Biden’s Free College Proposal Could Add $160 Billion to Economy
College tuition has increased much faster than inflation. The most recent U.S. News & World Report college issue found that in the last twenty years, in-state tuition at public flagship universities increased by 212%, while the general rate of inflation for the same period was about 50%.
When families save money to pay for college tuition, they aren’t spending it on other things. When college graduates pay off their student loans, they can’t use that money on other things. Instead of buying a new car and new furniture, many are riding bikes and taking hand-me-downs. These are personally responsible choices, but not so good for the economy. There are significant economic advantages to the person who earns the degree, but they get smaller as the cost gets higher.
That’s why many politicians have pushed for some sort of free college program. President Joe Biden has proposed that in-state public college tuition be free for families with an income under $125,000. MarketWatch reports that this would increase disposable income by $61 billion, leading to a gross domestic product boost of $136 billion in 2021 and 2022. When Sen. Bernie Sanders (I-Vt.) proposed similar legislation in 2017, the estimated cost was $600 billion over ten years.
This plan would have to get through Congress. Unlike when Sen. Sanders introduced his bill, there is a Democratic majority and an economy ravaged by a pandemic. That increases the likelihood of the bill passing, but not by much.
Still, it is likely to be popular with the public. College costs are among the many things that have been a drag on the middle class in recent years, and any measure to address that would find a warm welcome.
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