Making college ‘free’ will only make it worse

[NeoDymium]

@saillakeerie

Seems to me your analysis is extremely simplified. A lot of long term spending on state university campuses has been for educational buildings. What do you do with those in terms of cost recovery for those projects? How about student unions? Are there other uses for those facilities outside the university setting? How many people outside the university setting live close enough to create sufficient demand to offset costs for any given university facility such as student unions, libraries, exercise facilities, meeting rooms, etc? And unless you are charging use fees (at amounts sufficient to support those facilities), public tax dollars will be necessary to support them. So any cost savings to the universities are at least in part erased with tax increases to publicly support those facilities. And any losses to universities must be covered by tax dollars and/or other public spending cuts as well.

As I’ve said before, I don’t have a full cabinet of advisors to give you a less simplified answer and there is no illusion that this is a simple problem to fix. The universities would certainly lose money in the short term if they lose access to the tuition money. In the long term they will have to adapt to more stringent controls on spending.

A tentative plan that I think would be a good way to start would go something like:

1. Reel in the for-profit private schools, which have been proven to be rotten for educational value. This is the least politically controversial action and the easiest way to save 50% of student debt defaults and many millions of wasted GI Bill dollars. A lot of them should go out of business because they aren’t real schools and they would not be hard to replace by pushing more students into other programs.
2. Private nonprofits are the most expensive, but it’s also people’s right to go to them, but not necessarily on federal aid dollars. Ensure that high school juniors are taught about the expenses of state vs. private, the dangers of student debt, and when they should and shouldn’t go to private schools. Gradually drive down the amount of federal money used to pay tuition at those schools until it matches what the average state school is paid for in tuition dollars.This last step will perhaps do something to quell the fears of people worried that if they go to a private school, their tax contributions will be completely wasted.
3. Over the course of 10 years, downsize state universities as previously specified. They are the least problematic of the three - public nonprofit, private nonprofit, and private for-profit - so this can be done gradually. Over the course of those years, gradually reduce tuition rates as the university decreases operating costs. This would probably have to be accompanied with a tightening of admissions standards at most schools to divert less talented students (who didn’t belong in university in the first place) into inherently less expensive institutions. As far as I’ve seen, community colleges and trade schools are generally reasonably capable of increasing their student capacity without too much pain. They could probably expand their offerings into more involved almost-Bachelors level programs that, in conjunction with employer input, would make graduates very marketable.
4. Transition from the current funding model into one where universities are paid tuition by the government with tax money. That will require a mild to moderate increase of the tax rate.

On what basis do you believe operating costs would be a few thousand dollars?

On average over all students who attend institutions of higher learning, this is not very unlikely. Current costs at public universities, with all the waste mentioned, are about $15k per student per year. Community colleges and trade schools are much cheaper. Specialized schools - medical school (don’t think this will go below $25k/studentyear ever; MD profs are pricey), flight school (aircraft alone cost $55k/studentyear), many specialized “practicum” curricula, etc. - will always be expensive but will be rare enough that they won’t significantly distort average annual education costs.

We could, roughly, categorize college-bound students into three groups:

1. Those who want to get a well-paying job with an education at a beyond high school level.
2. Those who want to do advanced applied work in their field.
3. Those who want to do research in their field.

Which maps, roughly, as 1-> Bachelors, trade school, vocational school, etc.; 2-> Masters, MD, JD, etc.; 3-> PhD, MD/PhD, other research degrees. 2 and 3 require significantly more resources than 1, so students who are generally only interested in 1 should be gradually moved towards cheaper programs that are more suited to catering to those requirements. Universities should continue to cover 2 and 3 and some reduced amounts of 1. The reduced headcount within universities will also mean that costs can be higher than average for universities without pulling up the average cost of education. I think we can all agree that there are many students in universities that have no place being there, and I think there will be few tears shed if they were simply not to go to school there.

I agree that we need to find ways to help control costs. Biggest concern that I have is that disconnecting the consumer of a service (here college education) from the person paying for it will increase demand and put upward pressure on prices. So absent some incentives to control costs, “free” college to all (or any large group of people) will almost certainly lead to further increased college costs.

The biggest “cost” of attendance at a university is not tuition price, but opportunity costs. Spending 4-6 years in college for a Bachelors is a significant sum of money you won’t be earning in the meantime. So the price-demand response will be smaller than one would assume by looking just at tuition price changes.

It is true that in a purely market-driven response, more demand will lead to a higher price. The issue is that education as a whole is what we could describe as a market failure. The point of a market is to maximize profits, which in a lot of cases does coincide with the goal of maximizing welfare for all. However in the case of education (and medicine) it doesn’t - there is a perverse incentive to provide that from a purely economic standpoint. This is when large-scale government involvement makes a whole lot of sense.

If you want something that definitely does lead to price overruns, look no further than the federal student aid system. Easy student loans, coupled with no price controls, means that it’s easier to come up with the cash for college, without doing anything to limit prices.

Price controls do not have a huge history of success. Not sure what about college would necessarily lead to a difficult outcome. And if we put price controls in place (either at today’s levels or at some level below that which exists today – with some limited level of growth), fast forward 10-20 years. What will those price controlled colleges look like compared to other public universities (not “free” and thus subject to price controls) and private colleges? What kids will be studying there? What will the faculty look like? What employers will recruit there?

Education and medicine are two of the few large-scale enterprises that are done better by direct government control than by any market system. This is because the market incentives and the public well-being incentives do not align for those two programs. Strict price controls alone would probably not be a good idea (too many of those can lead to a “pay the lowest bidder” approach that will damage educational outcomes) but an indirect limit on allowable operational expenditures would be reasonable. More specifics than that would take a cabinet of economic advisors to work out the details.