This research covers information on the rising college tuition rates in the U.S. and how government aid is the determinant. Making post-secondary education free in the U.S.was introduced as a solution but also has its downfalls. Evaluating the free university system adapted in Europe and the current college system in the U.S. may help analyze what solution must be done and what actions must be avoided.
Rising college tuition in the U.S.
Research shows that college tuition has risen a lot faster than the inflation rate in the U.S. Data from the U.S Bureau of Labor Statistics (BLS) shows the inflation rate from the early 2000s to 2020. In 2003-04, the inflation rate was 2.9% (data recorded in U.S. CPI) while college tuition costs rose on an average 10.9%. This gap between the inflation rate of the economy and college cost in a year widened throughout the years. Despite the deflation in 2008, the CPI for college costs in 2008 increased by 231.82% (Bhutada, 2021). But in November 2020, college CPI met a record low of 0.6% due to the impacts of the COVID-19 pandemic. The impact of the COVID-19 was the forced shutdown of public places, the shift of in-person and hybrid classes to virtual, and cancellation of some classes that can’t be handled virtual.
The reason for the exponential increase in college costs boils down to one cause: government aid. Based on the laws of supply and demand in economics, an increase in demand with constant supply raises prices for the product being studied, i.e. the colleges and universities for this case. With students willing to study, are they necessarily able to study? The solution allowing students to afford college regardless of financial background is through government aids such as low-interest federal loans. If that’s the case, limited colleges with many students willing and able to study causes this scenario of raising prices. According to McConnell et al, the rise of federal student loans is the cause for rising tuition rates. Giving all students the willingness and ability to pursue a postsecondary education with limited supply of schools and facilities forces institutions to raise prices and meet an equilibrium price (when the supply meets the demand). This has not been the case since prices have been increasing since the 1940s. An approach the federal government took during the post-WWII era was building state universities and employing more instructors which reduced the tuition rates dramatically in that period (McConnell et al., 2021). But both the government and private entities can’t keep building universities.
Free Universities as Solution
Counterintuitively, government-funded public universities instead of the current FAFSA and federal loans were introduced to the U.S. It became a prominent topic during the Democratic primaries in 2019. Democratic nominee Bernie Sanders and Elizabeth Warner proposed student loans forgiven but Sanders went a step further. Sanders proposed free universities in the U.S. just like the system Europe adapted (Amselem, 2019).
Proponents of Free Universities
Proponents of free universities argue more favorably on socialist concerns. Free universities give students more freedom to major in what they’re passionate about, allow opportunity for individual growth (Marcus, 2016), produce economic growth through research and knowledge provided by students who are willing to study and have the opportunity to do so because it’s free, and treat postsecondary education as “public good, and not just a commodity” (Earwaker, 2020). Support for free or lower cost universities is evidenced by government funding initiatives. An example is the Permanent University Fund (PUF) amended in the Texas Constitution. The amendment required the Texas state government to allocate revenue from land grants for mining and oil drilling for University of Texas (UT) and Texas A&M schools. This led to a coalition with other Texas universities to pass an additional amendment called the Higher Education Assistance Fund (HEAF) which led other Texas universities to receive state funds from the land grants (Mora & Ruger, 2019). Normally, a Texas amendment or law requires strong lobbyists to influence legislators to propose it and let the governor and the people approve it. The two amendments concerning funding postsecondary education successfully went through the amendment process.
Opponents of Free Universities
Policy Analyst Mary Amselem mentions the drawbacks of a free university based on the real experience in Europe. The consequences of implementing a free university system include passing the burden to taxpayers, some of which didn’t even go to college and yet are forced to pay tuition for other students, fewer academic resources per student, overcrowding, and
counterintuitively, reduced access. Allocating certain tax revenues that don’t directly benefit all taxpayers is morally unfair and economically inefficient because taxpayers who don’t benefit would rather have their taxes allocated to something that could benefit them more or bring more satisfaction to the community. Although educating the population is beneficial in the long-term, it isn’t in the short-term, especially for non-degree seekers who are current taxpayers (Krason, 2017). Fewer academic resources and overcrowding are complementary consequences for a publicly funded university. In a data taken in 2016 from Organization for Economic Cooperation and Development (OECD), the cost for an average college student in Germany is “$16,895 compared to $27,924” for U.S. students (Marcus, 2016). Spending less for each student does not maximize the satisfaction and provide the best education. But budgeting less for each student allows more enrollments. According to Assistant Director of Political Affairs at Universities UK, Karmjit Kauer, education has to be “sustainably funded […][with] high-quality education and experience for students” (Earwaker, 2020). In addition to fewer academic resources, overcrowding is another problem experienced by a free university system. Kauer further argues that with a free university funded by the government, it is impossible to provide free education to all its citizens who demand it.
Solution to the U.S. Postsecondary System
A solution is to build more institutions or even innovate the way degrees can be obtained. Online universities such as Strayer University provide Bachelor degrees that are similar to the degrees offered by the traditional universities but the school doesn’t receive much federal aid and prominence. Policy analyst, Mary Amselem argues that reducing taxpayer-subsidized federal student loans and investing in other methods of education such as apprenticeship and vocational training can also “prepare students with lifelong skills” like a Bachelor degree does. Apprenticeship was adapted in Switzerland where 60% of private sectors are funding these programs because they find it profitable. Similar to apprenticeship is the Career and Technical (CTE) in the U.S. It offers career related skills that can be taken in high school and is supervised by the government. The U.S Department of Education (2021) showed statistical data that 77% of high school students graduated with a CTE course and completing a CTE curriculum as early as in high school can lead to career pathways such as STEM and Health sciences fields. Obtaining cheaper degrees such as an Associates rather than working on a Bachelor’s directly can also reduce financial stress and workload for a student. Anyone can obtain an Associate’s first then work on a Bachelor’s later on when the college budget isn’t so tight. Increasing one’s education incrementally or seeking for the traditional pathway for Bachelors and Masters degrees both improve human capital in the economy in the long run, it’s only a matter of preference in gaining one’s education.
There are pros and cons with a free university and the current system the U.S. has adopted. But there are solutions to continue adapting the U.S. college system of non-free universities without raising the cost of education rapidly and exponentially. It is through investing in other methods of gaining a degree or specialization and reducing financial aid. Free universities may limit enrollments while providing free education for their students and maintaining the quality of postsecondary attainment. But both proposed solutions will require some students to experiment in attaining their education, compete for limited enrollments, and face other challenges or difficulties to get educated.
Amselem, M. C. (2019, December 13). Free College in Europe: A Cautionary Tale for the
United States. The Heritage Foundation. https://www.heritage.org/education/report/free-college-europe-cautionary-tale-the-united-states.
Bhutada, G. (2021, February 4). The Rising Cost of College in the U.S. Charted: The Rising
Average Cost of College in the U.S. https://www.visualcapitalist.com/rising-cost-of-college-in-u-s/.
Earwaker, J. (2020). Should university education be free? Business Spotlight, 2, 28–29.
Krason, S. M. (2017). What’s Wrong with Guaranteeing a Free College Education? Catholic
Social Science Review, 22, 395–398.
Marcus, J. (2016, October 18). How free college tuition in one country exposes unexpected pros
and cons. The Hechinger Report. https://hechingerreport.org/free-college-tuition-one-country-exposes-unexpected-pros-cons/.
McConnell, C. R., Brue, S. L., & Flynn, S. M. (2019). Application: Government-Set Prices. In
Microeconomics: 22nd edition (pp. 60–63). McGraw-Hill.
Mora, S., & Ruger, W. (2019). In The state of Texas: government, politics, and policy (pp.
66–67). essay, McGraw-Hill Education.
U.S Department of Education. (2021). insights into how CTE can improve students’ income after
they graduate. CTE Data Story. https://www2.ed.gov/datastory/cte/index.html.