Free college tuition sounds pretty good, especially if you’re a parent with college tuition looming in the back of your mind. Who doesn’t like free things?
The truth is, making things free only makes them more expensive.
These days, a lot of policy-makers are calling for no prices (or at least lower prices). “Free higher education” is the form this refrain takes the most.
Morley Winograd, president of the Campaign for Free College Tuition, has called free tuition “the fastest-growing policy idea in the country.” So far, twelve states have enacted legislation to offer free tuition in some form.
At the same time, tuition and fees at public four-year institutions continue to soar. Outside of legislative efforts to lower prices, others, like James Koch of Partners for College Affordability and Public Trust, look to influence public opinion to send a message to university trustees. Writing in the New York Times, he decries the seemingly bizarre efforts of universities to attract students by adding new amenities like “lazy rivers” rather than increased educational value:
At a time when college has never been more expensive, this is the last thing students should be paying for.
It’s understandable why people are searching for solutions. But ultimately, free higher education is a policy unicorn. Making college free sounds great, but it will bring great harm instead of great benefits.
Free of Charge, but Free to Provide?
Presumably, the goal of making college free is to make it more widely available. We’re facing a problem of scarcity, constraints, and, ultimately, tradeoffs.
The key to human flourishing in a fallen world marked by scarcity is to overcome and, if possible, eliminate tradeoffs. Unleashing human creativity and entrepreneurship is the best way to do this. If college is a path to more entrepreneurship, greater technological innovation, and higher incomes, wouldn’t cheapening the cost of college increase all these things?
Paradoxically, lowering the cost of college will increase the cost on society. And it won’t make entrepreneurship and creativity more widely available, either.
Economics teaches that reducing or eliminating prices induces greater consumption. Think about your favorite ice cream flavor or pair of shoes. You consume more of these things when their price drops. It’s as predictable as gravity.
The same thing will happen with college. If we reduce the price of college to zero, we will encourage inefficient consumption of higher education.
Inefficient? What does that even mean?
College dropout rates are at an all-time high. According to Bill Gates’ estimates, only half of the students who enrolled in college this year (54.8 percent) will graduate. This is a tragic unintended consequence of inducing more students to attend college, regardless of their needs. This also makes college incredibly expensive for everybody.
Eliminating prices doesn’t change the level of scarcity of any item, college included. Making college free of charge doesn’t make it free to provide. Professors still need to be paid. The lights still need to be turned on. The janitorial staff is still required. Eliminating the price doesn’t eliminate the resources required to provide the education. Somebody still has to pay those costs, even if students aren’t.
So making college “free” just makes it more expensive, because now we have to find a way to pay for all the resources more students will be consuming at higher levels now that the price is (theoretically) reduced. And now we know that many of those students will consume those resources only to later drop out altogether.
Prices Help Solve the Problem of Higher Education
Policymakers cannot eliminate prices any more than meteorologists can fend off snowstorms. Snowstorms happen. So do prices. The difference is that prices are critical to better stewardship of our scarce resources.
Prices bring together the people who want to consume college the most with those who can supply it best. Increasing higher-education opportunities and alternatives happens when competition in the supply of college exists. That means opening more universities or providing professional certificates and vocational schooling. This competition will also drive down prices of higher education over time.
If we want more people to be able to afford and attend college, we need to allow the market, through buyers and sellers, to innovate, create alternatives, and compete to lower costs. In college, as with any other good, prices provide transparency and encourage innovation—we need more of that, not less.
Editor’s Note: The best of intentions should be checked with sound economic thinking. Check out IFWE’s high school homeschool curriculum, Biblical Foundations for the Economic Way of Thinking.
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