‘Free’ Community College Is A Bad Idea

One state finally pulled the trigger.  Tennessee will make community college free to all of its residents.  Earlier this year, New York state made a four-year college degree free for its residents, albeit with some serious caveats.

Naturally, the instant reaction is that such moves are simply wonderful.  I tell you, though, it’s a really bad idea.  Sorry, I know that makes me a horrible person, but allow me to explain.

First, let’s start with a quick visual economics lesson. Imagine you’re holding a water balloon in one hand. Now, take the thumb and middle finger from your free hand and wrap it around the balloon and squeeze. You moved the water from the middle of the balloon, right? Did the water disappear or was it just moved to the top and bottom of the balloon, distorting its shape? Congratulations, you just learned how government intervention wreaks havoc upon and distorts the free market.

Now, let’s look at how this program will affect the higher education industry and cause far more problems than it cures (like just about every government intervention into the marketplace). First, what always happens when something of value is suddenly given away for ‘free’? Demand skyrockets, yes? In my home county, Luzerne County in Pennsylvania, our local community college has an enrollment of just over 6,000 students and the yearly tuition is about $3,500 for an in-county resident. When something with a value of $3,500 is suddenly offered for ‘free’, do you think demand will go up? One cannot even use the traditional marketing/economics formula of price elasticity to measure such a proposition. Can we agree that enrollment would double, especially when you throw in a segment of the population who would say, “Nothing else to do, so what the heck? Let’s go to college. It’s free, after all.” Let’s be conservative, though, and say the 6,000 students would turn into 10,000.

Since our local community college campus — currently 15 buildings — isn’t built or staffed to handle 10,000 students, what has to happen? The college will have to build and staff to accommodate. That means that county officials will have to raise taxes to build the new buildings and parking lots and hire additional faculty and staff. That means more than just paying for one-time construction costs (which will run over budget by millions, guaranteed). It would also need to fund ongoing maintenance of the buildings and grounds, as well as salaries, benefits and sweetheart pensions for the additional faculty and staff.

‘Free’ community college would also be a menace to four-year colleges and universities. Currently, most four-year colleges will accept most if not all credits earned at community colleges. Who wouldn’t then get those credits for ‘free’ and then transfer to a four-year college, rather than paying $40,000 for the first two years at a university? Therefore, four-year colleges in the future will do one of two things: stop accepting community college credits or raise tuition exponentially to compensate for the lost revenue from their ever-shrinking freshman and sophomore classes. Competition will most likely force them to continue to accept the credits, which means they will simply raise tuition. They will have no fear of doing so because they know the federal government will simply increase funding through grants and loans because it is political suicide not to give the education establishment whatever it wants. Anyone objecting to blindly increasing education spending year after year is always labeled as ‘anti-education’.

Let’s take a look at how else the free market gets distorted by this proposal. Today, there are roughly 7,000 trade and technical schools in the United States. While less expensive than colleges and universities, on average, trade and technical schools still generally cost more than your typical community college and will certainly cost much more when community colleges are ‘free’. So, what do you think will happen to all of the trade and technical schools when the ‘free’ community colleges begin offering the same courses and certifications? If you guessed they will go out of business, give yourself a gold star. And when all of those schools are gone and all of the education is being done by one institution — the ‘free’ community college — what will happen to the quality of the programs? The quality will inevitably suffer from the lack of competition.

The annual operating budget for Luzerne County Community College is $42 million. With future student enrollment ever increasing, that budget would easily swell to $70 million. Suddenly, the hottest job in every county is the presidency of the local community college. With all that new money flowing through a government agency, waste, corruption, nepotism and cronyism will inevitably follow. Do you think a good chunk of that new money might just end up in the pockets of the board members and administrators? Nah.

Former President Obama spoke of free community college in one of his state of the union speeches.  His plan would have covered it nationwide.  It had some dangerous fine print, though. The federal government, according to this proposal, would only kick in 75% of the cost of this program and demanded that states pick up the rest. State legislatures and governors would have been handed an unfunded mandate (classic political tactic) and be forced to raise taxes through no fault of their own in order to pay for the federal giveaway.

‘Free’ government programs are never free and they are never without consequences. Besides, reaching into taxpayers’ pockets to provide ‘free’ community college is a classic example of fixing something that isn’t broken. Is there a community college crisis out there that only the government can solve?


Money for Education? It’s Been There All Along

The projected budget for the federal Department of Education for fiscal year 2017-18 includes $2.1 BILLION just for salaries and expenses for its 4,500 employees, all of whom are related to a Senator or Representative or somehow connected to a campaign donor or other such DC power broker.

Two billion, one hundred million dollars just for salaries for people to run an organization that adds zero value to education. Think about that the next time someone cries about a school not having enough textbooks or computers or whatever is lacking. If we shut down the department of education and distributed that $2.1 billion in salaries and expenses among the fifty states, each state would receive more than $46,000,000.. Do you think that might buy a few textbooks and computers?

Let’s not stop there, though. Let’s think deeper. Who benefits the most from the youth market? To what and whom do kids give their and their parents’ money? Let’s start with Apple, Inc, which currently sits on over $100 BILLION in cash and liquid securities, much of which was brought to them by teens, tweens, and college students buying iPhones, iPads, iMacs, and downloading music from iTunes. It doesn’t stop there. How many schools and colleges have purchased dozens or even hundreds of computers from Apple? Perhaps Apple can help fund education.

That same market segment has purchased billions in overpriced sneakers and athletic wear from Nike, making founder Phil Knight a multi-billionaire — $28 billion in net worth to be exact. Bill Gates has done well from kids buying X-Boxes, pc’s, MS Office suites, etc. He’s been at it long enough to sit on $84 billion in net worth. Perhaps these two can give back to the kids that have given them so much.

You’re reading this on Facebook, which has swollen Mark Zuckerberg’s balance sheet to a net positive figure of $54 Billion — all from just getting kids to like and share each other’s memes. Jeff Bezos, founder of Amazon, is a prime example of someone who has profited handsomely from the youth market. How many college textbooks and millions of other items purchased by kids and young adults are included in Bezos’ $73 billion of net worth?

Who has profited more from children who need those textbooks than the Disney Corporation? Perhaps that company can stick a crowbar into its $91Billion of net worth to give back to the market that has made it — and will continue to make it — an entertainment powerhouse. While we’re at it, perhaps George Lucas will allow the force to be with him enough to move him to part with a bit of his $5.3 billion to help those computer-less schools, the students of which purchased billions in all Star Wars movies and gear.

Let’s not forget the rest of that entertainment industry, which benefits mostly from kids. There is Kim Kardashian, who became a household name because of porn and whose sole talent is converting oxygen into carbon dioxide. With her equally talentless and classless husband, Kanye West, there lies a net worth of $212 million. Clearly, all of that came from the undeveloped minds of youth. There’s Jay-Z and Beyonce, too, who pilfered the pockets of kids with no taste and amassed a fortune of $875 million along the way, as well as the embarrassing wishing-to-be-forever-young Madonna who sits on $560 million that could buy a textbook or two for the kids she has punished with her music. Perhaps they’re not interested in helping to educate kids, since their minds may develop enough sense and taste to realize they’d been listening to garbage all those years. Sir Paul and Sir Elton? $1.1 Billion between the two, although in recent decades it has come from the middle aged and older market. Still, their careers were built on kids.

Finally, who more than any of the above directly benefit from educating kids? Colleges and universities. This group will financially rape and plunder kids and their parents for roughly $100,000 per student. But, surely, colleges and universities are just poor-as-church-mice non-profits who barely scrape by, aren’t they? Hardly. Every college and university has an endowment. The top ones are counted in the billions. In fact, if we added together the endowments of just the top ten universities, the total would be $169 BILLION. That’s just the cash being hoarded by the top ten colleges. There are 4,000 colleges and universities in the United States. As the cherry-on-the-sundae to this mis-allocation of funds, that $169 billion grows every year based on investment returns, which, if estimated at a conservative growth rate of 3%, would mean that a little over $5 Billion is being added annually.

The answer from Washington DC is the same as it has always been: we aren’t taxing enough. To the politicians, it’s not enough that Joe & Mary Sixpack and Biff & Buffy Chardonnay are buying the iPhones and X-boxes, and taking the kids to the Disney movies and paying for all those bad music downloads to line the pockets and build up someone’s balance sheet. These great unwashed need to pay more in taxes, as well. And if Harold & Martha Denture lose the home they’ve lived in for fifty years because they can’t afford the ever-increasing property taxes extracted from them to fund ‘education,’ then so be it.

We have neither a budget crisis nor a funding crisis in this country. We have a society-wide mis-allocation of funds and assets fueled by a refusal to accept the responsibilities that accompany the benefits of capitalism. And it has nothing to do with taxes. It’s time to stop playing the political game — which is nothing but a hamster wheel — and start applying social pressure on those companies and individuals who have benefited the most directly from the people who need the most. The kids have been and always will be there for them. It’s time for them to be there for the kids.