A Free Market Path to “Free” College Tuition

Would you buy a “free” college degree from this man?

Bernie Sanders, a leading Democratic Party candidate for president, has proposed making college “free” and erasing all $1.6 trillion in student debt. He calls the cost of higher education a “national disgrace,” which it is. But his proffered remedy is so wrong-headed that it’s all I can do to keep steam from shooting out of my ears.

Other commentators have opined on how free tuition would benefit mostly affluent Americans who qualify for college admissions, while debt forgiveness would reward students who recklessly piled on debt they couldn’t repay and penalize those who made sacrifices to make good on their loans. Less frequently noted, taxpayers should not be compelled to subsidize young wastrels who spend years partying or engaged in a search to “find themselves.”

But in this post, I focus on a question Sanders neglects to ask: Why are college costs are so high? His platform ignores administrative bloat. It ignores low faculty productivity. And it only partially addresses the gold-plating of buildings, grounds, and facilities. If we want to make college affordable without devastating taxpayers, we need to strip the costs out of the higher-ed sector.

What if… What if students could contract directly with accredited college professors to take a course rather than contract with a college or university?

What if college professors could create their own courses in response to market demand and deliver them directly to students?

How much would professors have to charge per course if most of the costs of higher ed’s buildings, grounds, facilities, and vast administrative apparatus were shorn away

Imagine that a professor taught three classes per semester: one large class (100 students), one medium-sized class (35 students), and one small class (15 students). Imagine that he (or she) taught two semesters per year and took the summer off to pursue research, write books, or follow his bliss. The total teaching load would be 300 students.

Next, let’s use the following average 2016 salary figures listed in the Chronicle of Higher Education: $134,000 for full professors, $82,000 for associate professors, and $70,000 for assistant professors. For purposes of calculating an average salary across the professoriat, let’s assume that full professors comprise 1/3 of the total, associate professors 1/3, and assistant professors 1/3. Then let’s add 30% for the cost of health care and other fringe benefits. We come up with an average compensation of roughly $125,000 per professor.

If we divide that $125,000 cost over 300 students, we get an average cost per student per course of $416. Let’s add $184 per course so these hypothetical free-lance professors can cover the cost of accreditation, marketing, information technology, bookkeepers, and lecture-hall and classroom rentals — in other words, the cost of operating a small business. Under such a free-contract arrangement, students would wind up paying $600 per course — or $6,000 a year for a full course load.

(Actual prices likely would vary depending upon the renown of the professor in question. A superstar scholar would charge more. Others, just starting out, would charge less.)

Over time, I would expect to see considerable innovation. Professors might take on larger teaching loads and hire assistants to help with grading. They might incorporate elements of distance learning. Certainly, students would be free to avail themselves of distance-learning classes to access courses and/or professors not available locally. Professors might team up to teach an entire curriculum in, say, economics or the classics of world literature.

In Bacon World, students would remain free to pursue the expensive, four-year residential option with football teams, student lounges, gyms, fraternities, sororities, drunken sex, intramural athletics, guest speakers, diversity bureaucrats, enforcing ideological rigidity and all the rest, if they so wish. But they would also be permitted to get a stripped-down but quality education at a fraction of the cost.

The cost of tuition and fees at four-year Virginia institutions in 2017-18 ranged from $9,056 at Virginia State University to $23,400 at the College of William & Mary. The difference between those numbers and $6,000 per year under the Bacon World plan represents administrative bloat, a coddled professoriat, mission creep, expensive building programs, and student activities of dubious educational value.

Here’s the real kicker: State funding per full-time-equivalent student in Virginia in the 2016-17 school year was $5,800. It’s a bit higher now. If the Commonwealth of Virginia paid that money to students instead of institutions, under a Bacon World scenario in which students and professors were free to contract directly with each other, higher education would be free — without dunning taxpayers for one more dime.

Of course, Sanders would never endorse such a plan — too much free enterprise involved, not enough subsidies for the corrupt, inefficient bastions of ivory tower leftism. But we don’t need to wait upon the federal government to get the ball rolling. We can create such a system here in Virginia, should we choose to.

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35 responses to “A Free Market Path to “Free” College Tuition

  1. Reduce high salary jobs filled mainly by progressives? What are YOU smoking, Jim?

  2. Lord. What could be worse than the govt giving money away in the name of education? Why mandating what colleges have to do, of course!

    We ALREADY have a “free market” in what courses folks want to take and from whom! Nothing keeps anyone from “contracting” with various for-profit companies to take a particular course at a particular course – often from some “adjunct” who does not make anything near what a College professor makes.

    I’m not understanding what the problem is. It’s like someone saying that even though there are Chevrolets for sale – they want a Cadillac for a Chevrolet price and they want the govt to require it. Mind you these are the same folks pointing fingers at others “socialism”!!!!

    I think what Jim is really after is a DIPLOMA from a 4-year “Name Brand” institution as opposed to someone who has taken a variety of different courses from different providers but has no “official” diploma, much less from the likes of UVA or Duke.

    I just don’t think that’s “free market”. It’s just using the govt to force Colleges to offer a less expensive product. That’s more akin to socialism than free market!

    Basic college could be “free”. No frills. No sports programs or other goodies – just the basic academics and it’s not “free” at any institution at any price – it’s a fixed price voucher that some Universities will accept in full and others you’ll need to add some more of your own. Many Universities will, no doubt, provide that product using adjunct professors and the like.

    I’m actually surprised that Sanders the socialist is apparently the only one offering something and his competitors are either silent or willing to let Sanders be the “voice” of the Dems.

    And you know what – for Conservatives, there are places like Liberty and I’m quite sure that as a super selling point – Liberty could offer “Free College” with the appropriate fine print…. and do just fine!

  3. First, determine the administrator to instructor ratios for each college or university receiving federal funds for 2018-19. Then calculate the same ratios for 2008-09, 1998-99, 1988-89. Give each institution until the start of the 2021-22 school year to reduce its administrator to instructor ratio to the average ratio for 2008-09, 1998-99, 1988-89. No new instructor hires, except for replacements, can be considered in the calculation. An institution not making the average loses 20% of all federal funding. An institution not making the average for the 2022-23 school year loses 40% of all federal funding. Etc.

    I suspect affected colleges and universities would not have a need to raise tuition and fees and may even be able to cut charges.

    • There is a lot to this. I remember walking through a VCU administrative building many years ago. I was surprised at so many offices for assistant deans, associate deans, assistant to the dean, etc. I wondered: What do all these people do?

  4. Shades of Helen Dragas!

  5. I don’t agree with Sanders’ proposals, but free tuition is not a revolutionary concept. It seemed to me that I remembered that, back in my youth, California and New York did not charge tuition to its residents to attend state colleges and universities. I have confirmed this memory. California offered free tuition to in-state students until the 1970’s. The CUNY system provided free tuition to the city’s residents until 1976.

    Much of the increase in college costs can be traced to the increases in fees. Part of these fees go to pay the debt service on those college facilities used for education and general purposes–classroom buildings, student activities buildings with climbing walls, etc. Then there are the meal plans provided by commercial caterers (Marriott, etc.) and the dorm apartments with plush carpet, private rooms, cable TV, etc. I have complained about the fancy buildings for a long time, but was told that there is a “luxury” race going on in higher education. The fancy facilities are what attract students and most colleges and universities feel they have to have them to compete.

    I have long had a fantasy that some Virginia higher ed facility would give parents of prospective students the following pitch: We will provide your son/daughter a good, solid education comparable to that provided by any other state school. He/she will have classes taught by full-time faculty. Your son/daughter will be safe in our facilities. The buildings and dorms will be comfortable and safe, but they will not have all the amenities that your son/daughter may be used to at home. The meals will be ample and nutritious, but there will not be a choice between Thai, Mexican, burgers, etc. There will be one dining hall that will offer some limited choice at each meal. In return for this excellent education and some physical sacrifice by your child, your total cost will be one-third (?) less than at other state schools. I wonder, if a school were to make such an offer, would enough parents have enough gumption to override their spoiled children and take the deal?

  6. I was living in CA when Reagan started to end free tuition at the state system. He had this great line about the students coming to Sacramento to protest but discovering they’d left their signs in their other cars…..

    That fantasy, Dick? We lived it, didn’t we? Sounds like W&M back in the day, pretty Spartan by today’s standards…..No AC, food was pretty bad, a workout meant back and forth on the basketball court during intramural games, no fancy gym….

  7. The costing out for Bacon World is unrealistic; it leaves out a lot of costs that higher ed institutions need to recover. For example, there is no funding for a library in the $6,0000 per year cost in Bacon World. Nor for campus security. I don’t think a $184 annual fee would cover the cost of “renting” a modern lab. Finally, no professor, no matter how good, can adequately handle a teaching load of 150 students per semester by himself or herself, unless all tests and exams are multiple choice and students would not be required to hand in any written assignments (book reports, term papers, etc.) during the year. If that is the case for courses in the humanities and social studies (English literature, history, etc.), I consider that a substandard education. Finally, professors need to have time to keep up with the latest research and debates within their fields. Otherwise, their course preparations would never be updated and remain the same year after year. Again, a substandard education.

    • Yeah, courses that require labs might be more expensive. In that case, professors in Bacon World would charge more to teach those classes. Presumably, the higher cost of a STEM course would be recompensed by the higher earnings potential of earning a STEM degree.

      Conversely, the cost of humanities courses would be lower.

      My purpose was to establish a framework for thinking about the cost of providing a higher education. I’m sure my back-of-the-envelopes would need significant massaging. But the larger lesson, which I think is undeniable, is that many students are paying for a lot of stuff of dubious value. That suits entrenched university interests just fine. But students, parents and taxpayers are screwed.

      As for the overhead cost of libraries…. university libraries are probably an institution that needs disrupting. What is the need for maintaining hard copies for literally hundreds of thousands of books that nobody has checked out for the past 10 years?

  8. Being “College Educated” is still a gold standard benchmark in the minds of many – and preferably one whose name is known and they have a sports “presence”.

    You don’t need all of that to get a good job – and, in fact, a standard, generic degree is no longer the guaranteed “good job” it used to be.

    But the mindset continues… and higher ed is more than happy to serve up that product and rake in the money to pay all it’s professors and administrators.

    But I still think – having the government determine how many professors or administrators or how much they should be paid – is as socialist as handing out money for college.

    But I guess some folks would say that the idea of tax-payer-funded “public” education – is socialist also.

  9. If we really want a free market solution, we would remove subsidies (student loan guarantees, grants to institutions, tax exempt status). If we then determine we want to provide financial support to lower income students, provide the grant directly to them (not to the institutions and not to those who don’t need it). A market-based loan system would look at the candidate’s prospects for repayment.

    If we continue with these massive government subsidies, then by all means we should insist on increased transparency from colleges. The fancy recreation centers are really just the tip of the iceberg.

    • First thing that needs to be recognized is that any/all govt “help” whether loans, grants or subsidies is more socialism than free market.

      Are we really talking about “free market” or just changes to the current socialism?

      The second thing to recognize is that there are education providers like Community Colleges as well as for-profit businesses that provide education that do not have upscale amenities, high paid professors or or a phalanx of administrators.

      Third – People can buy as much or as little education as they want. They can take a single course at a for-profit or community college or even some Universities and Colleges.

      If we recognize these obvious realities – a narrative that ALL College is “too expensive” and they have too many high paid professors and administrators is simply not true.

      I don’t see folks saying we have to do something about cost and administrative “bloat” at Community Colleges or for-profits.

      So then – it’s fair to ask why we continue to hear over and over the continuing claim that College is too expensive and the govt needs to “do something” different or more than they are right now?

      It’s not a call to get govt out of it -right?

      So what do we REALLY want?

      We already have the ability to pick and choose from a wide variety of options for higher ed. No one forces anyone to take on great gobs of debt – that’s a “free will” choice and the govt will help you get a loan no matter your socio-economic background and talk about limiting loans based on whether we think you can repay it – that’s still socialism but with rules that favor some or disadvantage others. In other words, some folks ‘deserve” socialism and others not… and especially so if they want to go to a recognized 4yr institution and receive a diploma.

      So basically, if you come from a family that sufficient wealth and the likelihood that you will repay the loan and you got to a recognized 4yr institution that awards diplomas – you should get full access to loans and others not so much? (remember, in a true free market, if we just looked at the student only and not his/her family wealth – no student would be “credit-worthy” – right?

      And we want to keep prices down by having the govt decide things like price, salary of professors and how many administrators, etc?

    • We have a free market solution. First, there are private non-profit colleges and universities. Many of those could exist without subsidized student loans, but the existence of those loans help.

      Then there are the for-profit institutions, which probably could not exist without student government loans. Their track record of preparing their students for jobs is pretty dismal.

  10. What you haven’t done is take a look at the demographics of those people, not just the professors, but the workers. When mgmt is allowed to run amok, you will see the problems there. Hiding things, like the ODU/rape issue, is the tip of the iceberg. Any time you have things like that, you know there is little accountability and more firing of people who shouldn’t be.

    • All institutions “hide” things and don’t want accountability – whether public or private..

      We actually do have SOME transparency and accountability – it’s just not enough for the critics – and what the critics want to do with the information – ultimately is to have the Govt “force” the institutions to do business a certain way.

      Do we REALLY want the govt dictating how Colleges should operate?

      And remember- again – we’re talking about ALL higher ed beyond the 4yr institutions, we’re talking about private college, community college, for-profit college and the cry seems to be primarily to assert govt control of public 4 year colleges. Right?

      So we’re calling for the Govt to essentially run the institutions and set the prices. This is coming from folks who say they are “free market” libertarians and folks who say they are Conservatives………..

      and the basic justification is that because the govt already provides subsidies, grants and loans – they also then should control prices, what courses to offer, salaries for professors, and how many administrators to hire, etc.

      It’s bonkers!

  11. Jim’s basic point remains valid, is based on sound economics and market psychology, and follows the rather wonderful thinking expressed once by P.J. O’Rourke – if you think education is expensive now, just wait to see what it costs when it’s free. He said it about health care, but the idea is the same.

  12. Bernie’s proposal is obviously absurd. I find it amazing that none of these politicians are discussing the bloated college costs and lackluster performance. The whole system needs an overhaul. I would suggest an immediate cessation of the government college loan program. Once the money stops flowing, the colleges will adjust their cost structure. If a student loan borrower needs “relief”, allow them to file for bankruptcy and suffer the personal consequences of doing so. Moreover, why is no one discussing the failure of our high schools. Many first year college courses are simply remedial classes.

  13. What I’m saying is that you can’t say you want “free market” but you want the government to have command/control over it.

    those two are mutually exclusive.

    If you REALLY want the govt to assert control over the Colleges then just admit that it’s not free market at all!

    In terms of the College Loan program – I’m in somewhat agreement with MatthewN but I do also want to point out that the military actually does give benefits to veterans via vouchers which are not “all you can eat” but rather limited in actual money as well as what they can be spent on and there is STILL a “problem” with folks not choosing wisely and frittering away their vouchers.

    But we ought to admit when the govt is subsidizing, giving loans and grants and vouchers – that’s not free market – it’s socialism….

    • In Virginia, the government flat out owns and operates all the state colleges and community colleges. Now. Already. Just start there, get their costs in line, and the rest are going to have to follow. And I don’t care what Harvard charges, or even W&L, but care alot about Tech, UVA and W&M.

  14. Like Paul Krugman of the New York Times, I am getting weary of the term “socialism” being bandied about. The definition of socialism is public, or social, ownership of the means of production and workers’ self-management. https://www.nytimes.com/2019/06/27/opinion/socialism-2020.html
    No one on this blog or any prominent politician is advocating that the government take over the means of production. The closest we have come lately to that is when the federal government bailed out GM and Chrysler and held a majority of the stock in the Great Recession (and the companies welcomed it). The government has divested itself of all, or most, of that stock.

    Unless one defines a higher education institution as constituting “a means of production”, we do not have any vestiges of socialism. The state of Virginia has decided to establish and fund, with public money, institutions of higher education, including community colleges. As a result, residents of Virginia can attend at a lower cost than residents of other states.
    Every state runs its system of higher education differently. Virginia, for better or worse, has chosen to use a system of semi-autonomous governing boards. There is a great deal of tension in the system, with the colleges and universities chafing at elements of state control (but still wanting the money) and the Governor and the legislators sometimes frustrated with the independence of the institutions. In the end, however, they are are the recipients of a lot of public money, if not as much as they think they need, and they should and need to be accountable in how it is spent.

    • Excellent comments, Dick. The involvement, ownership and operation of various and specific entities does not equate to socialism.

      Moreover, I think the idea of a free market economy does not assume there is no role for the government in the market. Adam Smith, for example, saw the role of government to be maintaining defense, keeping order, building infrastructure and promoting education. Government should keep the market economy open and free, and not act in ways that distort it, according to classic free market thinkers.

      Government protects private property rights and enforces private contracts through the courts. Government needs to protect the market against monopolies, tax preferences, controls, and other privileges that producers extract from the government authorities. Crony capitalism has no place in a free market.

      If Adam Smith were alive today, he’d be railing against the size of government and functions performed but he surely would not advocate shutting down WDC or Richmond.

      • Exactly. There are no free markets without government to establish the rules and enforce them. No government = anarchy.

        As for socialism, as Dick points out, the definition is total state ownership of the means of production.

        Closely related is fascism, which allows private ownership of the means of production but total subordination to, and control by, the state. Hitler and Mussolini (and their acolytes) worshiped and elevated the state, which used its power to mediate between labor and capital.

        Which U.S. political party most closely hews to that philosophy?

  15. re: “means of production”.

    I agree that I have pushed the point a bit (since our GOP friends are doing it daily now) -……………. but…….

    ” In Virginia, the government flat out owns and operates all the state colleges and community colleges. Now. Already. Just start there,

    ………… The definition of socialism is public, or social, ownership of the means of production and workers’ self-management. ”

    No one on this blog or any prominent politician is advocating that the government take over the means of production.”

    That’s my point – various folks at various times HAVE in BR called for the govt to set prices for tution, determine salaries for professors and determine how many administrators they can have.

    right?

    public roads are also socialism – the govt funds them and determines where they go and whose land to take.

    Many say the VA health care is socialism – totally govt-funded AND operated and Medicare is close with the govt funding it and setting the prices and determining what procedures people can get or not.

    Something that is closer to what seemingly is advocated is ObamaCare where the govt does subsidize the cost but insured also pay money on a means-tested basis – and they have a “marketplace” of private insurance providers they can choose from and folks can choose any doctor that accepts that insurance.

    Perhaps that is the model that folks are advocating for colleges –
    but even then – do we really want the govt deciding what courses are offered and what the salaries of the professors should be and how many administrators the college can have?

    Do we really want the govt doing that?

    The idea is that if the govt funds it – the govt can set all these things?

    It walks and talks like socialism then – to me – far, far away from the “free market” where the govt would not have any involvement at all in price and salaries and numbers of employees.

    No?

    • “Various folks at various times HAVE in BR called for the govt to set prices for tuition, determine salaries for professors and determine how many administrators they can have.”

      I don’t recall a single person who has called for gov’t to do these things. I (and others) have repeatedly noted that tuition is too high, faculty productivity is low, and administrative staffs are bloated…. as, in fact, they are. We point this things out to hold colleges and universities more accountable. But I’ve never called for “government” (either the legislative or executive branch) to micro-manage higher-ed. To the contrary, I have said that government should NOT set tuition or micro-manage.

      Larry, comments like this show how you read everything through a powerful ideological filter that distorts reality. Try harder not to impute to conservatives and free-marketeers your stereotypes of what they think and address what they actually think.

      • Actually reading and thinking intelligently about the words being read, plus synthesizing their message, and remembering it into the future, so as to competently learn is also helpful.

  16. there is no “powerful filter” nor distortion. You go right up to the edge of it many times but stop just short …. and others here go further – in this thread alone the point made that if the govt puts money into it – then the govt has the right to make rules.

    Besides what is all this endless blather about the “problem” and you’re saying that all that is merely “holding them accountable”?

    Sorry Jim – it’s more than that.

    You may be able to claim that you’ve never out and out called for the govt but you’ve gone right up to that line over and over – and when you do – you don’t call for other things to be done – nope – you say things like the govt is paying the colleges money and the colleges are not controlling prices – what other implication is to be drawn when you say that? You’re just filing the same complaint over and over without really calling for anything specific to be done? That’s all you’re doing?

    😉

    What exactly IS the POINT if you’re saying that tuition is too high, the govt helps pay, professors make too much and there is administrative bloat? You’re just saying that and not really calling for change?

    come on guy… there’s a certain amount of sliding around here..

    If you are NOT calling for the govt to get involved, what ARE you calling for? What is your remedy?

    • “If you are NOT calling for the govt to get involved, what ARE you calling for? What is your remedy?”

      What’s my remedy? For boards of visitors to act like real governing bodies, asking tough questions and holding administrators accountable instead of institutional cheer-leaders.

  17. Let’s take ONE issue. If you think there is administrative bloat – at higher ed (and I AGREE) – what exactly is the remedy you’d call for if not govt involvement?

    The part that confuses me is that in BR -we call that out – THEN WE SAY we need a “free market” remedy.

    And that’s where I get confused – because it appears that – we’re calling for free market solutions that the govt will impose.

    no?

    or are we advocating that the govt should stop funding higher ed altogether and stop giving loans and let the Colleges operate in a true free market?

    Can there be such a thing as the Govt setting up a “free market”? Is that what you are calling for? And if so – how would that work?

    I’d admit that a typical approach these days is for the govt to fund something but in order to get the money – you got to follow their rules.

    In those cases – do we consider that “free market”? If the govt provides the money and tells you how to spend it – is that “socialism”?

    Is MedicAid – socialism?

  18. Larry,
    I am going to agree with you on some points and disagree on some. First, I have always objected to calls for government to act like a business or as the free market. Government is not a business. There are many reasons why it does not and cannot and should not operate like a free market business. For example, for 55 cents the Postal Service will deliver your letter to anywhere in the United States, even to the most distant parts of Alaska. UPS or FedEx would not do that. The cable companies will not put in cable where there are not enough houses to make a profit. However, VDOT maintains roads on which a very few people live. And so on.
    On the other hand, state-operated colleges and universities are government agencies. Different from most other agencies, but, at the bottom, state agencies. However, when state revenues were down and all state agencies had to take cuts, the institutions of higher education did not do so. Yes, their appropriations were cut, but they just made it up in increased fees and tuition. They did not have to cut positions and lay off employees like the Department of Corrections and other agencies did. State-supported institutions of higher education have a responsibility to provide the best education for the state’s residents at a reasonable cost. There is a widespread feeling that higher education is not containing its costs; that it feels that it can jack up tuition every year at a rate that is much higher than general inflation and get away with it. Part of the problem has been cuts by the legislature. I don’t have the answer. If I did, I would be able to afford the beach house that my wife wants.

  19. Dick – you make cogent points here. And I do – somewhat – buy into the idea that the Colleges are like State Agencies but doubt that the State determines salaries and employment levels like they would for DOC or DMV or DEQ.

    Yes, there is a widespread perception that “higher ed” has not contained their costs but again point out that “higher ed” is not just 4yr State Universities, there are Community Colleges, private institutions and for-profit education institution.

    But the angst is primarily over the well-recognized State-funded 4yr universities with sports programs.

    In other words – it’s a specific product.

    You don’t have to buy 4yrs of high dollar on-campus tuition to get a degree and the Universities are charging based on how many professors or administrators they have -they’re charging for what they can get and THEN they “spend” it on more employees, etc…

    Also to point out – they are also criticized for hiring adjunct professors that are paid far less.. damned if they do and damned in they don’t!!!

  20. and so perhaps a question is – what level of govt involvement would justify calling it “socialism”?

  21. weathertiteconstruction

    Mr. Sizemore makes the valid point that the USPS delivers mail where a NGO wouldn’t at any price…no mention though that USPS is a lot in debt (no time to research the fact), and that roads are maintained not on the amount of usage but a more democratic scale of need vs utility. People need to get to homes in rural areas even though it is not cost effective to repair their roads vs the taxes paid.
    Having bludgeoned that poor thought to death, to move that same sort of logic to Higher Education or ultimately Education in general there ( which is what I started out replying to in the Steve Haner post at the beginning) is a higher tech free market solution to educating at lower cost and letting the market determine compensation. If the big gov’t (or private funded entity)provided an online university setting that optioned curriculum or single courses (i.e. Hillsdale College or LinkedIn) where professors could offer knowledge for a price people could chose what they wanted to learn with a scale (most accredited, or successful, to least with compensation commensurate to likes, follows, graduates, jobs attained…

    I have not taken the time to address the good vs bad at any length but I figure the good contributors to Jim’s blog will mercilessly do that for me as is everyone’s intention.

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