Home > News > Would Free College Tuition Work in the U.S.?

Comments 0 Comments

Sprechen sie Deutsch?

In case you haven’t heard the news, college tuition is now free throughout Germany—and not just for Germans. But before you pack your bags for Berlin, you might want to consider what those who’ve made it through the process and lived to tell the tale have to say about that.

Native-language proficiency is a must because, well, the lectures, textbooks and exams aren’t likely to be in English. Excellent high school grades and strong SAT scores are also necessary. And, different from how it is in the U.S., German curricula are discipline-specific from the get-go: Incoming freshmen don’t have the luxury of “finding themselves” a year or two later. They’re required to declare their major upfront as part of the application process.

American students will also find several other areas of stark contrast.

Students are responsible for their own living arrangements and amenities. There are no dormitories, concierge-level sports facilities or student unions equipped with pool tables and flat-screen TVs. Students are also on the hook for the cost of their food, textbooks and health insurance, too.

In other words, higher education is serious business in Germany. Not only are students expected to be disciplined and determined as they approach their studies, they’re also supposed to learn how to lead independent lives as a byproduct of their university experience.

As you may have guessed, taxation makes this all possible in Germany—corporate, personal, value-added and other forms—which, given the current political climate, makes this approach a nonstarter here.

That’s too bad, because the ugly truth is that higher education in the U.S. is fast becoming a losing-value proposition.

Tuition-price increases consistently outpace the rate of personal-income growth, which explains why education-debt levels are not just rising—they’ve reached the point where student loan payments are crowding out life for many borrowers. What’s more, as some schools choose to relax their admission standards in favor of filling otherwise empty seats, higher education’s roughly 50% completion rate is destined to decline even further.

That doesn’t bode well for those who leave school with lots of debt and no degree to show for it.

What Would It Take to Do This Here?

Turning around this miserable situation, however, won’t be easy. But it’s not impossible, either. A good place to start would be to wring out the system’s excesses.

Simply put, there are too many schools situated too close to one another, spending too much money on too many of the same things. For example, consider a moderate-size state, like my own, where there are a half-dozen private colleges and universities roughly the same size. Sure, each may have its own areas of specialty, but collectively they also have a half-dozen presidents, provosts, chief financial officers and back-end administrative functions—lots of redundancies within a fairly compact geography.

This assemblage represents a made-to-order opportunity for consolidation. But that’s not going to happen because entrenched administrations and compliant boards don’t have to do anything they don’t want. At some point, though, there won’t be enough students who can afford to pay enough to keep things spinning, and the so-called non-operating revenues the schools count on to bridge that gap will fall short because of shrinking endowments and faltering fundraising activities.

And what about the critical need for upgraded educational content and the technology to deliver it? The German approach to higher education is pure: It’s all about the learning. By contrast, U.S. schools have become education/hospitality/entertainment conglomerates, where the profits from one area are used to offset another with each competing for investment capital that’s grown scarce.

The good news is the money that’s needed for these improvements in the U.S. is literally under foot.

Dormitories could be sold to investors and real estate developers so that they may be turned into free-standing apartments. Likewise, buildings that house campus cafeterias could be retrofitted to accommodate privately-owned restaurants, bistros and supermarkets. Sports and fitness centers can become membership-sponsored health clubs that are also open to the surrounding community, and so forth. Not only would the capital that flows from these transactions pay down existing mortgages and other related debts, a portion would also become available to revitalize the institution’s core mission: the delivery of high-quality education.

As for tuition prices, the schools can lease the land upon which these structures stand and enhance those revenues with savings that would come from discontinued debt payments and maintenance expenditures. Colleges that choose to share administrative functions and, perhaps, technology would become even more affordable (and competitive).

The Other Big Issues

Scaling back the depth and breadth of the U.S. higher education experience would yield another benefit: Our kids will learn how to transition to independent adulthood. That is, as long as they’re able to qualify for the jobs they need to pay the bills.

There’s been a lot of talk about turning out students who are “career ready,” particularly in light of the chronic rate of underemployment for recent grads. But career readiness is more than a catch-phrase for promotional brochures and banners that are draped along the sides of campus buildings for parents and students to see. It requires a teaching staff that can effectively translate academic theories into on-the-job practicability.

If you think that goes without saying, consider the results of a recent Gallup/Lumina poll that found that only 11% of business leaders strongly believe that college grads are indeed career-ready, and compare that to an Inside Higher Ed survey of college provosts in which 96% believe their institutions are doing a good job at that.

Finally—and this goes to the heart of engendering post-graduation success—the schools must address outcomes. Time is running out for that as the government zeroes in on dropout rates and the student-loan defaults that are likely to follow (because non-grads earn less than college grads). Schools that stubbornly cling to the shortsighted—if not immoral—practice of filling seats and watering down curricula instead of selecting students who can do higher-level work are headed for trouble.

Germany’s taxpayer-supported approach to higher education may not work for us here. But there are elements of it that should inspire serious consideration — at the very least for the sake of an increasingly unsustainable system that’s teetering on the edge of insignificance.

This story is an Op/Ed contribution to Credit.com and does not necessarily represent the views of the company or its partners.

More on Student Loans:

Image: Andreas Rodriguez

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Credit.com receives compensation for the financial products and services advertised on this site if our users apply for and sign up for any of them.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team