Pandemic's New Victim? Free College

States would pay for large chunks of the free college plans from Biden and Sanders, but the coronavirus is sending state finances reeling.

April 3, 2020
 
Courtesy of CNN
Presidential candidates Joe Biden and Bernie Sanders

Though they don't necessarily doom the plans, the financial struggles of states amid the coronavirus pandemic have become a major obstacle to free college proposals from presidential candidates Bernie Sanders and Joe Biden.

So much so that at least one proponent of free college, Morley Winograd, president of the Campaign for Free College Tuition, acknowledged that the proposals from Sanders and Biden on how to pay for eliminating tuition now are unlikely to happen. The plans “need to be put aside for now,” he said, given the focus on preventing state cuts from sending college tuition soaring.

"Colleges never fully recovered from the last recession, and now they need tens of billions of dollars to avoid massive tuition hikes," said James Kvaal, president of the Institute for College Access & Success and former deputy domestic policy adviser in the Obama White House. "The first priority for both the federal government and states has to be addressing steep budget cuts and preventing large tuition hikes."

Kvaal said that "puts the free college plans in doubt for the foreseeable future." But he said free tuition could still happen sometime in the future.

What’s dampening hopes for many higher education experts is that both candidates’ plans call for states to chip in tens of billions of dollars.

Under Sanders’s proposal, for instance, the federal government would pay three-fourths of the cost, estimated by the campaign to be $48 billion annually. But it would rely on states to spend tens of billions a year to pick up the additional 25 percent.

Biden, meanwhile, initially proposed that states pick up one-fourth of the cost of a smaller plan that would have made community colleges free, with the rest paid by the federal government.

But in a move that was seen as an overture to Sanders supporters and young progressives, Biden announced last month that he would adopt an earlier Sanders proposal, the 2017 Colleges for All bill, making public colleges and universities free for all students whose families earn less than $125,000 a year. The federal government would spend what Sanders then estimated to $600 billion over 10 years, which would cover two-thirds of the total cost. States, in what’s now part of Biden’s plan, would have to pony up the remaining hundreds of billions of dollars.

But states are reeling financially as they deal with health care and other costs during the pandemic, at the same time as the closure of businesses and record unemployment are slashing their revenue. And higher education experts are worried about preventing another devastating round of state cuts in funding for colleges and universities, as happened in the last recession, which sent tuition soaring.

“It’s scary. Colleges will be swamped by a tidal wave of state budget cuts that could be more devastating than the Great Recession,” said Kvaal.

Winograd agreed. “As states focus their attention on responding to the immediate crisis, they are rapidly draining their financial reserves and then some. This combination of events makes it clear that even though the need for free college tuition has never been greater, the likelihood of funding it, even partially, from state revenues is unlikely,” he said.

Instead, Winograd said, Congress should provide money in a new stimulus package for governors who want to eliminate tuition as part of their economic recovery plans.

A spokesman for the National Governors Association said it's too early in the states’ budget process to forecast what will happen to spending for higher education. But he pointed to the dire comments Larry Hogan, Maryland's Republican governor, and Gretchen Whitmer, the Democratic governor of Michigan, made in a Washington Post op-ed on Monday.

“As a result of the sharp slowdown in the economy and the postponing of tax filings, states are likely to face huge shortfalls in revenue,” they wrote.

Though Congress included $150 billion in aid to states, territories, municipalities and tribal governments in last week’s $2.2 trillion coronavirus relief package, the governors wrote, “States will need additional and substantial federal help to continue funding essential services such as police and Medicaid while balancing their budgets and meeting the spending demands of the pandemic.”

“It’s looking very challenging for state budgets,” said Phillip Oliff, the Pew Charitable Trusts’ senior manager of fiscal federalism and student loans policy. “The coronavirus crisis looks like it's going to have a major economic impact. When there are economic downtowns, they often mean major troubles for state budgets,” many of which are barred by law from running deficits, said Oliff, who spoke about the financial situation facing states during the pandemic but declined to comment on its impact on the free college plans.

And when states have to make budget cuts, he said, they tend to look at higher education, because colleges and universities can raise tuition.

Looking to the Feds

Neither the Sanders nor Biden campaigns returned inquiries this week asking if they have a plan for paying for the free college plans given budget crises in the states.

To do free college without state help, experts said, the federal government would have to initially pick up most if not all of the states' share of the cost, until the economy improves enough for states to start chipping in.

“Likely, in reality, it will have to mean a greater investment from the federal government. And that would mean the federal government will have to reprioritize higher education,” said Tiffany Jones, senior director of higher education policy at the Education Trust, which focuses on issues affecting students of color and those from low-income families. She noted that last week’s stimulus package spent 30 times more on helping corporations than higher education.

Some, like Antoinette Flores, director for postsecondary education at the progressive Center for American Progress, thought Congress could go along given the trillions it has been willing to spend in the stimulus packages. She noted that Congress increased spending on Pell Grants during the last recession.

“I could totally see policy makers consider free college. I don’t think the idea is off the table,” she said.

Suzanne Kahn, deputy director of the liberal Roosevelt Institute’s education program and its Great Democracy Initiative, also wasn’t ready to give up hope that the plans could be implemented. “In a moment of incredible crisis, we’re seeing an acceptance of ideas on the table that seemed faraway a short time ago," she said. Kahn cited, for example, how canceling student loan debt, once seen as a radical idea, was considered by Congress as part of the most recent stimulus package negotiations.

“I think it’s hard to make predictions, given how quickly things are moving,” she said.

However, Republican congressional leaders, including Senate Majority Leader Mitch McConnell and House Minority Leader Kevin McCarthy, have put the brakes on another aid package until they see how the mammoth bill they just passed works out.

And even Democrats on the House education committee stopped short of funding free four-year institutions in the $331 billion College Affordability Act the committee passed last year, because of financial constraints, according to materials from Democrats.

Instead, the bill proposed a smaller plan, giving states $3 for every dollar they spend to make community colleges free.

That proposal doesn't make four-year institutions free. But Democrats on the committee believe the plan is an important step because it would establish a funding mechanism. Congress could add money later and someday make four-year public and private institutions free.

Preventing State Cuts

As attention shifts toward preventing state budget cuts, policy experts see a role for the concept of a federal-state partnership similar to ones proposed by Democratic candidates and House Democrats.

In simpler times before the epidemic, several education policy groups like TICAS and the Bipartisan Policy Center saw the partnerships as a way to encourage states to restore the funding for higher education they cut during the last recession.

A study by the liberal Center on Budget and Policy Priorities last year found that while states have increased spending on higher education in recent years, it still hasn’t gone back to pre-recession levels.

Under different variations of the idea, states that agree to maintain or increase their funding of higher education would be rewarded by getting at least that amount matched by the federal government.

The idea of the federal government increasing higher education spending by tying it to states' spending has “worked its way into the progressive zeitgeist in that everybody is talking about it. Think tanks are talking about it. Advocates are talking about it. The candidates are talking about it,” said Jason Delisle, resident fellow in higher education financing at the right-leaning American Enterprise Institute.

“The ubiquitousness of the idea has really been a sea change in thinking about how we pay for college,” Kvaal said.

What’s become particularly relevant now is that proposals from TICAS and the Bipartisan Policy Center included a backup plan aimed at preventing state cuts during the bad times, such as when states saw an increase in unemployment or a drop in revenue.

Neither Sanders nor Biden’s education platforms, however, are detailed enough to describe what would happen during a recession -- something Kvaal warned about in what now looks like a prescient op-ed in The New York Times last October, titled “The Gaping, Recession-Sized Hole in 2020 College Plans.”

Under TICAS’s proposal, for example, the federal government would encourage states to maintain spending on higher education by doubling the amount of federal dollars for those that do. States that cut their higher ed spending would have their federal funds reduced by half.

Now, TICAS and advocates like Jones said the next stimulus package should include a similar idea to a federal-state partnership to encourage states to not slash funding for colleges, as they did in the last recession.

“The top priority now has to be recovery from the immediate crisis. Colleges will need tens of billions of dollars to prevent rising tuitions and layoffs. In return, states should be required to limit their cuts and reinvest in colleges over time,” Kvaal said.

“It’s an incentive for states to think twice” about cutting higher education spending, because they would lose several times more in federal dollars, said Michele Streeter, a TICAS policy analyst.

Jinann Bitar, a senior higher education policy analyst at the Bipartisan Policy Center, said policies to prevent state cuts in higher education during recessions are overdue. Her group had proposed Congress create a rainy day fund for states to offset higher education cuts during the hard times.

“Had a policy been in place, it would have mitigated the cuts higher education is facing now,” she said.

A version of the idea was included in the just-passed stimulus package, tying $14 billion in federal funding to states in return for not reducing funds next year below the average of the past three years. However, the provision has been criticized by the Association of Public and Land-grant Universities and advocacy groups like the Center for American Progress as being too weak because the secretary of education is allowed to grant waivers from the requirement to maintain spending if a state is in economic distress.

A report by the Center for American Progress this week noted that states cut higher education funding during the last recession, even though Congress included a $48.6 billion state stabilization fund in the American Recovery and Reinvestment Act. States only spent $8.3 billion of that money on higher education, the report said. And of 48 states that received the stabilization funding, 23 ended up cutting higher education funding anyway.

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