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Harvard and MIT study: Here's who would benefit most from free college

According to a new study from Harvard and MIT, free college would lift graduation rates at four-year colleges. However, most of the money does not go to low-income students.

Twenty/20

Tuition-free college has been part of many democratic presidential candidates' platforms, including that of former Vice President Joe Biden. The current democratic nominee supports a version of the plan that would make college free for students whose families earn less than $125,000 a year. 

Advocates of tuition-free college say that making public, four-year universities free could help narrow the education and wealth gap by allowing more non-White and low-income students to graduate. 

This is indeed the likely outcome, according to a new study by Massachusetts Institute of Technology (MIT) and Harvard University professors. The study tracked graduation rates for Nebraska public college and university students who were awarded a particular scholarship, as well as students who were not, from 2012 to 2016.

The scholarship, which was the equivalent of free tuition, lifted graduation rates at four-year colleges by 8%. Of the students who attended a four-year college, 71% graduated within six years, compared to 63% of those not awarded a scholarship. 

These results, however, don't mean that low income and non-White students are the ones getting a majority of the aid money. In fact, a quarter of students who received aid through the study were not eligible to receive a Pell Grant based on their financial need, and two-thirds of the students in the study are White. 

Here's what this study found and how it suggests that tuition-free college would affect students of different economic classes. 

Low-income students would see benefits 

"The biggest effects of free college on graduation rates are for groups that are traditionally underrepresented in education," says study co-author Amanda Pallais, an economics professor at Harvard University. "This includes students who are non-White, who are lower income, who are first generation, and students who have less strong academic preparation." 

Along with higher graduation rates, Pallais expects these students would experience higher earnings than they would if the scholarship did not cover their tuition, in part because they'd be more likely to graduate. Currently, the high price of college leads some students to drop out, and typically, those with bachelor's degrees earn more than those with high school diplomas

However, a majority of the money assisted students who would have attended a four-year college absent the scholarship, the study found. And for these students, free college doesn't really change their career trajectory, says Sarah Cohodes, an associate professor of economics and education at Columbia University. "If you do broad-access financial aid or free college, a lot of money will go to people who could and would pay the sticker price," she says. 

So even though graduation rates rose among low-income students most, most students who received scholarship money were likely to complete their college degree regardless of funding, the study showed.

The biggest effects of free college on graduation rates are for groups that are traditionally underrepresented in education.
Amanda Pallais
Economics professor at Harvard University

Student debt would decrease

Debt is a big factor in students enrolling and persisting through college. The average student loan debt of 2018 graduates was $29,200, according to an analysis from The Institute for College Access & Success. 

By implementing free college, "we are taking the risk away from the individual and putting it on society," Cohodes says.

Because while for most people college does pay off, for some people it doesn't, and the fear that getting a costly degree won't lead to a higher salary might keep people from enrolling. By offering free tuition, though, the amount of risk associated with getting a degree decreases.

Almost half, 46%, of scholarship recipients in the study finished their fourth year of college with no federal loans. For those who did not receive a scholarship, this number dips to 29%.

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Community college students were not affected

Lifted graduation rates do not affect all higher learning institutions, though. Students who enrolled full time at four-year universities for their first year of college, as opposed to those who enrolled part time or went to community college, reaped the most benefits from free tuition. 

"I do think it's kind of interesting that we see that [free tuition] basically doesn't increase two-year college graduation rates," Pallais says. 

This might be because a scholarship to a four-year university simply costs more money, Cohodes says. 

"At the community college level, free college makes less of a difference because college courses are cheaper," she says. One credit costs an average $135 at a two-year public college, versus $325 at a four-year public college and $1,039 at a four-year private college, according to a 2018 analysis from Student Loan Hero. 

At those lower prices, she says, "a Pell Grant would cover more of the cost of going. The difference between having the scholarship and not having the scholarship will be more dramatic at a four-year institution."

At the community college level, free college makes less of a difference because college courses are cheaper.
Sarah Cohodes
Associate professor of economics and education at Columbia University

One thing the study does not measure is the whether free college would tempt more people to apply. That's not easy to gauge, Cohodes says.

Even though the study found that students most underrepresented in higher learning institutions benefited from free tuition, it's hard to say how a federal initiative to provide more financial aid to all students would affect the way college is perceived by those of all socioeconomic classes. 

"A lot of people can get grants and loans, but you have to navigate this Byzantine system," she says. "Does the simplicity and ease of just saying, 'OK, if you're going to a public state institution, you get a free tuition,' change the dynamic of who is going to college in such a way that it outweighs the downside of money flowing to people who could afford to pay?" 

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