Debt-free college plans could have far-reaching consequences

Should the plans ever become law, private colleges would see new challenges and greater competition

Higher education has taken center stage in the Democratic presidential primary as candidates fall over themselves assuring voters and supporters that the issue of student debt is high on their list of priorities. It is practically a requirement for Democratic candidacy that presidential aspirants support some form of debt-free or entirely free college. Hillary Clinton’s sprawling higher education plan, released this week, confirms for voters and donors that she, too, will work to make debt-free public college a reality for the nation’s students.

Of course, U.S. presidents are not all-powerful, and initiatives pitched on the campaign trail often find themselves without enough support from Congress to actually become law. But for higher education administrators looking into their crystal balls, there are some real consequences to all of this talk, should it be converted into action.

Higher education cost expert Mark Kantrowitz, senior vice president and publisher of Edvisors, expects a host of changes should a proposal like Clinton’s pass through Congress. First of all, it would put a lot of pressure on private colleges. The debt-free proposals are not aiming to underwrite private enterprise and, as such, public colleges would be the only ones eligible for increased aid. More students will inevitably choose public over private options, unable to turn down the savings for arguably similar or identical credentials. That will leave increasingly less-diverse student populations on private campuses. And, perhaps most dramatically, it will force certain schools to close.

“Small, private liberal arts colleges with less than 1,000 enrollment, very high tuition, and no endowment will start failing at a faster rate or be forced to merge with nearby institutions for economy of scale,” Kantrowitz said.

Plenty of colleges are already considering mergers to stave off full closure, entertaining the idea of such a deal long before financial calamity requires it for survival.

Clinton’s debt-free college proposal would be paid for by removing certain tax deductions for the nation’s wealthiest filers. Her primary opponent, Sen. Bernie Sanders, proposed similar legislation outlining tuition-free public higher education using a tax on Wall Street for much of its funding. But the federal investment would depend on state contributions. And Republican governors, especially, have made names for themselves in addressing student debt by choking off funding for public higher education institutions and freezing tuition.

This funding situation in the face of rising enrollment could force public institutions to raise class sizes, offer fewer sections, and rely more heavily on adjunct rather than tenured faculty.

Ramin Sedehi, the leader of Berkeley Research Group’s higher education practice and a longtime former administrator at the University of Pennsylvania, said debt-free college could provide a boon for institutions when it comes to enrollment. The number of high school graduates is shrinking, thanks to demographic trends across the country. Convincing more people that higher education is a realistic, affordable option could create a larger market for institutions competing for students. Of course, research is not conclusive on whether there really are masses of potential students sitting out simply because of cost. But the potential is there.

The institutions with which Sedehi consults, at this point, are focused mostly on the accountability measures that would come with any rush of federal funding. For campus administrators seeing success in diversifying their campuses, strict accountability measures could provide a reverse incentive to admit only employable or credit-worthy students.

While debt-free college is not likely for the next generation of college students, Sedehi expects some of Clinton’s and other candidates’ reform ideas might be. Offering additional refinancing options for students, supporting alternative retraining programs, and better protecting veterans in the higher education marketplace could all receive bipartisan support.

Whatever the future of higher education policy, Sedehi encourages administrators to get more involved in developing proposals.

“I think part of the solution,” Sedehi said, “is actually college administrators getting out there and coming up with novel techniques to reduce their costs, to reduce the need to increase tuition.”

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Filed Under: Higher Ed Policy & Regulation