Former Secretary of State Hillary Clinton has adopted one of Sen. Bernie Sanders' signature campaign pledges: free in-state tuition at a public college or university.
Under an earlier plan, Clinton had merely promised that families would not have to borrow for college tuition, but parents and students would have contributed what they could afford. To reduce the cost of free tuition — estimated at $750 billion over 10 years if all students were eligible — the new Clinton-Sanders plan is limited to families earning less than $125,000 per year.
Details have not been released, but the plan is likely to resemble the College for All Act (SF 1373) that Sanders introduced last year. Sanders' website claims "this is not a radical idea. … In fact, it's what many of our colleges and universities used to do. The University of California system offered free tuition at its schools until the 1980s."
The free-tuition plan makes political sense for Clinton as an appeal to Sanders' young, left-leaning supporters. But is it economically sound? Unfortunately, the proposal falls short for three reasons: 1) it is regressive, 2) it rewards bad behavior and 3) it inevitably would lead to federal micromanagement of public colleges and universities.
Free college tuition would be "regressive," meaning that the benefits would flow mainly to students from upper-income families. Let's look closely at this surprising conclusion. Even if something is free, it may not be used equally by people from different backgrounds. The users of higher education, particularly expensive higher education at elite universities, tend to come from upper-income families.
This was documented by Lee Hansen and Burton Weisbrod, two economists at the University of Wisconsin who studied the distribution of costs and benefits from California's free-tuition policy (the poster child for Sanders' plan). The state subsidies in 1964 varied dramatically across the three branches of the higher-education system, with the prestigious University of California campuses such as Berkeley receiving a much larger subsidy per student than state colleges and junior colleges. Since attendance at those elite universities was highly related to income, the subsidies disproportionately benefited students from upper-income families.
Hansen and Weisbrod compared the subsidies with state and local taxes paid to finance free tuition in California. The results showed that families with children enrolled in public higher education received positive transfers (subsidies minus taxes paid) that grew with average family income.
The same pattern persists today: Undergraduate students at more costly colleges come from higher-income families. According to the National Postsecondary Student Aid Study in 2011-12, 54.2 percent of dependent students enrolled in two-year colleges came from families earning less than $60,000 per year, while only 38.4 percent of those attending four-year institutions that grant doctorate degrees (such as the University of Minnesota, University of Michigan and Berkeley) came from such families.
The bottom line: The benefits of free college education would flow toward students from wealthier families.
Defenders of the plan argue that free tuition would open expensive colleges to students from low-income families. However, students from lower-income families who can't afford college now would be more likely to enter community colleges and two-year colleges when free tuition became available, rather than catapulting straight to the elite schools.
The second strike against free college tuition is that it rewards bad behavior among state governments.
Under the plan, the federal government would pay two-thirds of the current in-state tuition if the state were to contribute the rest. Some states have much higher college tuition than others, because they spend less public money on higher education. These states would receive a larger benefit from the program. David Feldman (no relation) and Robert Archibald, economists at the College of William and Mary, calculated that the average tuition payer in the stingy state of Vermont would get a $14,000 break, but a family in the more generous state of North Carolina would see its tuition cost go down by only $6,500.
A third flaw is that the free-tuition plan inevitably would lead to federal micromanagement of public colleges and universities. One only has to look at the text of Senate bill 1373 that lays out Sanders' plan. Once tuition and fees have been eliminated, any state that receives a grant must use the money to expand academic course offerings, increasing the number of full-time faculty, and must take other specified steps. Colleges are not allowed to use the money to build student centers or pay for administrators.
The prohibition against new student centers is ridiculous. Who is to say that a new student center, built to accommodate the influx of new students, is not a wise expenditure?
And how would the ban on spending money for administrators be enforced? At the U, being a department chair is a thankless task that takes valuable time away from research and teaching. To make the job more palatable, the university offers a modest "administrative augmentation" to the chair's salary. Would this expenditure on administrators be allowed or disallowed under the free tuition plan? Who would decide? How many hairs would they have to split?
College affordability is a real problem, but there are better ways to address it than free tuition.
Roger Feldman is an economics professor at the University of Minnesota.
