The rise of student debt is too complicated to blame entirely on escalating tuition at undergraduate colleges. However, it is true that as college costs rise, students and families generally need to borrow more. That is why many people want their state or the federal government to do more to keep college affordable. Lower prices would reduce the need for student loans in the first place.
So should college be free? Or should tuition prices be capped? There are pros and cons to these and other ideas for reforming how Americans pay for college. No single idea is a silver bullet. One of the most discussed ways to make college more affordable and reduce debt is to offer more financial aid to low-income students, for example by making the federal Pell grant or state grant programs more generous. In contrast, efforts to limit the price of tuition itself would affect students regardless of their family income. Here’s what to keep in mind:
One popular idea for controlling rising college prices is for the federal government to simply make college free. That would certainly make college more affordable, since there would be no need for students to take on debt for tuition. In fact, in a number of states, including New York and Washington state, public colleges and universities are now free for many low-income and middle-class students. However, those policies don’t completely eliminate student debt. Here’s some of the fine print:
- A lot of Student Debt is Unaffected by Free College. That is because around 40 percent of student debt is taken out to pay for advanced degrees beyond a college degree, like master’s degrees, law degrees, and medical degrees. Free college plans generally only apply only to undergraduate degrees, like a bachelor’s degree or associate’s degrees from a community college.
- Only Public Colleges are Covered by Existing Free College Programs. Unless a state or the federal government decides to take on a huge amount of additional expense, students who attend private colleges and universities wouldn’t be affected. Yet those students take on a large share of the country’s student debt. That same is true for students attending out-of-state public universities.
- Many Students are Ineligible. Free college plans offered by states often exclude a huge proportion of college students, a fact that limits the policy’s effect on the mounting student debt in this country. Usually free college is only offered to full-time students, or students who recently graduated from high school, not older students. And those excluded groups of students account for a considerable chunk of the student loans taken out each year.
- Most Free College Programs Don’t Include Living Expenses like rent and food. Most of the costs that low- and middle-income students incur at public colleges are for these expenses, not tuition, which is usually covered largely by financial aid like grants.
According to the U.S. Department of Education, low- and middle-income students at public four-year colleges face an average of about $2,000 in annual tuition costs after financial aid (not including loans) is applied, and about $9,000 in living expenses.
These limitations do not necessarily mean that free college is not a worthwhile option, or that a national free college plan wouldn’t reduce student debt — it would. And for those students who are eligible, college costs and student debt would be much lower than they are today. But the policy would probably have a smaller impact on the overall level of student debt than what many people assume, unless the federal government set up a free college plan without all the fine print that states have used to keep costs under control. However, that would be extremely expensive. Even so, some advocates and policymakers say the cost would be worthwhile. Just as with debt cancellation, there would be questions about whether taxpayers should support wealthy students’ college costs. But supporters of free college say that a simple message that college is free for all would encourage everyone who is interested in seeking the benefits of a degree.
Price Caps for College Tuition
Another potential solution for making college more affordable is to cap how much colleges can charge for attendance. Under this approach, the federal government would either specify a maximum that colleges can charge students or limit how much they can raise prices each year, if at all.
In many states, lawmakers already require that public colleges and universities set tuition at or below certain levels. They might also restrict how much colleges can raise tuition each year. Meanwhile, some states give universities broad flexibility in setting prices. Just as in the case of free college, there are many reasons these existing policies to cap tuition are not as effective as they might seem.
- Tuition Caps Generally Apply Only to Public Institutions. That’s because those schools are funded by their state governments. But about one in four undergraduate students attend a private college.
- Tuition Caps Don’t Address the Cost of Living. This is the same issue we see with free college. Another problem is that public colleges sometimes have more leeway to raise student fees than tuition, so they have a way to get around the caps by padding fees.
- A Tuition Cap Could Affect Quality. Lawmakers are often reluctant to put strict limits on the prices that colleges can charge, even though that would make college more affordable. Lower tuition can mean smaller budgets, requiring colleges to cut back in some way. That might mean fewer professors and larger class sizes or fewer course offerings. Or it might mean that colleges can’t accept as many students as before, limiting who has the opportunity to attend a public college.
In countries with free college (which is a price cap of $0), access to public colleges is often more limited than in the United States. For example, Finland’s free colleges reject nearly two-thirds of applicants, while Germany omits students with weaker academic scores.
The risk that price caps could undermine college quality has made the idea less popular among experts and advocates than other ideas. However, the idea remains a component of some proposals for the federal government to invest more heavily in higher education. If the government made college free for most or all students, policymakers would want to prevent the cost of that free college promise from quickly ballooning out of control. So colleges or states would likely need to commit to limiting how much their costs rise each year.
A resource from A resource from the Peter G. Peterson Foundation, created with collaboration from the Center for American Progress (CAP) and the American Enterprise Institute (AEI).
Take a deeper dive into reducing college prices using the resources below:
- Tuition Control Policies: A Challenging Approach to College Affordability (Midwestern Higher Education Compact)
- A Promise Worth Keeping: An Updated Equity-Driven Framework for Free College programs (The Education Trust)
- Free College and the Debt-Free Fantasy (American Enterprise Institute)
- Graduate School Debt (Center for American Progress)