Currently, President Obama has a proposal to make community colleges offer tuition-free classes for students. I am on fence on this issue because a lot of long-term positives can come from a more educated society. But whether or not they are strong enough to outweigh the short-term economic issues remains to be seen.
Obama’s proposal is for the federal government to pay for any community college student going to school at least half time who are able to maintain a GPA of 2.5 or higher, and is making steady progress toward a degree or transferring.
In the short run, there would be a large cost for government. To pay for this, the government could take action such as increasing taxes or borrowing money. If they chose to borrow money to cover expenses, it would increase the country’s already high deficit. This would drive up interest rates for the private sector. Firms would want to avoid taking measures to expand by means of spending money and hiring more workers, and this would hinder the economy.
In the long term, this proposal by President Obama does have some benefits. There’s a strong positive correlation between level of education and annual salary. People who have more education generally earn more. If this historic relationship holds, it will create long term benefits for the overall society. If people are more educated, they will eventually be able to earn more. This would increase the spending power of consumers in the economy.
In addition, unemployment would be likely to decrease because the more education a person has, the more qualified he or she will be to fill positions that were previously out of reach.
Not everyone would take advantage of the free higher education opportunity. However, if enough people did take advantage of this proposal, the average education level could rise potentially by, let’s say, a quarter of a year. If this were the case, this could substantially increase the average income and decrease unemployment, creating a stronger and healthier economy.
However, providing this free education to everyone could potentially devalue an associate’s degree because when something is more widely available, it loses value. When things are more available and easier to obtain, they are less special and valuable.
Education is important to an economy. With an overall more educated population, in the long run the economy could improve due to this proposal. However, whether or not any improvements would be enough to to cover the cost of providing this education is not clear.
It would be incredibly expensive to provide this service to the citizens in the United States; however, if it turned out that it could lead to a more educated society with higher levels of disposable income, it could be worth it.
If Obama’s proposal is passed, it will be interesting to see if the advantages of this proposal will be enough to overcome the high cost to provide this.