The Economist 14Dec2019

Degrees of expense

United States, net cost of college attendance*

Annual, 2019 prices $’000

Source: College Board

*Tuition, fees, room and board less

student aid and tax benefits

30

20

10

0

2000 05 10 15 20

Public two-year ( in-district)

Public four-year ( in-state)

Private four-year

A

curious thingseems to be eternally

recurring in the Democratic presiden-

tial primary. Polices that not long ago

looked like far-reaching progressivism are

now deemed moderate milquetoastery by

the party’s left flank. A public option for

health insurance bores when compared

with Medicare for All, a proposed single-

payer set-up. Comprehensive immigration

reform is deeply unfashionable next to de-

criminalisation of illegal immigration and

the abolition of the nation’s immigration-

enforcement agency.

The same has happened with the debate

over higher-education costs. Pete Butti-

gieg, the moderate mayor of South Bend,

Indiana, newly rising in the polls, would

like to expand subsidies significantly for

public institutions. But he proposes to ex-

tend free tuition only to families making

less than $100,000 a year (70% of all house-

holds), not to all students. For this, Alexan-

dria Ocasio-Cortez, a popular lefty con-

gresswoman, has accused him of parroting

“a goptalking point used to dismantle pub-

lic systems”. “Just like rich kids can attend

public school, they should be able to attend

tuition-free public college,” she added.

Ms Ocasio-Cortez’s preferred candidate,

Bernie Sanders, is offering a maximalist

solution to the problem. Not only would all

tuition fees at public institutions be elimi-

nated, but all $1.6trn of existing student-

loan debt, from both public and private

universities, would be cancelled. Elizabeth

Warren, another leading progressive can-

didate, has a similar plan, though with a

few more conditions on debt forgiveness.

She reckons her plan would cost $1.25trn

over a decade, paid for by her (at this point

somewhat overextended) wealth tax,

whereas Mr Sanders thinks his would cost

$2.2trn, which he would pay for by hitting

“Wall Street speculators” with a 0.5% tax on

all trades of stock.

Arrayed against this sort of solution are

the ideas of ideologically moderate con-

tenders like Michael Bennet, Joe Biden, Mr

Buttigieg and Amy Klobuchar, who would

like to subsidise higher education more

without making it entirely free. Unlike the

debates over Medicare for All and immigra-

tion, the agitation of the progressive wing

over free college probably does not run the

same risk of electoral backlash; few Ameri-

cans are committed to the current system

of university financing. Finding the opti-

mal solution, however, requires a clear un-

derstanding of two matters: the scope of

the current problem and the best way to

target the benefits of enlarged subsidies.

The stereotypical embodiment of

America’s high university costs, much

loved by journalists, is the part-time ba-

rista with a liberal-arts degree and a six-

digit debt. Such luckless espresso-pullers

undoubtedly exist, but they are far from

typical. The average recipient of a bache-

lor’s degree in America graduated with

$16,800 in outstanding debt. Though this is

24% higher than it was in 2003, it seems

unlikely to trigger the kind of indentured

servitude so often imagined.

One reason that public perception and

reality are so misaligned is the preoccupa-

tion with the costs of elite private colleges

(which have indeed rocketed). In 2000 tu-

ition at Harvard cost $31,400 per year with-

out financial aid in current dollars. Today it

costs $46,300. In part because America de-

votes considerable public dollars to higher

education—spending twice as much as a

share of gdpthan Britain, for example—

costs are lower than imagined. After aid

and tax benefits are taken into account,

private colleges charge an average of

$27,400 each year in tuition and fees. In-

state public college costs much less—about

$15,400 on average—whereas local two-

year colleges cost just $8,600.

A universal college benefit would dis-

proportionately help families that are al-

ready comfortable. Even among young

Americans (those between the ages of 25

and 29), only 37% have a bachelor’s degree

or a more advanced one. They are dispro-

portionately white and wealthy. There are

clear public benefits from higher educa-

tion, but also considerable private benefits,

given the large wage premium college grad-

uates enjoy over less-educated workers.

Nor would free college do much to advance

racial minorities. Racial inequalities in

educational attainment, which persist in

the present cohort of young Americans,

probably owe more to the quality of earlier

schooling than the anticipated cost of col-

lege. For that reason, universal pre-kinder-

garten may be a more effective use of re-

sources than universal free college.

Few countries in the world guarantee

free college, but in most countries college

is cheaper than in America. One outlier is

Denmark, where colleges are not only free,

but international students also receive a

monthly stipend of 6,166 kroner ($914).

That could make for a nice Democratic

presidential platform in 2024. 7

WASHINGTON, DC

Should the federal government subsidise students, or make college free?

The Democratic primary

College free-for-all

More woke than broke

32 United States The EconomistDecember 14th 2019