Even in the context of his other proposals, Sanders’ ideas on higher education reform are particularly radical. The “College for All Act,” a bill he introduced to the Senate in May, proposes to make all four-year public colleges and universities tuition-free. At first glance, policy changes to the public university system may appear at most tangential to a private institution like Stanford. Sanders’ deceptively noble proposal, however, belies a significant danger to Stanford’s diversity, mission, and social value. Making free a public university education – where graduation rates rarely are above 40% – creates a perverse incentive for prospective college students to invest less in their education. By discouraging college-bound Americans from seeking out the best opportunities possible from a quality standpoint, Sanders’ plan would impede Stanford from doing what it does best: transforming a varied group of the nation’s brightest young adults into pragmatic, informed, and capable citizens.
In some ways, higher education is best viewed as an investment. Admittedly, the principal for this investment can be quite high; most elite universities like Stanford charge a nominal annual tuition of around $60,000. Yet, the vast majority of students don’t actually pay this much, a fact which allows them to make an investment which yields incredibly positive benefits. Last year, The Economist calculated that a Stanford degree yields an average annual return of 14.2% over 20 years — a number that any fund manager would jump at. Why, then, don’t more people make this apparently lucrative investment? And why do individuals who take on student loans to finance it often become crippled by the resulting debt?
A proper higher education reform program would incentivize rational actor behavior both by easing sticker shock (reluctance to go to college due to its initial high price), and by helping students make educational investments in those institutions and disciplines most worth their while. Sanders’ does neither. It encourages students not to invest in high-quality private universities and, equally importantly, actually prices some students out of the opportunity altogether by eliminating more flexible forms of federal higher education aid.
Sanders pegs the cost of his program at around $70 billion, about twice what the federal government currently spends on Pell Grants. The bill stipulates that the federal government will foot 67% – $47 billion – of the bill, while states would be responsible for the remaining 33%. Sanders would not be able simply to levy new taxes to pull the funds out of thin air; public and mainstream political pressure towards reducing the current bloated, unsustainable government deficit is too great, especially with a GOP-dominated Congress. Funding would have to be diverted from an existing program or be drawn from government initiatives that generate their revenue in forms other than taxes.
This proposal comes at a time in which federal funding towards higher education has been on a consistent decline. The senate and congressional budget for the fiscal year 2015 mandated a nearly $303 million reduction to the Pell Grant program. The total $33.97 billion it set aside for educational grants similarly represents a substantial cut from last year. Perhaps more tellingly, the House has proposed capping Pell Grants at $5,775 per student for the next 10 years and narrowing the scope of their distribution. Accordingly, Sanders would almost certainly have to draw on existing education monies to make the federal government’s $50 billion annual contribution. These would also have to specifically come from funds earmarked for the higher education system — it would be politically unviable (not to mention completely off-message) for Sanders to pull them from secondary or primary public education. Pell Grants represent the only substantial financial source that meets all these criteria.
By slashing Pell Grants to fully fund public universities, the “College for all Act” would hurt the very people it is designed to help. While the federal aid program is by no means perfect, it is a far better alternative to Sanders’ plan. Pell Grants are distributed exclusively to those individuals who display a certain degree of financial need and, importantly, can be used at almost any undergraduate institution in America. Pell Grants do not alter students’ calculus of where to go to college; they simply make investing in higher education easier. Under Sanders’ plan, much of the money which previously went to Pell Grants would provide a free education to students whose families can already afford it. This money would, obviously, only go to pay for tuition at public universities — students seeking federal assistance to subsidize their college attendance at private institutions would have a much harder time doing so. Students teetering between attending Stanford and a public college – for whom, even with the financial aid Stanford provides, paying for a four-year private university still represents a serious commitment – could easily be pushed towards the latter option when the additional support provided by Pell Grants evaporates. Thus, instead of helping low-income, high-achieving students attend the college of their choice, the bill would confine their prospects to a subset of colleges, reducing their ability to invest in their higher education.
While supporters of the senator’s plan might counter that the “College for All Act” would clear the way for making alluniversities tuition-free, such a scenario is impossible. The cost of covering private university tuition would be at least an order of magnitude higher than the $70 billion which is already hard to pull together. Rather than pouring mountains of taxpayers’ dollars to finance private universities of unequal caliber and cost, it seems far more likely that Sanders would do the opposite by stripping away existing federal assistance for private research universities in order to allow him to pay for the “College for All Act”.
Government funding of private research universities, moreover, already marks an important federal expenditure on higher education (Stanford received $656 million in R&D grant money this year). Should Sanders pull the plug on R&D funding for private university research he would Stanford and its peers of the government support that makes some of their cutting-edge research possible. Stanford could be forced to raise tuition rates in response and private universities would become even more expensive to attend, even as its less productive public counterparts accept students free of charge. Stanford occupies something of a niche by marketing itself as an interdisciplinary, entrepreneurial, and forward-thinking undergraduate institution. High-caliber students who are attracted by this vision apply to attend. Price still has a major impact on individuals’ college choices, but, currently, Stanford’s robust financial aid program often makes attending Stanford equally, if not more, affordable than attending state universities for students coming from the lowest-income brackets (students whose family income is below $65,000 a year are expected to pay no tuition). Under Sanders’ plan, Stanford would stand to lose interested students for whom Stanford is a pricey option, but presently still a viable and attractive one since it is not now exponentially more expensive than most public options. Tuition-free public universities would change this equation entirely. It would disincentive large numbers of low-income students from ever accessing a Stanford education and push them towards making an investment which, based on the data, often carries a diminished rate of return. As a result, Stanford could find it difficult to retain current levels of economic and demographic student diversity — something it struggles with anyway. In short, all Stanford students would suffer.
To counter these effects, Stanford would probably have to drive down its tuition prices and expand its financial aid program. To compensate, the university would be compelled to either cut back on other forms of spending (making Stanford less able to provide academic and extracurricular opportunities for its students) or raise tuition prices for other students. Unfortunately, the latter option only serves to create a vicious cycle in which a new bracket of students becomes burdened with financial obligations that become difficult to meet.
Stanford stands at the pinnacle of higher education as a nexus of social and economic good. In order to draw new students, meet its operational costs, and provide current students with the best education possible, Stanford constantly has to reinvent itself and create new, compelling opportunities. While, by nature, not everyone can attend, the current layout of America’s higher education system allows Stanford to act as a herald of progress. “The College for All Act” casts a threatening, though little considered, shadow over this beacon. Stanford students, at least before flinging their support behind Sanders, would do well to consider its consequences.
A note from the author: Since this article centers on examining a hypothetical outcome to explore very real issues at Stanford and in America’s higher education system, it ignores the fact that the bill discussed will, in all likelihood, never garner the support needed to become law.