Tuesday, December 1, 2015

Bernie Sanders' proposal for free tutiiton at public universities could actually save taxpayers money. So why don't we do that?

Bernie Sanders has proposed free tuition at all American public universities. Let's look at that proposal and also examine the reasons why Bernie's scheme will never be implemented, even though it would cost taxpayers less money than they are spending now on student financial aid.

According to Catharine Hill, president of Vassar College, free tuition at the nation's public universities would cost about $70 billion, which is a lot of money.

But the federal government will distribute almost $35 billion  this year in Pell Grant funding to low-income students. If Congress closed the Pell Grant program and simply provided free tuition at public universities, half of the estimated cost of Sanders' plan would be covered by the switch.

Where would the other $35 billion come from?

In addition to Pell Grants, the federal government operates the federal student loan program, which will distribute more than $100 billion a year in college-loan money. About a third of that sum will be lost due to defaults It would actually be cheaper to provide every American with free tuition at a public university than to operate the federal student-loan program at $100 billion a year and the Pell Grant programs at $35 billion.  In fact, this change would save the federal government about $65 billion a year.

Why then don't we adopt Bernie Sanders' proposal?  Three reasons:

1) The for-profit college industry would collapse. Currently, the for-profit colleges get about 25 percent of all federal student-aid money. If the government stopped subsidizing the for-profit college sector, the for-profits would be forced to close because they get 80 to 90 percent of their operating revenues from federal funds. In fact, offering free tuition at public universities in lieu of the current student-aid system would shut down the for-profit college industry almost overnight.

This sleazy sector of higher education will never allow Bernie Sanders' plan to be operationalized. The for-profit colleges have made strategic political contributions to key congresspeople, and they own most of the lobbyists in Washington. For this reason, Bernie's free-tuition program is already dead.

2) Nonselective private colleges would collapse.  Bernie's free-tuition plan would also kill the nondescript private colleges. Why would anyone attend Malloy University on Long Island, Cabrini College in Philadelphia, or Pine Manor College in Boston if they could go to a state university for free? This sector of higher education will surely do everything it can to make sure Bernie's pipe dream never  becomes a reality.

3) Elite colleges and universities would suffer. Free tuition to attend a public university would not mean the death of Harvard, Yale, Vassar, Dartmouth, and the other elite private colleges. Most of them have large endowments that would keep them afloat even if the federal student-aid program was closed. Moreover, there will always be wealthy families willing to pay almost any amount of money for their children to attend an Ivy League school, even if the public universities were free.

Nevertheless, the Harvards and the Yales do quite well under the status quo. They certainly get a hefty financial boost from Pell Grant money and federal student-loan revenues.  Having a federal cash infusion allows then to jack up their tuition, because they know students will simply borrow more money to cover tuition hikes. When Catharine Hill of Vassar spoke out against Bernie Sanders' free-college plan in the New York Times yesterday, she was speaking not just for Vassar but for all the elite colleges.

Conclusion: Bernie's Free-Tuition plan is Dead On Arrival

In short, Bernie Sander's proposal to give everyone a free undergraduate education at a public college or university is DOA.  The for-profit college industry  and the non-profit private universities simply will not allow it.  These two groups own Congress, and they like the status quo.

Image result for "bernie sanders" images
Bernie's College-For-All plan: DOA

References

American Council on Education. The Status of Federal Student Aid Programs. Washington, DC: Author, 2015. Accessible at: https://www.acenet.edu/news-room/Documents/The-Status-of-Federal-Student-Aid-Programs.pdf

David Halperin. The Perfect Lobby: How One Industry Captured Washington, DC. The Nation, April 3, 2014. Accessible at:  https://www.thenation.com/article/perfect-lobby-how-one-industry-captured-washington-dc/

Catharine Hill. Free Tuition Is Not the Answer. New York Times, November 30, 2015, p. A23. Accessible at: http://www.nytimes.com/2015/11/30/opinion/free-tuition-is-not-the-answer.html?_r=0

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