There’s No Such Thing as “Free” Community College

Last week, President Obama announced a plan to provide “free” community college to American students. Democrats in particular rejoiced at the proposal, revealing just how limited mainstream economic literacy really is. Austrian economists like Peter Schiff know that nothing is really free.

Indeed, Obama’s plan would cost the federal government at least $60 billion. That’s $60 billion that would be passed on to American consumers one way or another by adding it to the already unsupportable $18 trillion US public debt. However, beyond the headline price tag, a “free” community college program would add a layer of government manipulation to a higher education market that is already floundering.

Famed investor Mark Cuban explained last year why he sees the student loan industry as another major bubble that will inevitably burst:

[Student loan debt] is having a significant impact on the economy. It’s really holding us back in the economy’s ability to grow… I think that bubble is going to burst. I think that it’s inevitable that at some point there will be a cap on student loan guarantees. When that happens, you’re going to see a repeat of what we saw in the housing market. When easy credit for buying or flipping a house disappeared, we saw a collapse in the price of housing. We’re going to see the same collapse in the price of student tuition, and that’s going to lead to colleges going out of business.”

Perhaps this is exactly why Obama is proposing a “free” college program. He’s preparing the industry for even more intrusive federal government regulation. The long-term effects of such a system are impossible to predict.

This issue is far more complex than simply making higher education “more affordable” to low-income Americans. Forbes published an article yesterday explaining just a few of the many reasons why Obama’s free community college is half-baked at best. Here’s a few of the points it makes:

1. Individual states already do a good job of providing a diversity of higher education solutions. A federal program could damage this diversity and create a one-size-fits-all education industry.
2. Obama’s proposal would subsidize many families that can already afford low-cost community college education.
3. Two-year degree programs might not be worth it, as graduates end up stuck with low-paying jobs that used to be standard for high school graduates. This could be one reason why enrollment in associate degree programs have plummeted in the past four years.

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