The Dollars and Sense of Free College

Free college has been gaining traction as a public policy option in recent years and has been adopted in some form by at least 15 states. Enthusiasm for the idea has gained momentum with the growing realization that a healthy economy requires a well-educated workforce and that workers benefit immensely from education beyond high school. Indeed, job market data show that 80 percent of jobs leading to middle-class wages call for at least some postsecondary education. Of course, free college is not really free for the taxpayers who will wind up paying for it. Supporters of free college argue that investment in the education system is a public good that yields both economic and noneconomic benefits far beyond its costs. In a diverse democratic society, higher education not only provides a path for economic self-sufficiency, it also contributes to positive outcomes such as improved health, reduced crime, and a greater sense of well-being. All these factors might reduce costs to society in the long run. Finally, higher education provides civic value by preparing an educated citizenry to participate in the electoral process. Any assessment of free-college plans needs to consider both costs and benefits. The analysis of a free-college plan endorsed by Joe Biden finds that it would have high costs but would also generate substantial benefits. Biden's plan would allow all students at community colleges and students with family incomes under $125,000 at public four-year universities to attend college without paying tuition. Like other first-dollar plans, Biden's program would allow students to use their existing financial aid toward other attendance costs, such as room and board. Biden's proposal for tuition-free college would cost $49.6 billion in its first year, with $33.1 billion in federal spending and $16.5 billion in state spending. These costs are $8.6 billion less than the costs associated with a first-dollar plan that would cover all students regardless of their family income. This report also examines the class and racial equity implications of first-dollar programs with universal eligibility, the Biden plan, and last-dollar programs with universal eligibility and discusses a variety of free-college models and assesses their relative costs and benefits. [For the executive summary, see ED608988.]