Free College Won’t Solve the Student Debt Crisis

Student debt tops $1.4 trillion.  With all the consequences of mounting student loan debt taken into account, liberal policymakers have generally proposed one of two solutions: heavily subsidizing student loans or forgiving outstanding student loan debt.  There’s a more radical third “solution”: having the government foot the bill for all tuition.  The third option may be too radical even for the American left, though it was championed by Bernie Sanders and Jill Stein.  Sanders would’ve liked to follow the Scandinavian model in making higher education free of charge to all students by having taxpayers pick up the tab – and Stein wanted the Federal Reserve to usher in another round of quantitative easing and use the money to pay off student loan debt (what could possibly go wrong?)

Regardless of what you think of the government involving itself more in higher education than it already does, some might assume that this would at least take care of the student debt problem.  If college is free, how could there be debt, after all?

And they would be wrong.

Above is charted average student loan debt in Sweden (where tuition is free) versus the United States.  And while there is obviously a greater amount of student loan debt in the U.S., most would certainly expect a much larger gap when we’re comparing ourselves to a nation where college is free.  In fact, average student loan debt in Sweden in 2013 was the equivalent of $19,000 USD, vs. $24,000 in the U.S.

Students graduating in Germany (before they socialized tuition) and the U.K. actually have lower student loan debt than students in Sweden.  Not only that, but 85% of Swedish students graduate with debt, while only 50% of American students do.  The reason may have something to do with the fact that student loan debt centers more on costs of living while away at college – rent, food, etc. – than with actual tuition itself.

Not only would “free” tuition likely fail to alleviate the problem of student loan debt, but it has its own set of consequences.  In Denmark, another country that offers college free of charge, students are much more likely to pursue the so-called “luxury” degrees over those in STEM fields.  Far from encourage more students to attend college and build human capital, free tuition in the U.S. would likely have the same effect that it has had in Denmark in encouraging students to pursue what they find interesting rather than what will turn into a career.

To paraphrase a comment PJ O’Rourke famously made about health care, if you think college is expensive now, just wait until it’s free.

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