The United States can afford to make college free. It can’t afford not to.
Many Americans believe higher education is an engine of social mobility, especially for Black and Latino people. Researchers, policy advocates, and elected officials often wrongly assert that “college is the path to the middle class” or those with a bachelor’s degree will earn a million dollars more in their lifetime than someone with just a high-school diploma. These assertions assume the degree is giving graduates a premium when wages for bachelor-degree earners have been stagnant for the last 20 years, especially Black and Latino workers.
There is a mountain of evidence that individually financed higher education reproduces racial disparities and the racial wealth gap. The primary problem with the current system is the amount of debt required to pay for college, and how that debt affects people’s lives long after they graduate.
It wasn’t always like this
Until the 1990s, student debt was such a small percentage of consumer debt it wasn’t even truly tracked by the federal government. And the first year it was, the government spent $24 billion on federal student loans, contrasted with over $100 billion annually from 2009-2013, these years considered the peak for student loan borrowing.
In 1965, the federal government created grants meant to make college free for working-class families and easily affordable for the middle class. Now called the Pell Grant, in the 1970s, the program covered the majority of college costs for low-income students, with state grants typically covering the rest. The problem — we switched rapidly to a student loan-funded system once Black and Latino students started to enroll in higher education in the late 1970s and 1980s.
Now in 2022, Pell grants cover less than 33% of the cost of college attendance, and state investments in higher education have dropped from 39% to 19%. The 60% of Black students and nearly 50% of Latino students who are eligible for Pell grants now must meet the cost of college through student loans.
Paradoxically, this situation, meant to help low-income students afford college, means students of color pay more for higher education than their White classmates. Their level of financial need forced them to rely on student loans more, so they must not only pay the price of attendance but also interest for years after they graduate.
Making matters worse, historically excluded students often are relegated to the lowest-funded institutions due to discriminatory admission practices and lack of affordability, giving them less opportunity for support to stay in school and ultimately graduate. As a result, students of color incur large debts but don’t complete the degree that seemingly is the path to mobility.
This racial disparity worsens when for-profit colleges enter the equation. For-profit educational institutions are often the most expensive and lowest-performing institutions in higher education. But they are convenient because they target communities of color. Students who live in a majority-Latino ZIP codes are 70% more likely to have a for-profit institution near them than students in a majority-White ZIP code. If it is a majority-Black ZIP code, then for-profits are 110% more likely to be nearby.
Once students who graduate do emerge with a degree, their financial power remains crippled by debt. Households with student loan debt have almost no ability to build wealth because wages for degree earners are stagnant, and household student debt balances are growing, not decreasing, over time. Based on a 2021 report by Andre Perry, Ph.D., 51% of student borrowers had zero wealth. And 52% of Black households with student loans have zero or negative wealth — though just 25% of Black households without student debt are in that precarious financial situation.
Too often, students who have been pressured into college as a path to upward mobility and forced into loans as a way to pay for it find themselves unable to make the payments. When that happens, the federal government pays private law firms, debt collection agencies, and loan servicers to try to recover the money. These industries all engage in predatory, and at times illegal, practices to accumulate profit from people the government says it is trying to help.
A new way to spend
One of the most expensive free-college proposals for undergraduate education pays not just tuition but also fees, books, and living costs. It totals only $95 billion a year. By contrast, the Biden-proposed property tax cut (SALT cap) costs $95 billion a year, and the 2017 Trump Tax Cut costs $180 billion a year. In just the last two years, the Paycheck Protection Program costs over $800 billion. This is well over $1 trillion in proposed or passed federal spending policies that all go disproportionately to rich households and corporations.
When it comes to low-income students, we only provide $26 billion per year in Pell grants, and when it comes to the majority of new college students, we burden them with $84 billion of student loans annually. For the rich, we are willing to spend in the trillions; for poor and working-class people aiming to earn an education, we give them a lifetime debt sentence.
Money for free college is available. The federal government spends it every year to provide tax cuts and forgivable loans to rich households and corporations. Instead, there is an opportunity to prioritize everyday people and communities of color who will benefit from free college. This benefit is why so many advocates argue that higher education must be a public good, specifically one that is economically and racially inclusive.
Jalil Mustaffa Bishop is an assistant professor at Villanova University, a co-founder of the Equity Research Cooperative, a nonprofit focused on radically transforming research, grantmaking, and freedom dreams, and leads the National Black Student Loan Debt Study.