The notion of free public higher education might elicit scoffs upon initial suggestion, but given the soaring student loan debts, the idea is one that begs further investigation.
Student loan debt hit the $1 trillion mark last year, helping it retain its place as the fastest growing consumer debt, and what's more, about 11.5 percent of student loan balances are more than 90 days delinquent or in default, according to a recent report by the Federal Reserve Bank of New York.
Research on the true costs of making all public higher education free in the U.S., such as that detailed in a working paper from the Campaign for the Future of Higher Education, points to the fact that while demand might rise if public higher ed were free, the cost of providing it actually is smaller than many would think.
Consider the math. In 2009-10, the average cost of tuition, room and board for undergraduates at public four-year institutions was $14,870, and $7,629 for two-year public colleges. When you multiply the number of students in each segment by the average total cost, it amounts to a price tag of $127 billion for free public higher ed.
But consider this: that same year, the federal government spent $35 billion on Pell grants and $104 billion on student loans, with states spending at least $10 billion on financial aid for universities and colleges and another $80 billion for direct support of higher education, the research shows.
As Bob Samuels, lecturer at UCLA and President of University of California's American Federation of Teachers, points out in "Making All Public Higher Education Free":
By eliminating the need for student loans, the federal government would also save billions of dollars due to the current cost of non-payment, servicing, subsidization, and defaults that could be directly applied to providing free public higher education.
Compounding the problem is the fact that instead of directly funding public higher education to cover the costs, the government has relied on tax deductions and credits to individual students. While the system has provided a bevy of subsidies to upper-middle-class and wealthy families, it leaves lower-income students scrambling for massive loans.
The tax subsidies, breaks and credits also add up in terms of lost revenue for the federal government. In 2010 alone, nearly $40 billion in tax revenue that could have gone to higher education was lost, the research shows.
State governments also lose billions of dollars in tax revenue each year due to the 529 College Savings Plans, due to wealthy families having figured out that they can use them as all-purpose tax shelters. So as states lose revenue and are forced to cut higher ed budgets, the rich are able to shield more of their earnings using this mechanism.
The bottom line is fairly simple, yet one that must be examined thoroughly and critically -- if state and federal funding already being spent, and lost, on higher education were re-appropriated, the possibility of making public higher education free for millions of Americans becomes a distinct reality.
Click here to read the paper "Making All Public Higher Education Free."