Free Higher Ed in the News: The Good, The Bad, and The Ugly

Almost every week, there is a new plan to make higher education free.  The latest two proposals come from Starbucks and a new group of former politicians called Redeeming America’s Promise; although there are issues with many of these new initiatives, the emergence of plans to change how we pay for college is an important first step.

The Starbucks policy has received the most news coverage and has generated the highest level of misunderstanding.  Although many people are reporting that Starbucks is going to pay for the tuition of its workers, what is really happening is the coffee company is making adeal to enroll some of its employees into Arizona State University’s onlineeducation program. In fact, it turns out that ASU is paying formost of the cost, and this new Starbucks’ plan replaces a previous policy that helped students attend a college of their choice.   

The Redeeming America’s Promise plan is much more comprehensive and ambitious, but its fatal flaw is that it is really providing tuition help to lower- and middle-income students, but it is not paying for the total cost of attendance.  The problem with this strategy is that on average over 60% of the cost of attending a public university or college comes from room, board, books, and other living expenses, and while federal, state, and institutional aid often covers much of the tuition, the total cost of attendance fuels high student debt. 

As the film Ivory Tower shows, one reason why most of student loan money goes to living expenses is that universities and colleges have engaged in an amenities arms race at the very moment states have been cutting back in their support for higher education.  In 2012-13, the average total cost of attendance at four-year public universities was $21,683 and the part going to tuition and required fees was $8,005. At community colleges, the total cost in 2012-13 was $13,277 and the part going to tuition was $3,080.  This means that for public universities, funding only tuition only accounts for 36% of the total cost, and for community colleges, it makes up 23%.  Thus, as everyone always talks about the cost of tuition, the biggest problem is the related costs of room, board, books, and living expenses. 

The RAP plan does address this issue of related costs by stating that students will be able to take out income-based repayment loans with a cap to pay for non-tuition costs, and they could write off on their taxes the full principle of the loan once they graduate.  There is also an effort to control tuition levels by tying them to a state’s medium family income level.

These efforts to make higher education free to the students should be applauded, but there needs to be a more realistic discussion of what is really driving student debt.