Breaking News! Tuition Free College and All Student Loans Forgiven!

By Joe Messinger, CFP®

November 29, 2019

3 min READ

Well not exactly, but if you’re gonna dream, then dream big! Every election cycle the topic of tuition free college comes up. Is that even possible? Could debt ever be forgiven? Could the government afford to provide college at no cost to the student? We are highly skeptical. Here’s why…

The odds against a massive debt-forgiveness plan are really long.

Recently, we took a look at the reality that is our federal student loan debt. This debt is the single largest asset owned by the government. Are we really going to get rid of it? Could our highly partisan government come to any agreement about how to do that?

The prospect of the government paying for college for every student is daunting.

Did you know that it costs every college an average of $44,000 per year to support each individual full-time student? Private colleges are spending $56,000 per pupil per year. (These figures are from 2015/16.) With approximately 12.1 million full-time students in 2019, that is a pretty hefty price tag.

What does the government currently spend on higher education? Excluding federal student loans, the government spent $45 billion via spending programs like Pell Grant and veterans programs and roughly $35 billion in the form of income tax credits/deductions.

The prospect of making the numbers work out (and getting everyone to agree) seems insurmountable.

Some colleges are free.

Often they require service in exchange. The US military academies fall into that category–West Point, Naval, Air Force, Coast Guard, and Merchant Marine academies. Some free colleges require work while in school. Berea College in Kentucky and College of the Ozarks in Missouri require full-time undergraduates to work a set number of hours with on-campus jobs.

Some states are taking strides to provide free college.

Maryland, Rhode Island, California, Tennessee, New York, and Oregon have some version of free college for their residents. Most are offering the free college through the state’s community college system. New York’s plan is through their State University campuses or City University of New York schools. The newest state to join in is New Mexico which is offering free tuition at all of its 29 in-state public universities. These programs are relatively new and show the most promise for some form of real free college for students.

Most plans cover the difference after need-based aid is awarded. Many also have some restrictions like income caps, minimum GPA requirements, or residency after graduation requirements. New Mexico’s is the most liberal being open to all students regardless of income. It is a “last dollar” plan–coming in to cover any remaining tuition costs after other sources of funding are applied.

Note that these plans cover tuition only. Room and board expenses, books, and other fees are not included.

Could a version of this work nationwide?

Maybe. Free community college tuition seems like the low-hanging fruit in all this higher education conversation. The cost is relatively low, and it could appeal to legislators from a multitude of perspectives.

The question becomes should college be free.

This article does a good job of presenting the pros and cons. Here are some pros:

• An educated population raises all of us.
• The careers of tomorrow will need a better educated work force.
• It could give the economy a boost.
• The current student aid structure doesn’t work.
• It would reduce the gap between the haves and the have-nots.

How about some cons:

• It’s not really free. Taxpayers (all of us) are still paying for it.
• The increase in the number of students would put a burden on the colleges and create waiting lists.
• Students need to be invested in the work they do.
• They will not work as hard as they should.
• A college degree would be devalued because more people would have one.

You can decide what you think about the idea of free college.

With all these “ifs” and “buts,” maybe a better idea is a common sense game plan.

We can’t wait for promises that might never happen. Families need to learn:

• How college funding works. Know the terminology. Understand how aid is awarded and by which colleges.
• Understand the financial situation. Estimate your Expected Family Contribution to know the need-based aid situation. Look for colleges that meet high need situations.
• Seek out those colleges that provide merit aid if a student is academically talented.
• Be open in conversations with the student so everyone is on the same page–how much can parents provide, what are the student’s responsibilities, will loans be a part of the picture. Plan out how to pay for all four years.

In this way, smart choices can be made to achieve the best fit college at the best price for the family.