Courtesy of The Other 98%, with over 9,400 likes and 2,900 shares.  This meme claims that in 2012 public college tuition was $62.6 billion, while the federal government spent $69 billion on federal programs aiding college students.  The conclusion drawn is that we already have the federal money (and then some) to make colleges tuition free.  As with most claims that sound too good to be true, this one quickly unravels when some light is shed upon it.  So, what’s the real cost of subsidizing college tuition?

As a primer, there were 21.1 million students enrolled in college in 2012.  If we took the $62.6 billion in federal spending this meme claims would provide tuition-free college, we’re left with just $2,966 per student.  This wouldn’t go very far, considering the median tuition for all public colleges in 2012 was $5,800 ($7,350 for 4 year schools).  Clearly, something is fishy with this claim that needs more investigation.

Where the Numbers Come From

This meme’s claim originates from an article in The Atlantic from 2014, which cited the $62.6 billion number they got from the Department of Education’s data for the 2012 school year.  They also cited the $69 billion in federal aid number, which they linked from The New America Foundation, a non-partisan D.C. think tank.  The Meme Policeman was unable to confirm or find this statistic on their website, but since it’s from a few years ago we’ll give them the benefit of the doubt.

Breaking Down the Numbers

According to the 2012 report from the National Center for Education Statistics, it’s true that public colleges obtained $62.6 billion of revenue from tuition.  However, there are significant caveats to this.

Tuition revenue is a small portion of total revenue at public colleges.  In 2012, the total revenue for public colleges was $300 billion, making tuition just 20% of their revenue.  Total expenses were $297 billion, meaning the $62.6 billion in tuition would only cover 21% of college funding.  Any honest analysis of making colleges “free”, means acknowledging that the tuition is a small portion of college funding.  The real cost is substantial, about $300 billion, and that only includes public colleges.  For a more detailed breakdown of expenses and revenues, see the table below.

 

The other thing omitted by this statistic is that it only applies to public institutions.  Many students go to private colleges, so what about their expenses?  In 2012, 6.1 million students, almost 30% of college enrollment, went to private institutions.  It turns out that another $63 billion was spent on private school tuition.  This means that in order to provide tuition payments for every student, this would double the amount this meme claims.  Granted, private colleges are generally more expensive than public ones, but even if this “free tuition” was only provided at public institutions, there would be a massive influx of enrollment to public universities, and costs would rise far above what this meme suggests.

 

What About Room and Board?

As every college student (and their parents) find out, tuition is just one portion of their college expenses.  There’s room and board, books, supplies and transportation costs to deal with as well.  In fact, tuition and fees constitute just 39% of the average budget for a student attending an in-state public university living on campus.  This is why much of the federal financial aid given, $136 billion in 2012, is used for things other than tuition.  Students use it to pay rent and buy food, among other needs.  Switching this financial aid to apply solely towards tuition in an effort to provide “free college” will not help many students as they will still have these other expenses to deal with.  If they can’t afford the cost of books and housing, and discover there’s no other forms of aid (as they’ve been delegated only towards tuition), they will still find college unaffordable, and either won’t be able to attend, or be forced into much more expensive private loans like credit cards.

Of course, this isn’t what the proponents of this free tuition idea have in mind, which is why their supposed solution will not cost $62.6 billion.  If the idea is to eliminate the financial hardships of getting a college education, it will cost far more than this, as much of the current financial aid will be kept intact.

Other Issues

Assuming we did make tuition free at public universities, there would be many unintended consequences, increasing costs. Here’s just a short list.

• What about private schools?  Many of the best colleges are private.  If a bright student wants to go to Harvard or MIT, will he or she be forced to pay the full amount while a peer gets free tuition at a state university?  Presumably not, which means additional costs as the government continues to provide aid to private institutions.
• Assuming college really was free, demand would rise considerably.  As any product gets cheaper, more consumers want it.  If the price goes to zero, there would likely be a much higher demand and number of students attending.  This would either greatly increase the $62.6 billion amount advertised on the meme, or it would require significant restrictions by the government to contain costs, likely by refusing students who wished to attend.  It would also introduce an even greater moral hazard than already exists currently with government subsidized loans.  There would be less incentive for students to pick majors that led to productive, well-paying jobs.  It would be far easier to justify studying art history versus petroleum engineering when there’s no requirement to pay back that education.
• If the federal government pays all the tuition, how will those costs be set?  Clearly not by any sort of market forces.  It would likely be set through negotiation between the colleges and the government, which has potential for all sorts of corruption and abuse.  Since the consumer (the student) has no concern to the cost, there is no pressure to lower costs or stay competitive.  As with military expenditures, the entity responsible for keeping costs in check is the government, something they seldom do well.

Conclusion

The $62.6 billion this meme cites only pertains to public college tuition, which is a tiny percentage of higher education costs.  Including private tuition alone would double this estimate.  Additionally, it’s dishonest in saying the $69 billion the federal government spends on helping students could simply be switched to tuition with no additional costs.  Much of this federal money (actually $136 billion in 2012) is used for items other than tuition, needs that would still exist, and still need to be funded assuming the goal is to allow students to attend and afford college.

In 2016, 20.5 million students are expected to attend college.  The average tuition for an in-state public university is $9,410.  Assuming we covered in-state tuition for all these students, the bill would be $192 billion, which doesn’t include room and board or other costs.  This would be a more realistic number when talking about free tuition for all.