- Hank Twichell ’20
With the 2020 election drawing closer, many of the Democratic presidential candidates have fought to distinguish themselves by publishing blueprints of policies that they would implement once in office. Elizabeth Warren (D-MA) and Bernie Sanders (D-VT) are two of the candidates who have promised to combat wealth inequality by addressing the issues of student loan debt and the high cost of college tuition. They have proposed to forgive a portion of student loan debt for students whose annual income does not exceed $250,000 and provide free college tuition for all students who attend public universities.
In theory, this is a brilliant plan. Removing the burden of student loan debt that unfairly penalizes families who cannot afford tuition would be a historic step towards leveling the playing field in higher education. However, eliminating the cost of tuition at every US university and forgiving nearly all student debt would create two significant issues: 1) a costly new public entitlement program, and 2) the likely devaluation of public university degrees by creating a tremendous increase in the number of public degree holders.
The $1.56 trillion dollar price tag on forgiving student debt and the estimated annual cost of $70 billion to cover tuition at public universities would result in significant financial stress on federal and state governments. The proposed plans from presidential candidates such as Bernie Sanders also detail that the federal government would only pay for two-thirds of the annual cost, leaving states to cover the balance. Many state governments are already facing serious financial issues and the federal government is burdened with increasing annual deficits and underfunded existing entitlements such as social security. Adding another costly program would be extremely challenging and ill-advised.
Another issue is that not every university in the United States is a public university. Schools like Stanford and Santa Clara are private universities, so they would not be required to eliminate the cost of tuition for students. By making all public universities free, some private school students would opt for receiving a (free) public education instead of paying for a similar, yet much more expensive private education.
With an increase in the number of students attending state colleges, the number of state college degrees would increase significantly, potentially causing the value of a degree from a public state school to decrease on a relative scale. The economics law of supply and demand would predict that as the supply of workers with public university degrees increases, the demand for these graduates would lag and therefore the market value of a citizen with a degree from a public university would decrease while the value of a graduate from a private college would increase.
Making public college tuition-free would certainly ensure that wealthier students who can afford to pay full tuition would no longer have an advantage over students who need student loans. Instead, their advantage would come from their ability to afford and attend expensive private universities and receive a degree with more value due to its relative scarcity. Thus, the students who come from wealthier backgrounds would be able to get higher-paying jobs. Instead of achieving the intended goal of decreasing wealth inequality, the plan to provide free tuition to all would have the unintended consequence of accentuating the inequality.
College education needs to be more financially accessible, but debt-free, tuition free college is not the answer. A reasonable solution could be to create a finite number of new, government-funded scholarships available for students attending public or private universities. This plan would reduce some of the financial obstacles for college students and avoid the potential devaluation of public degrees, while minimizing the financial burden on the government. Additionally, by making these scholarships available only to those for whom cost is a barrier to attending college, wealthier students would not benefit from this program, so the goal of reducing the impact of wealth inequality on the accessibility of college would be achieved.
Photo from Business Insider
