Since the Democratic Party is trying to triple the federal budget with new government spending legislation, one topic that keeps coming up is making college “free.” Of course, nothing is ever “free” – someone is going to pay for it; the beneficiaries just don’t want it to be them.
Here’s an interesting chart for you that I think speaks directly to the value of a college education right now:
This chart is interesting for a couple reasons:
(1) Its magnitude – One-third of college graduates move into positions where having a degree is irrelevant (that is how the Federal Reserve defines underemployment). To the extent that going to college crowded out other financial opportunities for them or left them deep in debt, it is perversely a long-term economic drag on them.
(2) That percentage is relatively stable over time. It hasn’t budged much since the 1990s, and even recessions (highlighted in grey) don’t move it much. Colleges are simply cranking out a lot of kids that don’t use their degrees.
So imagine subsidizing something to the tune of trillions of dollars that is literally worthless for a sizeable fraction of the people who obtain it.
I think one of the best public policy positions we could adopt is not to make college free, but to demand that universities have financial skin in the game in the debt market. (Especially when you consider that a lot of colleges have endowments beyond $1 billion, that they grow and utilize in a tax-free environment. Between that and offering deeply subsidized government-backed student loans, universities are already some of the most taxpayer-dependent institutions in the country.) If they graduate kids that are not going into positions that require an education, the university should be paying to relieve them of some of that debt – not taxpayers. A lot of the bloat and anti-social behavior in higher education would evaporate fast.