Why ‘Free College’ Could Make College More Expensive

Former Vice President Joe Biden became the presumptive Democratic presidential nominee this spring when his last remaining rival, Sen. Bernie Sanders (I., Vt.), dropped out of the race. But Sanders didn’t leave the race without scoring a consolation prize: Biden adopted his plan to make all public colleges and universities tuition-free for families making less than $125,000 per year.

Free public college is pitched as a progressive policy, since it would enable students from lower-income families to go to college without worrying about tuition costs. But the reality is that our current financial aid system is already quite progressive. Means-tested scholarships such as the federal Pell Grant provide up to $6,345 for low-income students to cover college costs, on top of existing state and institutional financial aid programs.

Those programs mean that 64% of students from families earning less than $30,000 per year already pay nothing in tuition and fees if they attend an in-state public college or university. The median middle-class student pays around $2,000 in tuition, and higher-income families pay more. Making college free would therefore require spending more taxpayer dollars on wealthier households, since those families pay the most tuition currently.

While the evidence does not suggest that free college is a necessary policy anywhere, it is especially misguided to implement the idea at the national level. That is because our public higher education system is mostly operated and funded by states, meaning the federal government must use chimerical policy instruments to work its will on the nation’s colleges.

Sanders (and now Biden) propose a federal matching grant. For every $1 the states spend to implement free college, the federal government will contribute $2. But, as I write in a new article for Forbes, this creates the perverse incentive for states to categorize every expenditure they can think of as higher education-related, in order to capture more federal matching dollars. Aside from the potential for waste and abuse, that will necessitate intrusive federal regulation to police state budgets, weakening the state-led model than makes American higher education unique.

America’s decentralized higher education system is a strength, not a weakness.

Moreover, the carrot of free college will nudge states away from experimenting with other policy ideas that might better serve their students. Perhaps some states might find it worthwhile to means-test their financial aid programs, or attach requirements such as part-time work or a minimum GPA. A national free-college program would sacrifice such policy innovations to a one-size-fits-all federal standard.

America’s decentralized higher education system is a strength, not a weakness. It allows states to test-drive new policies on a small scale and fine-tune their university systems to the unique needs of their populations. Congress shouldn’t shove aside the state-led system, least of all for a goal as unnecessary as national free college.