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Countries with "Free Tuition" Often Have Fewer College Graduates

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Presidential candidate Elizabeth Warren says she wants to make public colleges and universities tuition-free. That is, she wants free college for anyone willing to attend a public higher education institution.

Presumably, an important goal of this policy change — other than getting Elizabeth Warren elected, of course — would be to increase the total number of students that graduate from college.

But is there any reason to believe that "free" college would actually increase graduation rates? Not really. In fact, there are several reasons why the opposite may be true.

Indeed, in many countries with tuition-free college (or ultra-low tuition rates), there are fewer college graduates (proportionally speaking) than in countries with significantly more expensive college costs. This correlation doesn't prove causation, of course, but when we examine how "free" colleges must control costs, we can see why tuition-free higher education ends up limiting access to higher education.

Where College Is Cheapest — and Most Costly

For a sense of where the net costs of college are the highest, we can consult a 2010 report by Alex Usher and Jon Medow which takes into account all college fees (not just tuition) while also including the availability of government grants which don't directly subsidize tuition rates. Usher and Medow find, of course, that college is not truly "free" anywhere, although prices are certainly lower some places than others:


Source: Global Higher Education Rankings 2010: Affordability and Accessibility in Comparative Perspective (http://www.iregobservatory.org/pdf/HESA_Global_Higher_EducationRankings2010.pdf)

Although many Americans are under the impression that higher education is "free" most everywhere outside the US, the fact is only a handful of countries offer tuition-free college. Among large countries with more than ten million people, only France and Germany qualify as "tuition-free."1 Meanwhile, Japan, Australia, Britain, and Canada all require significant out-of-pocket payments from students. (Moreover, once we get into medium-income countries, it's important to consider the costs shown above with the local median income. In Mexico, for example, the $8,020 price tag shown here is more than 175% of the median income in Mexico.)

But do lower college fees translate into higher graduation rates, and more education?

Well, we find that the countries with higher proportions of college graduates tend to be countries with higher college costs for students. Japan, Canada, the US, and Britain are all among the most expensive countries in terms of net cost. Yet, these countries all have higher incidence of college completion among residents.

Meanwhile, in France and Germany, the countries with "free" education, the incidence of college completion is much lower:


Source: Indicator A1, "To what level have adults studied," in Education at a Glance, 2018.2

But how can this be? After all, pundits and politicians often tell us that higher education is open to all in most of the "industrialized world," and at a very low price.

The problem with this reasoning — and a clue as to why college-completion is lower in the "no-tuition" countries — can be found in the inherent conflict between the two phrases "open to all" and "at a very low price."

In the real world, no scarce resource can be both open to all, and also very inexpensive.

So, when it comes to higher education in places where institutions are mostly government-controlled, and ultra-low-tuition is mandated, the government must also intervene to restrict access to higher education, and to keep costs low through other means.

These methods include:
  • Restrict access to higher education through testing and other gate-keeping strategies.
  • Lower "customer service" quality with larger class sizes and fewer amenities.

The first and easiest thing to do is limit the number of students with admissions standards. This can be done by raising requirements for test scores and mandated course work completed prior to enrollment at a higher education institution. How this is done varies considerably from place to place. Germany, for example, employs a number of fairly robust admissions requirements. France, meanwhile, employs the baccalauréat exam system, designed to reduce the number of people eligible for a college education. As Claire Lundberg at Slate has described it:

The problem here [from the student's perspective] isn’t with the cost of the education, but with the huge amount of tracking, testing, and winnowing that is used to help keep the system free. In America, virtually anyone can get a college education so long as they have the money to pay for it. In France, you can get an excellent, free or nearly-free education but often only if you follow a prescribed set of rules and pass a series of grueling tests that often start early in high school.
French teenagers go through their first major career sorting at around age 15, when they decide on an academic or vocational course of study. This choice determines what kind of high-school graduation exam, or baccalauréat, the student will sit for, and to some extent what kind of higher education is open to them. The choice of track is also not entirely up to the students; the head of their lycée, or high school, has the final say. There’s some ability to change tracks, but it’s not particularly easy.

Naturally, if testing can be used to keep potential students out of college, this helps to control costs.

This model of restricted access, however, grows out of both administrative reality and European attitudes toward higher education. Europeans are decades behind the Americans in terms of adopting the idea of "mass education" in which more or less anyone ought to be allowed to enroll at some sort of higher education institution.3

Yes, Europeans have adopted the idea of providing an education to all applicants who are "qualified," but as sociologist Martin Trow puts it, "Universal access to postsecondary education ... is not the same as open access to university for those who earn an Abitur or baccalaureate."

This system of controlled access has endured longer in Europe which has long looked askanse at American populism in higher education. Consequently, higher education in Europe "constitutes a significant entitlement for the mostly middle and upper middle class families whose children go to university, and it is fiercely defended by them and their children."

In recent decades, political pressure from working-class voters have forced many European gatekeepers of this higher-education system to move more in the direction of true "universal access." But, it has proven difficult for European states to fund the expansion in higher education resources necessary to accommodate a model like this. In America, where there is more flexibility to raise tuition — and thus to expand buildings, services, and infrastructure in higher education — growth has been substantial, even if tuition rates have also increased considerably. In European no-tuition regimes, on the other hand, the political opposition to raising tuition rates — opposition provided largely by those middle and upper-middle class families who view it as an entitlement — means the problem of "underfunding" has grown "most dramatically in Europe."4

This means higher education in countries with few-to-no tuition fees are hemmed in financially, and must either continue to limit access to institutions, or they must find ways to reduce costs while admitting more students.

This leads us to a second means of limiting enrollment: lowering quality by limiting access to faculty and staff, and providing lower quality facilities. This in itself often indirectly encourages students to leave after they've already been accepted.

In the United States, tuition-dependent schools have an incentive to retain students through better student-teacher ratios, and through what Trow calls "armies of para-educators, professional counselors, deans of student life, remedial specialists, and the like."

European colleges do not employ such staff in nearly the same numbers, in part because they are less economically dependent on student retention.

In France, for example, making life difficult for students has been a time-honored method of controlling enrollments. Observers speak of "overfilled auditoria, high dropout rates, and fierce competition among students." Class sizes of 1,500 people are not uncommon.

As one group of researchers noted: "The accessibility of French universities — both from an admissions and financial perspective — paradoxically has had negative consequences on students. In 1968, French Minister of Education Alain Peyrefitte compared undergraduate life in France to 'organizing a shipwreck to see who can swim.'"

It appears that little has changed since then.

Nor is this experience specific to France. Many European universities — especially in jurisdictions where education is "free," appear uninterested in catering to the students:

European universities do not feel compelled to spend millions on amenities that have nothing to do with education, such as athletics, climbing walls, and the like. European students see campuses as places to go to study, not to find a spa-like infrastructure.

But, this is all part of a strategy to control costs. Marketplace quotes German professor Frieder Wolf who notes :

"This is not to complain. I love my job and I have a lot of freedom but this is how we keep costs down — larger classrooms,” Wolf says. “We’ve got courses with 40 participants, 50 participants in the social sciences, where [American universities] might have tutorials of four or five students.”

This isn't to say, of course, that an education can't be had at any of these institutions. The German model, by the Germans' own admission is “reliable quality" and they often achieve this goal — even if that means a stripped-down version of what many people (i.e., British and American students) think of as "the college experience."

We can contrast these systems with American higher education which is far more open, fluid, and customer-oriented.

After all, virtually anyone can go to college in the US at a junior college or community college where tuition is a mere fraction of what it is at the posh liberal arts schools where many students receive grants and take out loans to attend all four years. Class sizes also tend to be quite small at these 2-year colleges where course credit can also later be transferred to 4-year institutions.

Say Goodbye to Open-Access for Everyone

The mistake many proponents of free tuition make is they assume the current American system of highly flexible open-access colleges can be sustained in a system that also offers classes tuition free. They assume class sizes will continue to be relatively small, that current accessibility to faculty can be kept where it is, and that there will be no need to close off opportunities to students who fail to excel in high school.

The reality in "free-tuition" countries often suggests this is unlikely.

Moreover, this sort of rationed higher education means it will be even more difficult for late bloomers and "second chancers" to access higher education. Economic realities will dictate those potential students will be prevented from attending higher education institutions. But they'll still be taxed for them.

To all of this, some might object and point out that there's surely a happy medium here somewhere. Perhaps the prudent goal is not "no tuition," but merely "low tuition." After all, some countries, like Canada, have quite high degree-completion rates, and also highly subsidize higher education.

But, in most respects, American higher education systems already have the same in most states. The difference in cost, it seems comes not from too little government funding — which is on par with European welfare states — but from high levels of both government and private spending lavished on higher education institutions in the United States. This "extra" cost that must be absorbed by students then goes to athletics, diversity officers, and dorm life. Part of this, as noted above, stems from efforts to increase student retention. But much of it is enabled by America's odd system of subsidizing colleges through student loans, which means colleges compete more in terms of amenities than through prices. 

These latter issues certainly deserve our attention. But the European experience suggests the problems of high prices students now face will hardly be solved by embracing a "free college" model that will serve to only make colleges less responsive to student needs while, ultimately restricting access.

  • 1. It's worth noting that German college students are not without student debt, although it's at smaller levels than US students. According to the 2017 Credit Suisse global wealth report: "In the United States, 37% of those aged 20–29 in 2013 had some student debt, which accounted for 18% of the total debt of that age group. In Germany, 12% of those in the same age group had student debt and it accounted for about 6% of total debt." (http://publications.credit-suisse.com/index.cfm/publikationen-shop/research-institute/global-wealth-databook-2017-en/)
  • 2. It should be mentioned that this gap has been narrowed among younger age cohorts. Japan, the UK, the USA, and Australia, however, all remain near the top, while France and Germany remain below the countries with more flexible tuition regimes. Germany, especially, has lower college completion rates. See Table A1.2 in the OECD's Education at a glance for the 25-34 age range.
  • 3. See "80% of 12-year-olds in Switzerland told they can’t go to university" (https://lenews.ch/2016/01/13/80-of-12-year-olds-in-switzerland-are-told-they-cant-go-to-university/) and "Decreasing Social Mobility? The Swiss Case in Western European Comparison" (https://boris.unibe.ch/90663/)
  • 4. "From Mass Higher Education to Universal Access," by Martin Trow. Center for Studies in Higher Education working paper ,page 2. https://cshe.berkeley.edu/sites/default/files/publications/2000_from_mass_higher_education_to_universal_access_the_american_advantage.pdf

Contact Ryan McMaken

Ryan McMaken (@ryanmcmaken) is executive editor at the Mises Institute. Send him your article submissions for the Mises Wire and Power and Market, but read article guidelines first. Ryan has a bachelor's degree in economics and a master's degree in public policy, finance, and international relations from the University of Colorado. He was a housing economist for the State of Colorado. He is the author of Breaking Away: The Case of Secession, Radical Decentralization, and Smaller Polities and Commie Cowboys: The Bourgeoisie and the Nation-State in the Western Genre.

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