This essay appeared in newspapers across Indiana...
Since it appeared, another observation shows us that Obama is flailing about with this proposal: He's taxing 529 account for college in order to pay for free community college. Nice!
President Obama has proposed free community college
for everybody in the United States.
At present, according to the American Association of
Community Colleges, there are 6.5 million students in public community
colleges. Most of their $31 billion in revenues comes from various levels of
government. Although their average cost per student is about $5,000, the
average student only pays $950 per year in tuition and fees.
The proposal is supposed to cost about $60 billion
over the next decade. This estimate is probably based on a static analysis—that
only these 6.5 million students would attend community college, imposing an additional
burden of $950 per student on taxpayers. A more sophisticated prediction would
take into account the likely increases in both the number of students and the average
cost per student.
Average costs would be expected to increase with additional
subsidies and the greater bureaucracy that typically accompanies more
government involvement. We’ve seen how massive government subsidies have impacted
the overall cost of health insurance and health care in the United States over
the last 70 years. Or in the field of education: How about the cost of K-12
education, wholly financed by taxpayers, where we currently spend about
$300,000 per classroom of 25 students?
There are many other reasons to question the community
college proposal. Continuing with the cost side: Why should the average family
of four pay $780 in higher taxes to support another $60 billion program? In a
time of immense federal debt and tight state budgets, why should this be a strong
As for the recipients, how will students treat community
college if it’s completely free? Will they value the education appropriately and
become more responsible individuals? More broadly, is it smart for society to
create another “entitlement” program?
From the market’s perspective: How will the perception
of a community college degree be changed within the labor market? With concerns
about a “bubble” in higher education, is it wise to increase government
subsidies into that sector? Only 20% of community college students complete a
two-year program within three years. Are we imagining that the benefits are
greater than they would be?
Needs-based subsidies for higher education are already
in place through Pell Grants. Why is it wise to subsidize community college
tuition for all students, even those from upper-income families? As with the
minimum wage, the policy is poorly-targeted—in this case, subsidizing all
students, rather than just those with fewer means.
Given all of these concerns, the policy proposal seems
more political theater and cynical political games, than good (or even serious)
Interestingly, Governor Pence has proposed increased
funding for vouchers and charter schools. Other school reformers are calling
for “backpack funding”, which follows each student to the school of their
choice (and varies with student needs). With these policy choices, the approach
is to finance the decisions of parents and children, rather than sending money
to a school and then forcing students to attend that school.
President Obama takes a similar approach. He could
have proposed free community college, but only at the community college closest
to each person’s house. Instead, he said that we should empower students to
obtain educational services at the community college of their choice.
Given that we’ve decided, as a society, to finance
K-12 education, why not give those parents backpack funding as well—so that those
with any level of income have the freedom to choose the school that’s best for