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Free tuition will bleed colleges dry

By Noah Smith

At last week’s Democratic primary debate, the issue of free college became a sticking point.

Free tuition at state universities has long been one of Vermont Senator Bernie Sanders’s flagship proposals. But critics such as South Bend, Indiana, Mayor Pete Buttigieg say that it’s a giveaway to the rich.

In one sense, Buttigieg is right; high-income families tend to pay much more tuition than their low-income counterparts. But most plans for free public college count on replacing the lost tuition revenue with increased government spending, funded by tax revenue. Since the tax system is progressive, the wealthy and upper-middle class would end up paying most of the bill. The net effect mostly would be a wash.

But free college comes with a much bigger risk that is rarely acknowledged by its proponents. If governments don’t shell out the money to replace the lost tuition dollars, universities could end up starved of funds.

Almost all public universities now receive much of their funding from state governments. In some cases these are controlled by leaders who doubt the value of universities, and are occasionally downright hostile. For example, former Wisconsin Republican Governor Scott Walker cut public funding to the University of Wisconsin system. Cuts like these may partly be driven by ideology. But opposition to higher education spending can be based on economics as well as ideology. Raising taxes can be politically dicey, especially where rates are already high and there are worries about driving business elsewhere. In states that are inclined to spend a lot, there’s often a great deal of political pressure to use revenue for other purposes like social spending and K-12 education.

Then there’s the business cycle. Most states reduced spending on universities during the Great Recession and the vast majority didn’t restore it to its former levels after the recession ended. Sanders’s own state of Vermont decreased higher education spending per student 16% between 2008 and 2018.

If even Vermont’s government won’t pony up the cash, who will? Those on the socialist left seem to believe that the federal government will step in, but this seems overly optimistic given decades of cuts to every major spending item except health care. Some might argue that the very existence of tuition at state schools might be driving governments to shift costs onto students, since they know tuition money can replace lost tax dollars. But even places that have much cheaper college tuition, such as Australia, France, the U.K. and Canada, have seen university funding cuts or pressure for cuts in recent years.

So it’s highly likely that free tuition would force U.S. universities into an era of painful austerity. How would they respond? They would almost certainly accelerate the shift from classroom instruction by tenure-track faculty to low-paid adjunct faculty, lecturers and graduate students:

Student services would also likely take a hit. Academic departments would shrink, with humanities and social science taking the biggest hits. Some universities would simply shut.

Economically, starving the U.S. university system of funding would be a terrible move. Universities are the best tool the country has for revitalizing flagging regions. Their research sustains U.S. technological and industrial leadership. They remain one of the few truly effective, world-beating institutions that the U.S. has left.

Although free-college crusaders might imagine a never-ending wave of socialist political victories providing a shower of government money for colleges that ends the need for tuition, the rest of the country should look on this fantasy with a jaundiced eye.

Smith writes for Bloomberg Opinion.

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