Free College for All: Is It More Dream Than Reality?

Election 2016
Posted By Donna Fuscaldo on December 22, 2015 at 9:30 am
Free College for All: Is It More Dream Than Reality?
Senator Bernie Sanders, Democratic presidential candidate

Free Education for everyone has been the mantra of the Bernie Sanders and Hillary Clinton presidential campaigns for some time now, but is it a reality?  Depending on who you ask, the answer is yes or no.

What to do about the cost and access to a college education has long been a debate within higher education. But the issue has been thrust into the spotlight because it is an election year.  Earlier this year, Democratic hopefuls Sanders and Hillary Clinton called for free college for all, with Sanders unveiling his College For All Act and Clinton talking up her New College Compact plan.

Free college as a way to combat rising costs to earning a degree

Free college is appealing for many people, considering the cost of earning a four-year degree increases each year. Many students have to take out thousands upon thousands of dollars in student loans to earn a four-year degree and then spend a large part of their working years trying to pay it back.  People who don’t have access to loans can’t even go to school, creating a wide gap between the haves and have-nots. After all, without a college degree, many are not able to get those higher paying jobs. Not to mention that in the coming years, the majority of all jobs will require a college degree.

Enter Sanders’ College For All Act, which he estimates will cost an eye-opening $47 billion a year. Under Sanders’ plan, the $47 billion would be given to states each year to eliminate undergraduate tuition and fees at public colleges and universities.  Sanders estimates total tuition at public colleges and universities amounts to $70 billion a year. Under his plan, the government would cover 67% of the cost and states would have to cover the remaining 33% of the cost.

Recognizing that quality could suffer under a government-run plan, Sanders says states will have to meet a number of requirements designed to protect students, ensure quality and reduce costs, in order to qualify for federal funding. For instance, states will have to maintain spending on their higher education systems, academic instruction and need-based financial aid. What’s more, schools will have to reduce their reliance on low-paid adjunct faculty.  And none of the funding can go to administrator salaries, merit-based financial aid or the construction of non-academic buildings, which means no state-of-the-art stadiums or football fields.

Student loan rates will decrease under Sanders’ plan

But, the College For All Act doesn’t stop there. Sanders is also proposing the formula for calculating student loan interest rates in effect until 2006 be restored. Under the previous calculation, student loan interest rates would be reduced nearly by half to 2.32 percent from 4.32 percent. Rates would never be allowed to rise above 8.25 percent.  And students with existing loans would be able to refinance their loan to the lower rates under the plan.

Keeping an eye out for low-income students, who suffer from higher dropout rates in comparison to their richer counterparts, Sanders is also proposing an expansion of the number of students who can participate in the Federal work-study program, with funding for the program focused on schools that enroll high numbers of low-income students.

Sanders also wants the Federal Application for Student Aid simplified and for Wall Street to pay a tax that would help foot some of the bill for free college for all. Investment houses, hedge funds and other so-called speculators would have to pay 0.5% on stock trades, 0.1% fee on bonds and a 0.0005% fee on derivatives. “It has been estimated that this provision could raise hundreds of billions a year, which could be used not only to make tuition free at public colleges and universities in this country, it could also be used to create millions of jobs and rebuild the middle class of this country,” said Sanders.

Hillary Clinton’s plan to cost $350 billion over ten years

Hillary Clinton is also calling for free college under her “New College Compact” plan that would cost about $350 billion over ten years. States, under the proposal, would have to boost their spending on higher education, and public colleges and universities would have to clamp down on spending to lower the cost of a degree. Families would still have to contribute, but student loans wouldn’t be necessary to attend public colleges and universities.

Tax hikes will limit the appeal for some politicians

While the Sanders and Clinton plans sound great on paper, there’s one major problem, according to critics: the billions of dollars it will cost and the way they plan to come up with the money. “Both propose to increase taxes, which is a non-starter in a Republican-controlled Congress,” says Mark Kantrowitz, a financial aid expert. “So, even if they like some of the ideas, such as increased accountability and risk-sharing, they stop reading as soon as they see that the proposal requires increasing taxes.”

Instead, Kantrowitz says it is possible to provide free college tuition and cover the required fees and the cost of textbooks without increasing taxes or the deficit spending. He said it can, instead, be paid for by replacing all current federal spending on need-based student financial aid, and the three tuition-dependent education tax benefits, including the American Opportunity Tax Credit, the Lifetime Learning Tax Credit and the Tuition and Fees Deduction.

As for the candidates’ reliance on taxpayer dollars to bring free college to the masses, Kantrowitz says it may be on purpose. “Perhaps the political candidates are counting on this as part of their proposals, in order to establish a contrast between their positions and the positions of the Republican candidates,” he says.

Donna Fuscaldo
Donna Fuscaldo is a freelance journalist hailing out of Long Island, New York. She has also written for Bankrate.com, Glassdoor.com, SigFig.com, FoxBusiness.com, Business Insider, Dow Jones Newswires and the Wall Street Journal.

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