How Much Would Free College Cost?

Report Highlights. Less than 1% of the $5.3 trillion annual federal budget could be used to make college free for all. 

• A First-Dollar tuition-free program would cost $58 billion the year it is implemented. 
• Over an 11-year time frame, a First-Dollar Tuition-Free program would cost a total of $800 billion.
• The cheapest free college program, the Last-Dollar Tuition-Free program would cost $28 billion the year it is implemented.
• Free college would cost on average 67% of what federal tax dollars pay for now. 

Related reports include Financial Aid Statistics | How Do People Pay for College? | Public Education Spending Statistics | How to Pay Off Student Loan Debt Fast | College Savings Statistics

The American Family Plan 

The American Family Plan originally endorsed by the Joe Biden administration aimed for free college tuition at community colleges, historically black colleges, tribal colleges, and other minority-serving institutions. The proposed plan funds were to come from a federal, state, and Indian tribal partnership.

• The estimated total cost of the American Family program is $290 to $305 billion.
• $109 billion of the total cost would go to funding two years of free community college.
• $85 billion would go to the Pell Grant program.
• $62 billion would go to grants for programs that help low-income students complete community college.
• $39 billion would be earmarked for two years of free college for those students enrolled in a minority-serving college and whose families earn less than $125,000 a year.

College For All Act 

The College For All Act endorsed by Senator Bernie Sanders and Representative Pramila Jayapal aims for free college tuition at all community colleges, public 4-year colleges, and tribal colleges. The purpose of the act is to eliminate tuition fees for students from families making under $125,000 and to reduce the cost of attendance by doubling the maximum Pell Grant award. 

• The estimated total cost of the College For All Act is $700 billion.
• The program shares the cost of tuition between the federal government (75%) and the state/Indian governments (25%).
• Those tribal colleges with a majority population of low-income students would be responsible for just 5% of the cost of tuition. 
• The federal government would provide at least $48 billion annually to the states and tribal governments to cover free tuition. 
• Of the $700 billion total cost, $1.3 billion of it is earmarked for low-income students at private non-profit colleges that serve minorities.
• The proposed funding for this plan is a separate bill that taxes Wall Street speculation on stock trades by 0.5%.
• The tax is intended to raise $2.4 trillion for the funding of this program.  

America’s College Promise Act 

This act is endorsed by Senator Tammy Baldwin, Senator Patty Murray, Representative Andy Levin, and Representative Bobby Scott. Originally a proposal by the Barack Obama administration, it was reintroduced in Congress in 2021.

• The program shares the cost of tuition between the federal government (75%) and the state/Indian governments (25%).
• The America’s College Promise Act of 2021 estimates that its own program will continue to cost $2.52 trillion annually after 2031.
• The act would also create an annual formula grant program called the Student Success Fund (SSF) – $1 billion would be apportioned to this program.
• The Student Success Fund (SSF) doles out grants to states using evidence-based strategies aimed at ensuring student success.
• Under the first 4 years of the SSF, states would receive federal grants totaling 75% of their program costs, 50% of their program costs for the 5th and 6th years, 25% for the 7th and 8th years, and no more grant aid for the 9th and 10th year.

Categories of Free College Programs

Several different approaches to free college exist. As a result, the cost of college varies wildly based on the program. These programs include the Last-Dollar Tuition-Free program, the First-Dollar Tuition-Free program, and the Debt-Free program. 

• The least expensive program for the government would be the Last-Dollar Tuition-Free program.
• The most expensive program for the government would be the Debt-free program.
• The College for All Act proposes to double the maximum Pell Grant to $12,990 specifically so that students can use it to pay for room and board.
• Similarly, the American Family Plan proposes to increase the maximum Pell Grant award by $1,475.

Last-Dollar Tuition-Free Programs

Under this program, the government pays the remaining tuition fees after grant aid has been applied. The program does not cover the cost of room and board. Last-Dollar Tuition-Free programs require more administrative effort to implement, but can closely identify a student’s exact level of financial need.

• If tuition totaled $10,000 and grant aid covered $4,000, the government would pay the remaining $6,000.
• The Tennessee Promise program is a real-life implementation of the Last-Dollar program.
• The majority of tuition-free programs being implemented across the states are Last-Dollar programs.
• The Last-Dollar Tuition-Free program would cost the federal government $27.8 billion the year it is implemented.
• After 11 years, the Last-Dollar Tuition-Free program would cost the federal government $415 billion.

First-Dollar Tuition-free Programs

Under this program, the government would pay for the full cost of tuition before grant aid is applied. Grant aid could go to a different expense instead. First-Dollar Tuition-Free programs are streamlined, quick, and require less administrative work to implement. However, the grants may not accurately reflect each student’s financial needs.

• If tuition totaled $10,000, the government would pay the full $10,000.
• The $4,000 grant aid could go to room and board expenses instead.
• Note that in this example, the government paid $4,000 more than it would in the Last-dollar Tuition-Free program.
• The Kalamazoo Promise in Michigan state was a real-life implementation of a First-dollar Tuition-Free program.
• The First-Dollar Tuition-Free program would cost the federal government $58.2 billion the year it was implemented.
• After 11 years, the First-Dollar Tuition-free program would cost the federal government $800 billion.

Debt-free Programs

Under this program, the full cost of college is covered by the government. This includes tuition, the cost of room and board, or any other expense. The Debt-Free College Act endorsed by Senator Brian Schatz and Representative Mark Pocan is a specific example of a tuition-free program that also covers the cost of attendance.

• If tuition totaled $10,000 and room and board totaled $15,000, the government would fund the whole $25,000.
• The Debt-free College Act endorsed would cost an estimated $95.4 billion.
• A Debt-free program would cost the federal government $75 billion the year it was implemented.
• The Debt-free College Act includes extra costs beyond making the cost of attendance free such as renovation and construction of new facilities.

Beneficiaries of Free College

Depending on the program implemented, free college may benefit lower-income students over wealthier students. The majority of the beneficiaries will be White, but free college is projected to have a significant impact on minority communities as well.

• 25% of the funds from a First-Dollar program would benefit students living in the bottom-income quartile.
• 13% of the funds from a Last-Dollar program would benefit students living in the bottom-income quartile.
• 29% of the American Family Plan program’s funds would go to students living in the bottom-income quartile.
• The graph below is a nationwide look at how free college tuition affects students in public schools.

State Examples of Free College and Their Cost

One popular, albeit limited implementation of free college in the last 15 years has been free tuition at the community college level in certain states. These experimental programs offer data on how free college might fare on the nationwide level.

• The state of Tennessee uses a last-dollar program to cover the cost of tuition for residents pursuing their associate’s degree.
• The Tennessee Promise program covers the cost of college tuition for students attending Tennessee community colleges.
• The original America’s College Promise proposal was based on the Tennessee Promise program.
• The Oregon Promise program covers the cost of college tuition for students attending Oregon community colleges.
• Eligibility for The Oregon Promise program is dependent on the student’s Expected Family Contribution (EFC).

School-Specific Examples of Free College Programs

More examples of limited implementations of free college are the schools running free tuition programs for students with low income and low expected family contributions. Several of these programs require part-time work in exchange for free tuition. Note that most of these colleges cover tuition, but not the total cost of attendance.

• Alice Lloyd College (KY) offers free tuition for students who reside in Central Appalachia.
• 30% of the free tuition program funding at Alice Lloyd College comes from gifts and bequests.
• 37% of the free tuition program funding at Alice Lloyd College comes from Financial Aid Grants for students.
• The University of New Hampshire has the Granite Guarantee financial aid program that covers tuition for all 4 years of an undergraduate degree.
• To be eligible the student must be a New Hampshire resident and an incoming first-year student or a transfer student.
• 24% of first-year students at The University of New Hampshire qualified for the Granite Guarantee program
• Brown University’s free college tuition program covers the tuition of students whose families make less than $125,000 annually.
• In addition, Brown University has another program for students whose families make less than $60,000 annually – this program fully covers tuition, books, and room and board.
• Texas A&M University has the Aggie Assurance program which covers tuition for students whose families make under $60,000 annually.

Sources

1. Peter G. Peterson Foundation: What Is Free College and How Much Would it Cost? 
2. Economics for Inclusive Prosperity: The Economics of Free College  
3. National Association of Independent Colleges and Universities: Free Public College  
4. Georgetown University: The Dollars and Sense of Free College   
5. National Association of Student Financial Aid Administrators (NASFAA): Free College Proposals Matrix May 2021  
6. Congress.gov: S.1396 – America’s College Promise Act of 2021 
7. Peter G. Peterson Foundation: What’s In The American Families Plan? 
8. Treasury.gov: Federal Spending Overview 
9. Fact Sheet: The American Families Plan | The White House 
10. Senator Sanders: The College for All Fact Sheet 
11. Senator Baldwin: America’s College Promise Act  
12. Debt-Free College Act of 2021 | Congress.gov 
13. Our Tuition Guarantee | Alice Lloyd College
14. Granite Guarantee | Undergraduate Admissions 
15. Brown to significantly expand financial aid and college access 
16. Aggie Assurance