The Unintended Consequences of "Free" College

Affordability is not the culprit here.

High school graduation is the first big achievement for many young people. It’s a celebration for them and the loved ones who supported them along the way. Parties are thrown in their honor, and just as with birthday parties, gifts are given to the new diploma-holder.

Types of gifts can vary, from a portfolio or a microwave oven to the most liquid gift of all—cash. Now, Alamo Colleges, based in Texas, wants to kick in one of its own; free tuition for all Bexar County high school graduates. Is this a good idea, though?

High Return on Investment for Education

Education is the source of the greatest positive spillovers in society. Crime tends to be lower the more able we are to make a good living. We’re capable of creating increasingly energy-efficient machines, thereby decreasing pollution. We’re also healthier the more we know about diet, vaccination, and exercise.

That’s why education merits public support. We all believe in equality of opportunity, especially for children; hence taxpayer funding for K-12. None of this, however, makes it immune to unintended consequences.

The Erosion of Price Signals 

One deficiency experienced at the grammar-school level would likely also arise from this proposal: the erosion of price signals.

Prices are more than just the dollars and cents we pay for a good or service. They encompass a bundle of information: the cost of the inputs, the prices of competing goods, the supply of and demand for the service, the effects of natural conditions, etc.

Introducing price controls invariably causes problems. 

Prices compel us to prioritize our wants when faced with limited resources. It’s how we deal with scarcity, the fundamental problem in economics. As Ralph Waldo Emerson put it, “Want is a growing giant whom the coat of Have was never large enough to cover.”

Introducing price controls invariably causes problems. The minimum wage, a price floor, deprives younger people of as early a start in the workforce as they’d prefer. Price ceilings, above which a product may not be sold, have recently led to malnutrition and weight loss in Venezuela.

Capping tuition at $0 is a price ceiling.

It Would Increase Costs

In addition to the “one-third of high school graduates” who “went straight into the workforce,” the segment targeted by this plan, there are some for whom going to school locally was a consideration. Had this option been available, they might have taken advantage of it rather than immediately going off to a university.

Also, given the quality of our institutions, prospective students who live out-of-district could be drawn to establish residency in Bexar County ahead of time in order to qualify.

These factors would add pressure, both by increasing costs and draining revenue, to what is already estimated to be a $13 million per year program.

There’s a cohort of folks who have no children wondering why they still have to pay.

One of the public entities reportedly involved is the San Antonio Education Partnership, created in 1989 to “provide scholarship assistance” in an effort to “close the college graduation gap.” Data is somewhat sparse, but since 2010, the college graduation rate has risen from 23.7 percent to 25.7 percent in 2017. Enrollment growth in Alamo Colleges since 1995 has averaged 1.4 percent; .67 percent if you subtract the Great Recession years 2008-2009.

If that track record doesn’t attract a substantive contribution from private philanthropic sources, how will the funding gap be filled? If spending is not cut or curtailed in other areas, property taxes could rise. It’s difficult to envision that being a painless sell on a public already chagrinned by the property appraisal process. Furthermore, there’s a cohort of folks who either have no children or whose children have long left home, leaving them wondering why they still have to pay.

Parents have no bigger duty in life than raising well-adjusted, well-educated children.

Regardless, that may become a moot issue considering the property tax cap currently making its way through the state legislature. Then what? In the face of scarcity, tradeoffs have to be made. One target might be Alamo Colleges’ dual-credit program.

Over 12,000 Bexar County students earn college credit with some of their high school courses (one of the author’s daughters is signed up for these classes next year, three from Alamo Colleges). A study presented to the Texas Higher Education Coordinating Board last year, however, showed that such courses increased college enrollment by just a couple percentage points and increased graduation rates by barely 1 percent.

Coupled with a loss of $21.5 million in revenue, perhaps dual-credit should be reassessed before adding more “tuition-free” options to the curriculum.

Ultimately, they might be absolved of much fiscal responsibility. While a similar effort at the statewide level appears to be gaining little traction, things look different at the national level.

Unintended Consequences 

Following President Obama’s lead, there has been a growing movement among progressives to make community college “free.” This has percolated all the way up to most of the candidates running for the Democratic nomination for president in 2020.

In 2017, Sens. Kirsten Gillibrand and Elizabeth Warren co-sponsored Sen. Bernie Sanders’s College for All Act. Sen. Amy Klobuchar supported the America’s College Promise Act last year and reiterated as much at a recent town hall in New Hampshire. Rep. Tulsi Gabbard and Sen. Kamala Harris are also on board.

In the end, regardless of jurisdiction, it’s the smallest minority that gets stuck with the bill: the individual taxpayer.

Closer to home, former congressman Beto O’Rourke, during a debate while challenging Texas Senator Ted Cruz last year, suggested raising the corporate tax rate to make community college free. And our own former mayor Julian Castro supports working “toward a tuition-free system of … college, apprenticeship and certification programs.”

In the end, regardless of jurisdiction, it’s the smallest minority that gets stuck with the bill: the individual taxpayer.

Beyond the budgetary considerations, there’s also the moral hazard of which to be mindful.

When a good or service is free, a consumer tends to take less ownership of it. College alumni surely remember the parties where the house was strewn with partially filled plastic cups. If you’re enjoying a beverage at home, though, how often do you toss it out before you’ve drunk it all? Some students would feel no pressure to simply walk away if it was “too hard,” nevermind the modest 2.0 GPA requirement.

The level of “support” they derive from unknown taxpayers with less personally at stake should unequivocally shrink even more.

The San Antonio Express-News editorial board, in voicing support for this proposal, claims “many students … can’t scrape together tuition money” when their “family income” doesn’t qualify them for “financial aid.”

The cost of earning an associate’s degree from one of the Alamo Colleges is less than $6,000, with opportunities to drive it down further. In addition to the aforementioned dual-credit courses, if you take six/eight classes during the fall and spring, you qualify to take one/two summer classes free of charge.

Affordability is not the culprit here.

Anyone above the “lower rungs of the economic ladder” who wants to go to a community college will sacrifice purchases that bring them short-term pleasure in order to improve their future. This is not a scenario lacking in real-life examples.

In The Law, 19th-century French economist Frederic Bastiat said of such activism that

the law has only two alternatives: permit … teaching-and-learning to operate freely … or … [take] from some … to instruct others, without charge. But in the second case, the law commits legal plunder by violating liberty and property.

Parents have no bigger duty in life than raising well-adjusted, well-educated children. They are our investments in and contribution to society. But when they leave the nest, their level of financial support should only diminish over time. The level of “support” they derive from unknown taxpayers with less personally at stake should unequivocally shrink even more.