The High Cost of “Free” College

In the age of endlessly rising college costs and mounting student debt, it’s no wonder that the concept of so-called “free college” has been embraced by so many. Bernie Sanders champions the cause of making all public schools tuition-free and cites other countries that have already done the same, including Germany and the Scandinavian nations (Sweden, Denmark, and Norway).

I’ll always be using “free” synonymously with “taxpayer-funded” throughout this essay – and there’s plenty of taxpayer funding in the Scandinavian nations in particular where levels of taxation exceed every dollar of income earned. And for all those taxpayer dollars spent, there isn’t much return on investment for those who attend free college in Scandinavia.

While the average American college graduate earns 65% more than the average high school graduate, that figure is a mere 2% in Norway. Note on the chart below that all numbers are relative (whereas high school earnings = 100). Additionally, a “post-secondary education” means educational attainment up to the equivalent of a Bachelor’s degree, while tertiary includes education up to the doctoral level (and trade school). 

I’m choosing to focus solely on Scandinavia because public universities have only been free in Germany since relatively recently, 2014.

In addition to the reduced return on investment, free college hasn’t resulted in a more educated populace than the United States. A larger share of 25-64 year olds have completed a tertiary education in the U.S. than in Scandinavia. 

Even excluding tertiary education and only looking at completion of post-secondary education, the figures differ slightly, but still show the U.S. as more educated.  

Poor Danish high school students are no more likely to attend college than poor American students, which creates a problem in it of itself. If the poor aren’t taking advantage of “free” college, that means they’re the ones paying taxes into a system for a program they’re not even using. Given the highly regressive tax systems of Scandinavia, it’s the poor subsidizing the middle and upper class in this case.

The Bizarre Case of Free College and Crippling Student Debt

According to Sen. Sanders, “It is insane and counter-productive to the best interests of our country and our future, that hundreds of thousands of bright young people cannot afford to go to college, and that millions of others leave school with a mountain of debt that burdens them for decades. That shortsighted path to the future must end.”

So Sanders would probably be just as shocked as I was to learn that there is student debt in Scandinavia despite their lack of university tuition, and a lot of it. While tuition is free, room and board are not. Paradoxically, offering free tuition seems to have incentivized students to be more likely to rack up debt by moving out early. While it’s becoming more common for American students to save money by living at home and attending a two-year community college, there’s less incentive to do so with “free” tuition. 

  • In 2015 Swedes who borrowed to attend college had an average $17,266 in debt.
  • In Norway, the average student graduated with 280,000 NOK in debt in 2016. That amounts to roughly $32,000.
  • For contrast, the average student debt for someone graduating in America’s class of 2015 was approximately $30,100.

Student debt levels in Norway are on par with America (despite the almost non-existent ROI on a Norwegian college education), and Swedes have roughly half as much debt, but only in nominal terms. Interestingly, while having less debt per-student that takes out debt, a larger percentage of Swedish students have debt than Americans. 

In 2004, 85% of Swedish students graduated with debt, compared to 50% of U.S. students. While Swedes have less debt per-capita, the reduced ROI on a Scandinavian college education relative to an American one means that American students graduate with average debt-to-income ratios of 57%, compared to 79% in Sweden

In other words, relative to income, American students do indeed have less debt than Swedes and Norwegians. 

 

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