investments. The real trouble is among those who lack the enhanced earning power to shoulder even modest debt. The plans being touted by presidential candidates do very little to address the nation’s abysmal dropout rate. They focus almost exclusively on the politically resonant “cost crisis,” while largely ignoring the more damaging completion crisis. 

“At its top levels, the American system of higher education may be the best in the world,” writes David Leonhardt of the New York Times. “Yet in terms of its core mission—turning teenagers into educated college graduates—much of the system is simply failing.”

And as far as solutions for that failure go, the presidential candidates offer very little. Instead of creating programs to entice middle-class voters, any large-scale reform or infusion of new federal money should be aimed at improving graduation rates and helping families who genuinely can’t afford college, rather than more heavily subsidizing those already well-served by the current system. 

Some of the most promising reforms being discussed in policy circles are aimed at redesigning the Pell Grant to better encourage college success rather than just college enrollment.

These reforms should include making the Pell more generous, on one hand serving students further up the income ladder, but not so far up that they can afford to pay as they go, and on the other, covering a greater portion of the cost for low-income students. Too often, students in these categories are driven from higher education not by academic troubles, but by financial stress. 

Reform should also make the Pell more flexible by expanding it to pay for summer studies and competency-based coursework, which it currently does not. And it should make federal aid eligibility more straightforward, so families know what kind of help they can expect long before the college application process gets underway.

Just last month, there was finally progress on simplifying the federal aid application. Making that means-tested system easier to access, and using federal grant aid to more effectively encourage on-time graduation, are far more equitable reforms than simply eliminating costs for all students and families, regardless of income.

If we’re going to spend more on higher education, we should spend it where it’s most needed: providing access and encouraging completion among those students with the fewest resources. Middle-class costs may drive headlines, but dropout rates should drive public policy.

“Free college” makes for a neat sound-bite in Democratic primaries. But turning higher education into another middle-class entitlement isn’t going to improve outcomes, isn’t going to promote economic mobility, and isn’t going to encourage the kind of structural reforms that are long overdue.

 


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