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The reality of the debt-free college dream

Vermont Senator and Democratic presidential candidate Bernie Sanders has plans for debt-free college through what is called a "Robin Hood Tax." PHOTO CREDIT: PHIL ROEDER
Vermont Senator and Democratic presidential candidate Bernie Sanders has plans for debt-free college through what is called a “Robin Hood Tax.” PHOTO CREDIT: PHIL ROEDER

It should shock no one to see the cost of college play a huge part in the race for the next president. According to the Institute for College Access and Success, 69 percent of all college seniors are graduating with significant debt, at an average of nearly $29,000 per borrower. This trend has been increasing at a startling rate over the last decade, and it has been a driving force behind a movement in this country that is pushing for tuition-free public colleges.

Every Democratic nominee has a plan for some sort of debt-free college option. Vermont Senator Bernie Sanders is the champion of this movement, and is running on a platform that includes the elimination of tuition for all public universities. How can a student resist such an offer?

It’s easier to resist than you think.

First and foremost, the biggest problem with his proposals is how they intend to cover the cost of tuition. Bernie Sanders’ proposal would fund these public universities through a “Robin Hood Tax,” which taxes every single stock trade at 50 cents per $100 trade. While it sounds insignificant, the difference between that and a capital gains tax, which taxes profits off stock trades, is huge. This tax would absolutely destroy the trading volume of the stock market, annihilating stock liquidity.

Don’t believe me? Just look at Sweden, the country Sanders loves to model so much. They attempted to institute a similar tax in 1984. It instantly dropped the volume of bond trading by 85 percent and effectively ended the options trading market. During the seven years it took for Sweden to end the tax, it lost half of its trading to the U.K. and suffered over a 7 percent drop in the stock market for incredibly disappointing tax returns. If Sanders instituted his plans, we would not only have to make up the taxes he isn’t getting from Wall Street, but also make up the lost tax money from all the economic activity the tax would drive away. So as easy as it would be to have the “1 percent” foot the bill, as it is so fashionable to do, we’d likely end up having to pay for this proposal by increasing taxes on the middle class.

Secondly, public universities are not really the driver of the debt crisis in our country. Most public universities in the U.S. have full year in-state tuition under $10,000, which while significant, is meager compared to the outrageous $60,000-plus tuition most private universities charge. Many students, like myself, declined the chance to attend a high-prestige, high-price tag private university for a modest in-state school. Other students have had no problem spending full tuition on a private university in order to receive a degree that might not even greatly improve their post graduation prospects.

Colleges have been given a blank check by the federal government with federal student financial aid and guaranteed student loans, and they’ve spent it lavishly. Universities have certainly not spent all that money on improving education. Luxurious renovations of recreational facilities, huge spending on athletics and an explosion in the amount of administrators have followed this increase in tuition over the years. Between 1987 and 2012, there were 517,636 new administrators hired in the US, at a rate of 87 per working day.

At Stony Brook, the number of administrators has increased by over 75 percent since 1987, while at a school like Quinnipiac University, the number of administrators has increased from 16 to 210 over that time period. This incredible hiring boom is indicative of the unchecked spending that has lead to the tuition increase, and increasing the federal spending on public universities will only make this worse.

In the past, colleges have been able to function while also charging a reasonable tuition, and I would argue that they are still able to. We need to cut out the mechanisms that allow for such insane tuitions. Free tuition would only serve to increase the excess at colleges across the nation, while hard-working Americans bear the cost.

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