Bernie Sanders’ weird plan to control College costs

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In the midst of rolling out his own plan to improve the affordability of higher education, Democrat presidential candidate Martin O’Malley trashed Bernie Sanders’ free college plan.

“If you simply cut a check for tuition, you’re going to see tuitions go up and up and up, and eventually we all foot that bill,” Time Magazine quoted O’Malley saying. “So we have to do two things at the same time. We have to increase degree attainment and bring down costs.”

But O’Malley is wrong. The Sander’s plan does attempt to control the rising cost of college, at least for the federal government. It just does it in a weird way. By now, much has been written about Sander’s $70 billion a year plan to make tuition at public schools free for students. But no one has covered his convoluted and kind of crazy plan to control the skyrocketing cost of college.

So here it is. Five years from now the Secretary of Education is required to figure out the average amount the federal government is providing states to pay to keep tuition free. Then the Department has five more years to cut the money going to states over that average until all states are under the 2020 average allotment. So basically, the Sanders’ plan cuts off federal funding for the program over a particular, but uncertain, amount.

The plan is currently conceived as a partnership between states and the federal government. The feds would fund two-thirds ($47 billion) while the states would cover the last third ($23 billion) of the projected cost. But the projected cost is based on how much tuition students attending public universities currently pay. The total costs would change wildly with the implementation of this plan.

First, Sanders’ proposal, if enacted, would drive up costs because of requirements it imposes on states and institutions. For example, the plan requires tenured faculty to teach a certain percentage of classes and mandates that colleges devote a certain level of spending to instruction.

Also, making tuition free would increase the demand for public higher education. To deal with this heightened demand, public colleges would have to increase admissions requirements, turn away qualified applicants, or significantly increase enrollment. Increasing enrollment is an expensive proposition, particularly when those students are not paying any tuition.

Maybe some of this additional cost would be priced into the program after five years of implementation. But schools hardly need additional requirements and increased enrollment to face increased costs.

Higher education has its own inflation indices (Higher Education Price Index and the Higher Education Cost Adjustment) that are consistently higher than the traditional rate of inflation. At the same time, pretending that the cost of providing an education in Massachusetts is the same as the cost of providing an education in Alabama seems misguided.  Simply declaring that the federal government will not increase the amount of money for this program above and beyond an arbitrary benchmark that isn’t tied to inflation would not stop higher education from costing more.

In order to carry out Sanders’ plan of free tuition, states would have to pick up the additional costs. Over time the share covered by the federal government would shrink and the amount covered by states would grow.  Eventually, states, particularly high cost states, would probably have to opt out of the program. While Sanders does have a plan to stop the growth of this program for the federal government, there is no plan to stop the underlying cost increases that might eventually doom the program.

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