Is Free Education Really Free?

Andrew Johnson

The cost of college is remarkable. and part-time status.3 The benefits would Shelling out thousands of dollars for some be numerous, but so would the costs. knowledge and a receipt claiming you paid The concept of free education is not is, in a few words, the modern American a new one. Germany has provided free college system. Perhaps unsurprisingly, post-secondary education for over 60 policies have been proposed to reduce the years.4 Unlike in the United States, cost of college, even making it free in some however, not everyone qualifies to attend instances. On January 9, 2015 President college in Germany; only those who pass Obama unveiled a plan to make “two years qualification tests are granted acceptance. of community college free for responsible In fact, most European universities charge 1 students across America.” Given the no tuition and only collect minimal fees.5 Republican control of Congress, the idea The result is affordable education for stands little chance of being passed, but it students. Whether or not the education is 2 is still interesting to consider. Under the superior to American education is up for President’s plan, all Americans, regardless debate, but the point remains that of income, would have access to two years European students pay very little relative to of free community college education American students. provided the student maintains a 2.5 GPA

American students, upon graduation from high school, often chose not to attend Even though the college simply because of costs.6 The proposed plan would average cost of attending a public college in America, including room and board, is constitute less than 0.1 over $20,000 per year.7 The low price of percent of the federal community colleges, specifically $3,300 budget, the costs are per year, entices students to remain at home and commute to a local community still substantial to state college. Students who take out loans to pay governments, for college carry, on average, $27,850 in debt.8 In May 2013, total United States especially in an era of student debt was estimated to surpass $1.2 declining investment in trillion.9 American student debt constricts public colleges and the economy by reallocating potential consumption to the paying of interest. universities. Avenues to reduce student debt are twenty-five percent.11 Requiring states to becoming increasingly common, with cover 25 percent of the budget could prove America’s College Promise among the to be controversial if state governments most popular. President Obama unveiled don’t want to allocate funds for the this plan as a solution to help middle class program. Overall, costs are expected to families cover the cost of college. The reach $60 billion over ten years to pay for program doesn’t seek to assist low-income the estimated 9 million students who will students who already receive grants, such attend community college.12 Even though as the Pell Grant, to attend community the proposed plan would constitute less college.10 Obama instead desires for the than 0.1 percent of the federal budget, the plan to assist middle class families who costs are still substantial to state otherwise would not qualify to receive governments, especially in an era of funding for college. declining investment in public colleges and Liberals and conservatives alike universities. acknowledged the benefits of a more The positive externalities of an educated public and middle class but were educated population increase the general simultaneously skeptical of the source of well-being of people’s lives. Higher funding. Seventy-five percent of funding educated citizens are more likely to would come from the federal government appropriately self-diagnose health levels and states would cover the remaining

58 and make necessary changes.13 Studies America’s College Promise, in have shown a negative correlation between addition to externalities, may provide obesity and education levels.14 Households economic benefits for America as a whole. with less than a high school degree had a The White House hasn’t yet provided an nearly 25 percent obesity rate compared estimate for total economic benefit and with 10 percent in households with a studies haven’t yet been conducted bachelor’s degree.15 Americans with a evaluating the President’s plan. However, a bachelor’s degree lived, on average, 9.3 few other findings can be analyzed despite a years longer than those with less than a lack of direct empirical evidence on the topic. high school degree.16 Considering obesity A study evaluating community colleges in related problems cost the U.S. between Kentucky found that individuals with an $147 billion and $209 billion every year, associate’s degree make 24 percent more, on any reduction in obesity would greatly average, than those who only have a high benefit the nation. 17, 18 school degree.24 The same study found a 10 Higher education levels also reduce percent increase in Kentucky’s community crime and promote governmental integrity. college enrollment would provide benefits, The probability of imprisonment decreases economic and social, between $48 million with each additional year of schooling.19 If and $61 million. the public was more educated, prison This is quite a substantial benefit for a costs, which currently reach $39 billion single state, but it should be noted that these annually, could drop.20 Voter participation benefits do not necessarily translate into is also higher when education levels are America’s College Promise. Foremost higher. Milton Friedman, in Capitalism and amongst these discrepancies, increasing Federalism, writes, “A stable and community college enrollment by 10 percent democratic society is impossible without a would be difficult because most people who minimum degree of literacy and would attend community college are already knowledge.”21 Democratic participation enrolled. The White House does estimate, necessitates that most citizens are well however, nearly “9 million students could educated and well informed of public benefit.”25 This estimate primarily includes the affairs. Those who enroll in college, 6.8 million students already enrolled in regardless of completion, are nearly 20 community colleges.26 22 percent more likely to vote in elections. A study by RAND found Governmental officials are less likely to governments receive a greater net public succumb to corrupt acts when their budget when citizens attain higher 23 constituents are better educated. education levels.27 In other words, the more

59 people that go to college, the more money College Promise, which will be funded the government will receive in tax revenue. primarily by taxpayers. Another issue is that The RAND study measured the increased the Tennessee Promise hasn’t been tax revenue and found that increasing implemented yet. America’s College Promise educational levels from high school to is based on a program that won’t begin until some colleges garnered nearly $40,000 in the fall of 2015.34 President Obama has also net lifetime tax revenue.28 Additionally, an mentioned that the plan has similarities with a investigation by CEO’s for Cities found that program in Chicago. The Chicago Star in 51 metropolitan regions across the U.S., Scholarship covers the costs of tuition, books a 1 percent increase in educational and fees. No implementation of the programs attainment would provide a nearly $124 billion has occurred, however, so there is no data on increase in annual aggregate household the success of the programs.35 29 income. Even with a conservative estimate A local program that has been in effect of the federal tax rate at 15 percent, the for a few years is the Pittsburgh Promise. The economic benefits could surpass $18 billion Pittsburgh Promise provides graduates of each year. Pittsburgh public schools up to 10,000 dollars America’s College Promise draws a year to attend a college, either two or four inspiration from a similar program in year, in the Commonwealth of Tennessee called the Tennessee Pennsylvania.36 The program is funded Promise.30 The official website of the almost entirely by private fundraising and is program states that the Tennessee expected to cost $250 million over 10 years.37 Promise, “will provide students a last-dollar Since 2008, more than 5,500 students have scholarship, meaning the scholarship will received a grant to pursue higher education. cover tuition and fees not covered [by other The program has shown tremendous grants].”31 Funding for the program primarily success in increasing the amount of college comes from private donations, a reduction of graduates in the city of Pittsburgh.38 A CEO’s HOPE awards and spillovers from the for Cities presentation estimates that if 1 Tennessee lottery.32 HOPE grants in percent more people in the city of Pittsburgh Tennessee provide students minimal attain a college degree, the city could assistance ($1,500-$2,250 per year) in return experience an annualized benefit of $1.8 for enrolling in a college.33 Reducing the billion.39 However, funding for this program program’s award amount to pay for comes almost entirely from private donors community college will reallocate funds and and not the city budget, making it far less will not cost the government too much more. controversial. There is very little impact on taxes paid by Tennessee residents, unlike America’s

The main criticism of America’s education. A study found that living close to College Promise involves the extent to which a community college increased the educational levels will actually increase. Many probability of attending college but reduced students don’t even graduate high school, total education attainment.42 The reasoning and many who start college don’t finish. 40 In being that many students who would have fact, over the past 20 years, nearly 30 million otherwise attended a four-year college individuals have enrolled in a college but settled for attending the community college didn’t finish. If America’s College Promise and never obtained a bachelor’s degree. funded everyone who enrolled in a President Obama’s plan could possibly community college, the cost of paying for decrease education attainment because students who end up not even graduating students would choose to attend a could be enormous. Much of the 60 billion community college in lieu of a four-year dollars spent on the program would college. This concern, however, is minimal undoubtedly pay for students whose because it happens on such a small scale. education level would be unchanged. Despite questions surrounding Another problem is uneven America’s College Promise, its likely concentration of community colleges, which benefits — namely, increased health of would further divide the educated from the citizens and increased government uneducated. Many citizens do not live near a participation — vastly outweigh its potential community college and would receive no setbacks. The program would increase the benefit from the free tuition. The term competitive nature of America’s economy “education desert” refers to a region or as well as raising tax revenue, which could community where educational opportunities assist in paying for the program. Above all, are limited. A study evaluating commuting America’s College Promise revives zones found that 11 percent of the U.S. necessary standards that can stimulate a population live in an education desert.41 The rise in education and competitiveness in an same study discovered Hispanics or other low increasingly globalized atmosphere. educational attainment minority groups often populated these areas. Since not everyone has access to a community college, America’s College Promise could unfairly benefit those who do.

Education deserts could further the additional problem of substandard

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Report on Nation's Health," Centers for Consumer Financial Protection Bureau." Disease Control and Prevention, May 16, Consumer Financial Protection Bureau. 2012 July 17, 2013. Accessed March 20, 2015. http://www.cdc.gov/media/releases/2012/ http://www.consumerfinance.gov/newsroo p0516_higher_education.html (Accessed m/student-debt-swells-federal-loans-now- March 20, 2015). top-a-trillion/. 16 "Health, United States, 2011: With Special 10 Hillman, Nicolas. "America’s College Feature on Socioeconomic Status and Promise: Prospects, Concerns, and the Health," National Center for Health Need for More Research." University of Statistics, 2012 Wisconsin-Madison. January 12, 2015. http://www.cdc.gov/nchs/data/hus/hus11. Accessed March 20, 2015. pdf (Accessed March 20, 2015). https://wiscape.wisc.edu/wiscape/home/bl 17 Finkelstein, Eric, Justin Trogdon, Joel og/wiscape-blog/2015/01/12/america-s- Cohen, and William Dietz, "Annual Medical college-promise-prospects-concerns-and- Spending Attributable to Obesity: Payer- the-need-for-more-research. And Service-Specific Estimates," Health 11 The White House, Ibid. Affairs 28, no, 5 (2009): W822-831 12 Mitchell, Ted. "Menu." EDgov Blog. January http://content.healthaffairs.org/content/28/ 21, 2015. Accessed March 20, 2015. 5/w822.full.pdf (Accessed March 20, http://www.ed.gov/blog/2015/01/americas 2015). -college-promise-a-ticket-to-the-middle- 18 class/. http://www.sciencedirect.com/science/arti 13Grossman, Michael, "Education and cle/pii/S0167629611001366 Nonmarket Outcomes," Handbook of the 19 Lochner, Lance, and Enrico Moretti, "The Economics of Education 1 (2006): 578-633 Effect of Education on Crime: Evidence http://faculty.ses.wsu.edu/cowan/teaching from Prison Inmates, Arrests, And Self- /593/grossman education published Reports," American Economic Review, version.pdf (Accessed March 20, 2015). 2004, 155-89 14 Chou, Shin, and Michael Grossman, "An http://pubs.aeaweb.org/doi/pdfplus/10.125 Economic Analysis of Adult Obesity: 7/000282804322970751 (Accessed Results from the Behavioral Risk Factor March 20, 2015). Surveillance System," Journal of Health 20 Henrichson, Christian, and Ruth Delaney, Economics 23, no, 3 (2004): 565-87 "The Price of Prisons: What Incarceration http://www.sciencedirect.com/science/arti Costs Taxpayers," Federal Sentencing cle/pii/S0167629604000207 (Accessed Reporter, 2012, 68-80 March 20, 2015). http://www.vera.org/sites/default/files/reso 15 "Higher Education and Income Levels Keys urces/downloads/Price_of_Prisons_updat to Better Health, According to Annual

27 Carroll, Stephen, and Emre Erkut, "How ed_version_072512.pdf (Accessed March Taxpayers Benefit When Students Attain 20, 2015). Higher Levels of Education," RAND, 21 Friedman, Milton, "The Role of Government January 1, 2009 in Education (1962)," The Friedman http://www.rand.org/content/dam/rand/pu Foundation for Educational Choice RSS bs/research_briefs/2009/RAND_RB9461. http://www.edchoice.org/The- pdf (Accessed March 20, 2015). Friedmans/The-Friedmans-on-School- 28 Carroll, Ibid. Choice/The-Role-of-Government-in- 29 Cortright, Joe, "The City Dividends: How Education.aspx (Accessed March 20, Cities Gain by Making Small 2015). Improvements in Metropolitan 22 Dee, Thomas S, "Are There Civic Returns To Performance," CEO's For Cities, Education?" Journal of Public Economics, September 1, 2008 2003, 1697-720 http://www.pittsburghpromise.org/assets/d http://www.nber.org/papers/w9588.pdf ocuments/City (Accessed March 20, 2015). Dividends_FINAL_NewLook.pdf 23 Glaeser, Edward, and Raven Saks, (Accessed March 20, 2015). "Corruption in America," Journal of Public 30 The White House, Ibid. Economics 90 (2005): 1053-072 31 "About." Tennessee Promise. Accessed http://projects.iq.harvard.edu/files/gov212 March 20, 2015. 6/files/glaesersaks_2006.pdf (Accessed http://tennesseepromise.gov/about.shtml. March 20, 2015). 32 “Tennessee Promise Frequently Asked 24 Blomquist, Glenn, Paul Coomes, Christopher Questions,” Inside Higher Ed, n.d., Jepsen, Brandon Koford, and Kenneth https://www.insidehighered.com/sites/default Troske, "Estimating the Social Value of /server_files/files/TN%20Promise%20FAQ.p Higher Education: Willingness to Pay for df (Accessed March 19, 2015). Community and Technical Colleges," IZA Discussion Paper, no, 4086 (2009) 33 "Tennessee Student Assistance http://ftp.iza.org/dp4086.pdf (Accessed Corporation." Tennessee Student March 20, 2015). Assistance Corporation. Accessed March 20, 2015. 25 White House, Ibid. http://www.tn.gov/collegepays/mon_colleg 26 "Enrollment," American Association of e/hope_scholar.htm. Community Colleges 34 “About,” Ibid. http://www.aacc.nche.edu/AboutCC/Tren ds/Pages/enrollment.aspx (Accessed 35 "Chicago Star Scholarship." City Colleges of March 20, 2015). Chicago. Accessed March 20, 2015.

ocuments/Talent%20Dividend%20- http://www.ccc.edu/departments/Pages/c %20Pittsburgh.pdf hicago-star-scholarship.aspx. 40 Stetser, Marie and Robert Stillwell, “Public 36 "Scholarship Overview." The Pittsburgh High School Four-Year On Time Promise. Accessed March 20, 2015. Graduation Rates and Event Dropout http://www.pittsburghpromise.org/earn.ph Rates: School Years 2010–11 and 2011– p. 12,” National Center for Education 37 "The Impact Dashboard." The Pittsburgh Statistics, April 2014, Promise. February 1, 2015. Accessed http://nces.ed.gov/pubs2014/2014391.pdf March 20, 2015. (Accessed April 2, 2015). http://www.pittsburghpromise.org/about_d 41 Hillman, Nicholas, “Differential Impacts of ashboard.php. College Ratings: The Case of Education 38 "The Pittsburgh Promise The Benefits to Deserts,” Educational Leadership and Pittsburgh." The Pittsburgh Promise. Policy Analysis, University of Wisconsin- Accessed March 20, 2015. Madison, August 27, 2014, http://www.pittsburghpromise.org/assets/d https://news.education.wisc.edu/docs/WebDi ocuments/PPBenefitsPgh.pdf. spenser/news-connections-pdf/crp---hillman- --draft.pdf?sfvrsn=6 (Accessed April 2, 2015). 39 "The Talent Dividend." The Pittsburgh 42 Promise. Accessed March 20, 2015. Dee, Ibid. http://www.pittsburghpromise.org/assets/d