Could We Make All College Tuition Free?

A blog about business, finance, and economics.
Sept. 20 2010 11:03 AM

Could We Make All College Tuition Free?

Robert Reich's new book Aftershock should appeal to those who enjoyed Timothy Noah's splendid Slate series on inequality . The remedies that Reich offers in his conclusions are mostly familiar choices from the liberal menu—including higher marginal tax rates on the wealthy, and Medicare for all—but one jumped out as novel. Reich argues that the fear of not being able to afford sky-high college costs keeps many students today from post-secondary education. So he proposes that no one who attends college or university in America should have to pay anything upfront for tuition. Those attending private institutions could take out federal loans, and tuition at state institutions would be free.

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Graduates would then be required to give 10 percent of their salaries—Reich acknowledges that the number is an estimate—back to their school for the first 10 years of full-time employment. After that, any loans would be forgiven. In effect, those who leave college for financial or other well-paying careers would subsidize the education of those who pursue socially useful but lower-paying areas like teaching or social work.

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Reich doesn't provide much detail on this idea. A similar "graduate tax" mechanism was recently proposed in the U.K. (where tuition fees are on average much lower than in America but have grown substantially of late) by Liberal Democrat business secretary Vincent Cable. It was widely attacked, among other reasons, because some feel it would demolish universities' fundraising powers .

There's another problem, too. According to Andrew Hacker, co-author of the excellent new book Higher Education?: How Colleges Are Wasting Our Money and Failing Our Kids—and What We Can Do About It , tuition at state institutions is not really what builds up most students' massive debt. Hacker points to comprehensive surveys conducted by the College Board , which show that the average in-state tuition cost for public four-year schools is about $7,000 a year. Add in Pell Grants and other forms of already available assistance, and the figure comes down to about $3,000 a year—real money, of course, but not a level that most families can't take on through either savings or loans.

No, the real culprit is living costs, both the traditional "room and board," plus on many campuses the price of maintaining a car; fees to fraternities or sororities; ski trips and study abroad; etc. "Those costs are open-ended," Hacker explained in an interview, and thus there would be no practical way to include them in the scheme that Reich describes.

These are significant roadblocks to a graduate-tax system, and there are others. Still: That $7,000 average means that many students have much higher costs; at some Penn State campuses , the current annual tuition fees are more than $14,000. I don't expect that Reich's proposal will become federal policy any time soon; it would be instructive, though, to see an experiment on a state level.

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