The U.S. needs more colleges

The idea of free college, one of the pillars of Bernie Sanders’ unsuccessful presidential bid, hasn’t been discarded in the wake of the 2016 election. New York Gov. Andrew Cuomo recently released a plan to make all public colleges in that state free for residents whose families earn less than $125,000 a year.

The policy isn’t all that radical. It’s actually pretty similar to what selective private schools such as Stanford and Harvard already do. At those schools, students from rich families subsidize those from more modest backgrounds. In New York’s case, a lot of the subsidy will also come from foreign students, who pay full sticker price.

Nor would Cuomo’s policy be likely to have a huge effect. Public-university tuition is already fairly inexpensive for most students from low- and lower-middle-income backgrounds.

Making public schools even cheaper for kids from lower-income families isn’t a bad idea, but it does represent tinkering at the margins. And that doesn’t come free, of course – colleges, now receiving more state money in the form of tuition waivers, will raise their sticker prices (though states sometimes try to address this with price caps).

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But there’s an even bigger limitation to the free-college idea. As long as the number of available college spots remains roughly fixed, reducing the price of college will have only a very modest effect in creating broad-based economic opportunity.

In an unfettered market, spots at universities are rationed by price – those who pay, get to go. But in a world of price controls, the limited supply of college education must be rationed by some other mechanism. That mechanism, inevitably, is grades and test scores. Lower-income students who do well in high school will get a free ride to a brighter future, while those who don’t put up the requisite numbers will be left to the dubious mercy of the high school-only job market.

To me, that doesn’t seem like a huge improvement.

My recommended solution is to focus on increasing the number of college spots available. One way to do this is to make public schools expand the number of students they admit. A second way is to actually build new universities, especially in underserved areas of the country.

My favorite idea is for the federal government to create a national university system, similar to those that exist in most other advanced countries.

More supply would also help push down the sticker price of college, making it cheaper to subsidize tuition for the poor. Supply and demand doesn’t always work, but it seems reasonable to at least give it a try.

So instead of making college free, maybe it would be better to first focus on building more colleges instead. •

Noah Smith is a Bloomberg View columnist.

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