The “free” college plans touted by Sen. Elizabeth Warren (D., Mass.) and other Democratic presidential hopefuls will require radical tax hikes and leave 86 percent of American households worse off, a recent study found.
Warren and Sen. Bernie Sanders (I., Vt.) often promise tuition-free higher education and student debt cancellation on the campaign trail. However, a National Bureau of Economic Research study conducted by University of Wisconsin researchers found that free college translates to a hollowed-out higher education system that leaves many Americans worse off.
Researchers simulated two scenarios: one in which the federal government forces states to adopt tuition-free public colleges and another in which it provides subsidies to encourage states to do so. They calculated how each plan would affect the welfare of American households. The welfare function was derived from, among other things, the positive and negative impacts of higher tax rates and lower education costs.
“Over 86% of all households would lose while about 60% of the lowest income quintile would gain from such policies,” the study found.
In both scenarios, the free tuition policy benefited a group of the poorest Americans at the expense of everyone else. For the vast majority of U.S. households, any benefit derived from a free college plan was outweighed by its negative consequences. – READ MORE