A central theme of Hillary Clinton’s student-loan alleviation program is not just that students should pay less for college, but that college should cost less overall.
Is that even possible?
The cost of college has been rising much faster than the rate of inflation for decades. As part of broader budget cuts, states have allocated less money to higher education, meaning that students are bearing an increasing portion of that higher cost of attendance.
While some of the rise in college costs is due to flagrant spending on rock-climbing walls, stadiums and rock-star professors, the bulk of it comes from economic factors that have simply made running a school expensive.
For one thing, while certain businesses can automate functions or run a leaner ship to cut costs, the very nature of education relies heavily on human beings. And those workers aren’t able to get any more productive than they already are, even as demand for their service increases. The core problem: more students are seeking degrees, even as the experts in any given field can only teach so many classes, grade so many papers.
Making matters worse, those who teach the most in-demand subjects tend to be able to earn more outside academia. Why should a lawyer, banker, technologist, or medical expert toil away teaching at a community college, state school, or even a well-endowed university, when she can work for an industry and make millions?
Another issue is that public colleges and universities are playing catch-up with maintenance of aging infrastructure, as well as investments in technology. Visible expenditures might be big, but the invisible ones are much bigger.
“There is definitely an amenities arms race at elite institutions that are trying to attract students with rock climbing walls and such,” says Rachel Fishman, a senior policy analyst for the Education Policy Program at the New America Foundation. “But that’s not happening at places like community colleges, which 40% of students enrolled in higher education attend. They’re not having an amenities arm race. They’re just facing higher costs.”
Ultimately, going to college costs more just because there is more demand for education. Capacity to educate America hasn’t increased as quickly as demand, particularly in the most desirable schools. What’s more, students (and their parents) expect more out of their schools – in terms of the quality of education, the resources put behind classroom teaching, and amenities like food on campus.
“Bending cost curves is pretty hard because a lot of underlying demand makes it more expensive,” says Mark Schneider, a vice president and institute fellow at American Institutes for Research. “Some colleges are expensive. They don’t compete on cheap, they compete on quality. There are cheap options.” If you complete an associate’s degree at a community college within two years, he says, and then transition to a state school to complete a bachelor’s degree, you could graduate with a relatively modest amount of debt.
But millions of students have no desire to choose that route.
Clinton’s plan would encourage colleges to cut their budgets, but it’s not clear that they’ll be able to do that without hurting educational outcomes.
As Purdue University President (and former Indiana governor) Mitch Daniels told the Wall Street Journal a few months into his tenure, “this place was not built to be efficient. You're not going to find many places where you just take a cleaver and hack off a big piece of fat. Just like a cow, it's marbled through the whole enterprise." No future U.S. president will be able to incentivize all state and community colleges to cut out such deeply-marbled fat – especially not if her only mechanism for doing so is a broad grant program.
Clinton’s plan – dubbed the New College Compact – uses financial incentives as a tool for bending the overall cost of tuition. The details are vague, but broadly it looks like she plans to give more money to states whose schools keep a lid on costs, devoting more of their budget to education rather than recreation and whimsy. From the plan (bolding added):
“The federal government…has not done enough to address the underlying problem of rising costs.”
“States will have to … work with public colleges and universities to cut costs.”
“States will be rewarded for … limiting costs for non-tuition expenses.”
“States that commit to the compact will…meet these guarantees by lowering the cost of college on their campuses, ensuring that all funds received will be applied to instruction and learning.”
“More than half of the total will go towards grants to states and colleges… These new grants will be paired with holding states and colleges accountable for bringing down costs.”
Sensibly, Clinton’s plan mostly concentrates on reducing costs at existing colleges, rather than pushing techno-utopian solutions such as MOOCs. As a group of researchers led by Harvard assistant professor David J. Deming reported in a study earlier this year, online learning may cost less, but its efficacy remains questionable.
For Clinton’s plan to be adopted, she would have to win the presidency and get it through Congress, neither of which are sure bets. But assuming all of that occurs, it may be that the cost of college keeps rising fast and taxpayers bear more of it than students do.
Clinton’s plan involves free tuition at community college, no debt at four-year state colleges and universities. It’s clear that the federal government would contribute $350 billion over 10 years, not only to new students but to existing students who want to reduce the interest rates on their student loans. She also plans to have families contribute an unspecified “affordable and realistic” sum, and for students to contribute earnings from 10 hours a week of work. But it’s impossible to know how much her plan will cap or reduce the cost of college, or how much of it will come from taxpayers vs. individuals, without more specifics.
“She’s saying, ‘Trust me, I’ve got solutions, we’ll tell states that funding will be based on how successful they are,’” says Henry Levin, an expert on the economics of education at Columbia University’s Teachers College, who is skeptical that Clinton’s plan would succeed in lowering the cost of college. “Now let’s hear about the mechanisms, and how that’s actually going to work.”
I oversee Fusion's money section and have spent most of my time as a journalist writing about banks and finance. I live in Brooklyn with my partner Geoffrey & our two dogs, Captain & Tallulah. Favs: leopard print, Diet Coke, gummy candy, Ireland.