Should College Be Free? The Economic Impact of Free College

Should College Be Free? The Economic Impact of Free College
Imed Bouchrika, Phd by Imed Bouchrika, Phd
Chief Data Scientist & Head of Content

Education face countless issues. On top of the now popular, Safe Space Movement is the never-ending issue of student loan debt. In 2020, 45 million borrowers owed a staggering $1.56 trillion in student loan debt (Friedman, 2020) with 1.5 million US students graduating with debt four years prior (Goldy-Brown, 2019). Student debt is the second largest category of consumer debt in the country next to mortgage debt. However, because the cost of a college education is skyrocketing, students have no choice but to borrow money to pay for their studies.

As a fundamental right, the debate on whether free college education should be a public priority continues. Advocates of free college insist that it would significantly contribute to the economy, and, therefore, secure the nation’s future. But opponents think otherwise, for them, free college is a flawed policy that would eventually failwhy should college be free if it creates inequality in attainment and completion? Those in favor of paying for college propose that money raised from tuition fees could actually be used in helping poor students, while at the same time creating a vital source of income for universities (Adams, 2017).

Should college be free for everyone? In this article, we revisit the main arguments that are at the core of the debate on free college. While the debt burden among students is a major concern, providing loans and grants might not be the only solution that could fix this pressing issue.

Should college be free? Table of Contents

  1. Five Issues in the Debate
  2. Main Arguments Advocating Free College
  3. Main Arguments Against Free College

Five Issues in the Debate

While there are affordable online colleges and universities for early education, nursing, and other degrees, there remain five main themes at the center of the debate on why should college be free. There is the issue of inequality, the debt burden that it creates among students, the direct effect on the future workforce, the overall impact of having postsecondary education on society, and the significance of an educated populace in ensuring economic growth.

The economic impact of free college has become more important now that countries are reeling from the effects of the COVID-19 pandemic. With the availability of free college in Europe and other regions, this has proven to ease the burden on many students. This is especially because college education has the potential to drive major change by equipping students with lifelong learning skills and competencies. A recently published report by the World Economic Forum (WEF) highlights the crucial role of post-secondary education in global upskilling. The report suggests that wide-scale investment in upskilling has the potential to increase the global domestic product (GDP) by$6.5 trillion by 2030 and create 5.3 million new jobs globally (WEF, 2021).

Perna and Finney (2014) developed a framework from a cross-case analysis of the relationship between policy and educational attainment. They identified that the characteristics of existing policies, the state’s historical, demographic, economic, and political context, and the qualities of its higher education system will determine the state policies that are needed to improve educational attainment and close gaps. Simply put, offering free college is not a silver bullet that could solve this higher education crisis.

Source: College Board Research

Main Arguments Advocating Free College

Increasing educational attainment is the main goal of free college. Economic evidence suggests that education fuels economic growth and global competitiveness (Valero and Van Reenen, 2016). Falling enrollment and inequality in higher education access are just two of the concerns frequently cited by the free college movement. The supporters of free college believe higher education benefits not only the individual but the society. In this section, the gains of providing free post-secondary education will be identified.

Free College Would Decrease Inequality

Social inequality is one of the major arguments as to why college should be free. Students who choose to pursue college eventually graduate with an average of $32,731 in debt (Friedman, 2020). Students from low-income families are usually held back by the possibility of incurring huge amounts of debt, and opt not to pursue college. Between 1979 and 2012, the inflation-adjusted earnings gap between two-earner households, one with high school diploma and one with college diploma increased by about $28,000 (Pew Research, 2014). This cycle of inequality is expected to continue unless free college becomes a policy.

Free college would also lessen undermatching, which occurs when students select colleges and universities based on financial needs (Lopez, 2019). While these students could opt to pursue post-secondary education in more selective institutions as their academic achievement and credentials predict, their choice of less selective colleges eventually affects earnings and work opportunities, which negatively impacts their contribution to communities. Offering free college will promote equal opportunity to all students.

Free College Would Eliminate Debt Burden

Not all students and families can afford college. It is widely accepted that while college is increasingly necessary, it is also increasingly unaffordable. Lopez (2019) studied the detrimental effects of the high cost of college education and concluded that financial factors affect the persistence of students of lower socioeconomic status. Student debt likewise takes a toll on mental health and is cited as one of the reasons why college should be free. One study found that 9 out of 10 borrowers experience significant anxiety due to their loan burden (Gravier, 2021). Eliminating the debt burden through free college would encourage students to pursue post-secondary education, which is essential to the post-industrial, creative economy.

Free College Would Produce a Strong Workforce

The benefits of a more educated populace cannot be stressed enough. College education helps people “learn how to learn”. The Covid-19 pandemic has highlighted the need to have this ability to re-skill and upskill in times of rapid change. The expanded performance standards and new learning networks in the post-industrial economy will require workers with both broader and deeper knowledge, skills and abilities for entry-level jobs, and to keep up with the accelerated pace of lifelong learning (WEF, 2021).

Computer technology may have the capability to automate processes, but it also requires a higher level of cognitive and non-cognitive competencies to optimally deliver services. College is believed to be the perfect training ground for all these skills to become embedded in the individual who would eventually join the workforce.

Free College Would Reduce Social Problems

Education plays an important role in a nation’s evolution. Studies reveal that those without college degrees are disproportionately afflicted with falling marriage rates, increases in single parenthood, rising mortality, and opioid addiction, to name a few (Deming, 2019). The critical thinking and deeper learning skills that post-secondary education inculcates have a significant effect on human capital. College education decreases crime and increases civic participation. It has also been established that increases in the quality and quantity of schooling directly increase productivity (Johnes, 2017).

Free College Would Drive Economic Growth

The increase in post-secondary education is the key that propels the economic development of nations (Deming, 2019). In different types of economies, as college students graduate without debt, this would give them the ability to earn, save and spend immediately, which could stimulate the economy. This spending will create more demand and more employment opportunities, a significant economic impact of free college as claimed by free tuition advocates. A recent study of students beginning at a four-year public university in Texas by Denning, Marx and Turner (2019) found that free college facilitates led to an increase in degree completion and postgraduate earnings.

Although advances in technology have increased productivity, and, thus, reduced the demand for manufacturing workers, the growing importance of technology to the overall economy has upsurged the demand for educated workers. Overall production output encompasses innovation in work processes that result in increased value. This upturn in demand for highly educated workers that can harness the power of technology and its possibilities has been the defining feature of our post-industrial economy.

Main Arguments Against Free College

In 2020, the total number of student borrowers in the U.S. was 44.7 million, with a loan debt of  $1.56 trillion. Horn (2015) argues that free college policies are misguided because they don’t address the root cause of why post-secondary education costs so much. The goal is to increase enrollment, access, and equality, but free college education policies have failed to deliver. This section will present the main arguments against free college.

Free College Would Deepen Inequality

While free college is perceived to be the mechanism that could level the playing field, an opposing view argues that free college education would further drive inequality due to the wealth concentration among the top 1% of society (Deming, 2019). Students that belong to the upper socioeconomic status could also avail themselves of free college, and since this group has a starting advantage in terms of basic education, it would widen the earnings gap, thus, strengthening social inequality. A free college program would be regressive because students from poor families are less likely to attend college while their wealthier peers can even choose to study in selective universities.

Free College Would Negatively Affect the Quality of Education

Cutting spending on other areas, such as education research and development to accommodate more students could also compromise the quality of teaching. Proponents of education becoming a commodity through free college argue that making education more accessible makes it less valuable. England’s experience with free college revealed that over time, education quality declined. Caplan in his book The Case Against Education: Why the Education System is a Waste of Time and Money insists that the “college-for-all mentality” delivers little lasting value other than a “credentialist arms race”.

Free College Would Not Ensure High Completion Rates

There is no guarantee that free college will benefit all students because some might not even want to go to college. Lochner and Monge-Naranjo (2012) found that the return to college for marginal students is low. The least-prepared students would struggle to succeed. There are long-run factors, such as family environment, that have a significant effect on determining college attainment (Cameron and Heckman, 2001).

Free college recipients are not as motivated to study as those who pay for it. In Denmark, these type of students are referred to as ‘eternity students,’ or those who stay in college for six years or more without any plans of finishing a program. Having free education affords these students to continually transfer from one study program to another. In contrast, paying college students showed greater perseverance in studying and finishing a program.

Free College Would Not Lead to a Well-Educated Workforce

Factors such as the quality of faculty as well as the readiness of students are crucial if post-secondary education is to deliver its perceived benefits. The infusion of money may benefit students by lessening the financial burden of going to college, but it does not ensure quality at all levels. Making college accessible could lead to compromising the quality of education, which would defeat the purpose of policies that seek to provide free college for the benefit of society. London is the most educated city in the world and sits atop the list of having the most talented workforce, but in this city, college education is not free.

Free College Is Not Directly Linked to Economic Growth

While education is a key driver of economic development, free college alone would not ensure growth. Education raises creativity and productivity, requiring substantial investments in institutions. Since the provision of free college could affect the quality of education, free access for all to postsecondary education might not be able to provide the competencies and skills needed to produce a strong workforce. The government has many competing priorities and free college requires high education subsidies. Unless spending is well-targeted, there is a high possibility of failure in the long-run (Deming, 2019).

Indeed, a study by Perna et al (2020) on college promise programs as published by the American Educational Research Association revealed that efficient use of resources is at the root of the debate on free college. Their work, “Is a College Promise Program an Effective Use of Resources?” published in the American Educational Research Association, states that “promise programs may advance vertical equity by investing resources in a financial award that reduces costs of attendance for low-income students and creating eligibility requirements that permit students from underserved groups to receive program resources. Programs may advance equity and efficiency by investing in personnel and other supports that enable students from underserved groups to meet eligibility requirements, enroll, persist, transfer, and complete.”

Increasing Attainment Through Leadership

Economic barriers are not the only reason why postsecondary completion rates have remained low. As these arguments reflect, there is a deeper problem that can be traced to state policy leadership. Perna and Finney (2014) concluded in their research that “improving attainment is expected to require state policy leadership that sets shared statewide goals for attainment and steers the state’s colleges and universities to achieve these goals.” The state, as well as the educational institutions, should work together by formulating policies that would give students access to high-quality post-secondary education.

The arguments presented on why should college be free are to some extent valid, but other crucial factors still need to be addressed. It is interesting to note that the counter-arguments highlighting the weaknesses of the free college policy also underscore the need for the state and the institutions to work hand in hand to increase attainment and reduce inequality.

Expanding access to higher education should be a national priority to equip the future workforce for the post-industrial economy. Critical thinking skills, abstract problem-solving, serious consideration of values and ethics are just some of the skills and competencies that college education teaches.  Free college education may have a large short-run cost, but it will provide significant benefits in the long run. Policies that increase college attainment can pay for themselves because college graduates have been proven to earn higher wages, and, therefore, have the capacity to pay higher taxes (Deming, 2019).

Having a well-designed free college plan is crucial to eliminating low rates of degree completion and minimizing overcrowded and underfunded institutions. While those who advocate and those who oppose free college differ in their perspectives, both agree that the economic impact of free college cannot be overstated for its potential to shape a well-equipped workforce. A well-educated workforce is an important ingredient in the stability of economies and in the overall advancement of societies.



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