Avoiding Student Loan Debt, Cost of Degree, Educational Consulting, Graduation Rates

A Few Thoughts about Free College

With the upcoming election cycle, a number of candidates have been discussing a variety of plans for financing college education, some of them being called “free college for all.” I hope at a later date to provide a comprehensive overview of each of the major candidates on education, but at present I would like to take a look at what candidates have been calling “free college.”

First, we have a real problem with student loan debt. Forbes very recently described it as a $1.5 trillion crisis. I know that student loan debt has been around a long time, but it’s ballooning, and students graduating now have a much higher debt to income ratio than students who graduated before 2008. The Forbes link above provides very good historic data about how students have been increasingly taking on higher student loan debt.

Some colleges are better than others, though. As you’ll see in the Forbes data, students graduating from public colleges have the lowest rate of student loan debt (66%), followed by students graduating from private non-profit colleges (75%). The most debt-burdened students are those who graduate from private for-profit colleges (88%), and dangerously, these students also have the lowest graduation rates. The amount of debt held follows the same pattern: those who attended public colleges hold the least debt while those who attend private for-profit colleges hold the most.

Next, 2008 is an important year. It’s the year that the biggest economic crash since the Great Depression hit worldwide. Massive unemployment caused a drop in state revenues, and a drop in state revenues created almost immediate, and very large, cuts in state support for education across the boards. State colleges and universities could only survive by massively increasing tuition, with immediately increased the student loan burden held by students attending these schools.

We should also understand that no one is really promoting “free college.” Bernie Sanders has a plan for “tuition-free” college, which is really taxpayer supported college, but even “tuition-free” college isn’t free college. Students still have to bear the costs of room and board, books, fees, travel, and incidentals, and at many public colleges and universities room and board can be equal to or even twice the cost of tuition. For example, at UCF this year tuition is about $6,300, while room, board, and books is just over $11,500. Sanders’s plan is a great improvement over our current system, but by itself it won’t solve our student loan debt crisis.

We should next take into account state funding. If the Fed stepping in just means that states will cut their funding, that move will cause more damage. As it is, the massive state cuts to higher education funding following the 2008 crash have had ongoing and long term negative effects on higher education. So while we need Federal programs that fund tuition apart from debt, we also need commitments imposed on states to maintain their funding. If the federal government covers tuition, state financial aid should then be redirected toward room, board, and books.

But can we even afford to pay for this? Yes we can — we’re actually very close to paying for it all already. It’s more a matter of how we allocate our current spending and finding a few additional sources of revenue, but that will be the topic of a future post. Taxpayer supported college education is the only viable model going forward, but the details of this plan matter.

I would like to leave you with the thought that we do indeed need to fund college societally. A college education is not a luxury item; college educated citizens are needed for the workforce, and everyone benefits from their presence, even those who never attend college. Without college graduates we would have no roads, infrastructure, buildings, utilities, internet, medical professionals (doctors, nurses, and technicians) — the list could go on. A college education is not a personal luxury, but a societal necessity, and we need to come together to help cover it. Massive debts just mean an inevitable crisis, and right now there is more student loan debt than credit card debt.

3 thoughts on “A Few Thoughts about Free College”

  1. This is helpful: good work. I don’t see his the huge debt can just be written off as I sometimes hear. That would also be hugely unfair to people who didn’t get a degree because they knew they couldn’t afford it.


    1. Thanks so much for responding, Jim, and it’s great hearing from you. Yes, the amount of debt sounds huge, but it’s probably about 1/2-1/3 of what it would cost to start another war in Iran or Syria. So we can pay for it just by not going to war.

      The fairness thing is another issue — the right is playing that up quite a bit: “I had to pay my student loans off, why shouldn’t they?” And you’re right — there are also people who just never went because they couldn’t afford it.

      My thinking runs along two lines here: first, by that reasoning, we can never make things better in the future because people had it worse in the past. I think that’s self defeating. Next, student loans today aren’t what they were 10 years ago, much less 20 or 30 years ago, and for two reasons: 1) The sheer amount of debt creates the possibility of another financial crash, so it’s in everyone’s interests to forgive them all, especially since that frees up available debt for other sectors, such as automotive and housing. And 2), debt is different today because it’s so much higher relative to one’s starting income. The debt to income ratio is higher today than it was before 2008, and especially in the 1990s and before. There’s something to be said for the idea that people were able to pay off their debt in ten or fifteen years at one time because state government was subsidizing education at a much higher rate, so most students’ debt levels relative to their starting salaries were much lower. In other words, people who held debt were in fact the recipients of state subsidies in the form of lower tuition, which made their debt manageable. It’s getting increasingly unmanageable today, and that is what is unfair, in my opinion.

      These are indeed difficult questions, though — thanks so much again for chiming in. I hope you’re well.


    2. Thanks for the comment. I’ve never found the fairness argument compelling for a few reasons — first, and most importantly, by that way of thinking, we can never improve anything, because any improvement in the future would be unfair to people who didn’t have it that good in the past. No end to slavery, no 40 hour work week, no health insurance, no public education at all, etc. We should all be on horseback with no electricity.

      I think the important thing is what’s best and possible for everyone now, and seeing how we can make things better for everyone now. That way of thinking is also denying the mass economic stimulus that student loan forgiveness would encourage, as it would free up debt for other sectors such as the automotive industry and housing.

      The other problem with the fairness argument is that student loan debt is by no means equivalent to what it was just in 2008, much less ten years before — in the 1990s. The truth is debt is massively unfair now by comparison. People who paid off student loan debt acquired before 2005-8 had a much higher percentage of their tuition covered by the state than students do now, so students graduated with a lower debt to income ratio then. I graduated with my BA in 1996 after spending two years at an expensive private college with $12,000 in student loan debt. Average debt now is upwards of $30K, but starting salaries for college grads aren’t that much higher than they were in 1996.

      I favor thinking pragmatically and making the system better for everyone now. We can afford it if we’re not stupid enough to go into another useless war with Iran.


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