President Obama promoted his proposal to make community college free in last week’s State of the Union address. The proposal affords the opportunity to consider whether a zero price means free and examine the differences between higher education and K-12 education in America.

First, let’s look at some of the details about the President’s proposal. Students would need to maintain at least a 2.5 grade point average and make progress toward a degree or transfer to a four year university. Colleges would need to ensure that their credits transfer, that their occupational training programs lead to jobs, and improve student support services. And the Federal government would need to come up with the money to cover costs currently paid by tuition. Tennessee already has a similar plan in place, so the President’s proposal is not unrealistic.

Characterizing this as free community college, however, is economically offensive in two ways. The plan will not actually reduce the cost of community college, just shift some of the cost from students to the Federal government. Somebody will have to pay for employees, buildings, energy, and so forth used by community colleges. Government never makes anything free by picking up the tab.

And students will still incur a cost of attending. Economists typically use the cost of attending college to illustrate to students the concept of opportunity cost. The opportunity cost of an action is the value of what must be given up to take the action. The cost of attending college includes the value of the time spent attending and studying in addition to tuition, fees and books. This time could be spent working more hours, or perhaps spent with family. Enrollment by new high school graduates fell sharply in 2013 as an improving labor market increased the opportunity cost of attending community college.

The Federal government already pays the full tuition of many community college students through the Pell Grant program, so the budgetary impact will be lessened. Still, eliminating tuition will increase enrollment, both by bringing some students out of the labor force, and by diverting some students from four year colleges. The Center for College Affordability and Productivity, which performs Forbes magazine’s annual college rankings, notes that the cost per student year for community college is often half that for a public four year college. Student debt recently topped the $1 trillion mark, so encouraging some students to avoid the extra cost and debt of four year college sounds worthwhile.

President Obama has promoted this plan as making community college as universal as high school, and this is where I see a problem. Making higher education more like our K-12 education system, I think, will weaken our university system. Many American universities, both public and private, rank high on any list of the top universities in the world.

Public universities have no exclusive attendance zones. Students from Troy are not required to attend Troy University simply because it is closest to their home. Instead they can attend Alabama, Auburn, or one of the state’s other universities or community colleges. And because higher education is not free, private universities do not face the same price disadvantage as private K-12 schools. Troy University, like all of America’s state universities, has no captive audience and must compete for students. Competition assures quality.

Shifting the cost of community college from students to the Federal government also raises fairness issues. Consider two high school classmates: one takes advantage of tuition-free community college and then completes a bachelor’s degree, while the other joins the workforce. The college graduate will likely earn far more, but the President’s plan makes the poor high school grad pay his former classmate’s community college tuition.

Perhaps even more troubling, the price imbalance relative to four year colleges will likely generate substantial pressure to extend tuition-free college. Our K-12 school system is the most expensive in the world, but only a quarter of high school graduates test ready for college on the ACT. We cannot afford the high cost of more “free” public education.

 

 

Daniel Sutter is the Charles G. Koch Professor of Economics with the Manuel H. Johnson Center for Political Economy at Troy University and host of Econversations on TrojanVision. Respond to him at dsutter@troy.edu and like the Johnson Center on Facebook.