Obama Free College Plan Flawed, Critics Say

January 21,2015

College tuition and student debt have increased at a rapid pace in the past 20 years - raising serious questions about whether a student loan crisis may be brewing in the United States. Some, including President Barack Obama, believe the solution is to provide free community college education for students who qualify. But some say throwing more money to fix the problem is not the answer.

Higher learning - it’s an expensive, but necessary proposition in the 21st century job market. But with tuition rates rising at a record pace, many Americans simply can’t afford it.

Justin Mills enrolled at a two-year community college in Maryland - for about a third of the cost of a typical private college education.

The cost of tuition is probably the main reason why people don’t enroll in the first place because they are worried about coming out of it in debt - heavy student debt," said Mills.

In his annual State of the Union address, President Barack Obama said not only does that hurt U.S. competitiveness - it’s also unfair.

“That’s why I am sending this Congress a bold new plan to lower the cost of community college - to zero," said President Obama.

The president’s plan would eliminate tuition fees at two-year community colleges for students with at least a 2.5 grade point average. But with an estimated price tag of more than $60 billion over 10 years, it’s unlikely to pass in the Republican-controlled Congress. It's not just politics, though. Some say Obama's plan uses a sledgehammer where a chisel might do.

1.2 trillion dollars

Matthew Chingos is head of education policy research at the Brookings Institution.

“It’s going to spend resources out over a large number of students, as a result not be generous enough for people who need the help and be too generous for people who don’t need the help," said Chingos.

In the past 20 years, the amount of money borrowed by American students to pay for a college education has quadrupled. At more than $1.2 trillion, it’s bigger than the country’s total credit-card debt. Despite the higher costs - Chingos' research shows the returns - more job opportunities and higher incomes - still outweigh the initial investment. A better solution, he says, is to expand existing financial aid programs.

“It comes back to this idea: should the policy be focused on people who need the help the most, whose behavior is most likely to be affected - or should we spread the same resources out over a much broader group of people?," he asked.

Critics say the president’s plan would not only mean big tax hikes for higher income earners - it would also eliminate tax breaks for those saving money for education. But those in favor say the plan would more than pay for itself, reducing high school dropout rates and improving U.S. competitiveness abroad.

While unlikely to pass - Chingos says the proposal is helpful if it opens up discussion on the true cost of education - and if it leads to action that ensures all Americans can afford it.