Question

Ten states have enacted legislation granting free college tuition, and several more are considering such legislation.

Should college tuition in Texas be free?

• Explain the pros and cons of free college tuition, including the costs and benefits to society.
• Since there definitely is a cost to providing a college education, who would pay for these costs if tuition is “free”?
• College education results in a positive externality for society. Explain whether the market failure that results from this externality is already being addressed with respect to college tuition in Texas.
• What would happen to the number of students enrolled in college, and how would this impact college campuses?
• Would free tuition decrease the value of a college education? Explain why or why not.
• The above points are just a few relating to the topic of free college tuition. What other points not mentioned above do you think should be considered when discussing the possibility of free college tuition, and why?

Answer 1

1. The pros of Free college tuition -

• The number of students will increase, who are not able to afford the higher rates of tuition fees.
• There will be less burden on the parents as a large chunk of their income was going for the college fees, this will further increase the disposable household income.
• There will be an increased output in numbers of Educated peoples which is further an economic benefit of the country as it will get large number of expert workforce.
• During the time of economic expansion all the expert work force can be consumed by the industry.
• The effective and efficient work force will lead to optimum output.
• This will lead to greater economic Productivity.
• The rate of unemployment will reduce.
• This will increase the household mobility.

The Cons of Free college tuition -

• Indirectly the cost is borne by the society itself as the cost involved is subsidized due to the taxes paid by citizens of the country.
• Increased number of college movers will increase in the demand of college infrastructure and other basic facilities that are needed for providing education.
• There will be less focus on Research and development as the institution will be burdened by the number of students and to maintain the basic need of the student will be priority rather going for innovative work.
• The student Faculty ratio will effect the quality of education.
• The Institutions will be dependent on the Central Government for Funds needed to maintain the proper functioning of the structure.

2. This is but natural that for running any Institution a cost is involved to maintain the working capital, fixed costs and variable costs. As in the above condition the Government has decided to provide Free College Tuition, though it is not directly effecting the expenses of the parents. As the burden of paying the fees for their children is reduced in one way but it will indirectly affect the whole society as the Government will compensate the fees with the help of Tax receipts that are being paid by the Citizens. So we can say that it will not effect an individual directly but indirectly the effect will be on the society as a whole. One more thing this a situation of social benefit, the decision of Government will reduce the budget for other productive purpose which can help out in economic expansion. Welfare schemes are good for the society as a whole but it also impacts the economy somehow.

3. Providing Free college education is a positive externality for the society as a whole, as it comprises social welfare motivated to increase the number of educated people which further lead to greater economic productivity, Reduced Unemployment rate, Social mobility of household as discussed above in question no.1.

There may be a possibility that the negative effects of this externality have been discussed prior to its implementation other wise it will have following impacts on economic activity -

• Increased supply of expert workforce will need increased demand on the number of production and service providers.
• During the time of economic dip there will be large number of layoffs, increasing the unemployment rate.
• There is a chance of brain drain if the huge number of experts will not be infused in the economy.
• The mobility of expert workforce will effect the competitive advantage of the Country.

4. The number of students will increase though it will have an effect on the college campuses -

• Increased Infrastructural requirements.
• There will be more need of Faculty members as the student teacher ratio will be adversely affected.
• The quality of education will be effected.
• Overburdened campuses will need more capital to be infused, for the capital requirements the Institutions will have to be dependent on The Central Government.
• Decreased research and development & Innovation.
• A situation of chaos will increase.
• The focus of Institution will move toward less productive areas which will further impact the goodwill.
• A situation of discourse can occur among the students.