Why oppose free tuition?

By: Cielito F. Habito - @inquirerdotnet

Philippine Daily Inquirer / 05:30 AM August 04, 2017

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Why have President Dutertes own top economic officials reportedly written him to recommend
that he veto a measure recently passed by Congress granting universal free college tuition? Why
has the Foundation for Economic Freedom, with topnotch economists and former Cabinet
economic managers among its prominent members, similarly issued a position paper supporting
such a veto? Why does the countrys top think tank, the Philippine Institute for Development
Studies (PIDS), see the measure as counterproductive?

In a similar vein, why have economists been against granting free irrigation water for our
farmers, even as proponents believe it to be propoor? Are economists such an insensitive lot who
care more about saving taxpayer money than helping the poor?

Surely they cant be. They must see something objectionable from societys point of view about
granting free this and free that. I find it hard to believe that such sentiments could be
motivated by personal gain. I cannot be as confident about politicians, who are too often mostly
motivated by the desire to win votes to stay in power. This need not be a bad thing if it means
promoting the greatest good for the greatest number, the true yardstick for good policy. The
problem is, what is popular is not always what is right. Theres no such thing as a free lunch.
Someone, somewhere pays for anything that appears to be free. Often, the intended
beneficiaries themselves end up carrying a burden greater than the expected direct benefit from
what will supposedly be free.

Subsidies can make sense under certain situations. As the PIDS study explains, college education
benefits both the individual and society at large; everyone benefits from having a more highly
educated population. Society loses if gifted and talented students who could help advance
knowledge and nation-building cannot enroll in college because they cant afford it. But what
economists argue is that universal free tuition is not the right tool to get us there, as it is neither
efficient nor effective.

There are at least four arguments for this. One, giving free tuition to all, rather than target
deserving students, benefits rich and poor alike, and with current patterns of enrollment in our
state universities and colleges, those who can actually afford to pay will actually benefit more. It
would thus be a waste of government funds otherwise usable for other forms of assistance to
those truly in need. Two, all taxpayers will ultimately pay for the tuition subsidy, whether or not
they have family members who are attending college or plan to do so. This defies the sound
user pays principle that promotes efficiency inasmuch as user fees push people to make best
use of limited resources and avoid waste. Students who pay will take their studies more seriously
and diligently than those getting a free ride, and free tuition could attract students without the
motivation and ability for college education.

Three, sound economics prescribes that education subsidies be handed not to the schools, but
rather, to target students, who can then shop for the best school in which to study. In turn,
competition for students will push colleges to strive for quality and efficiency. Giving the
subsidy to state schools does nothing to improve the quality of our tertiary education, and could
only perpetuate mediocrity. Four, tuition is only part of the total cost of obtaining college
education. As PIDS notes, living expenses and study materials make up the greater part of
college costs, and where the poor cannot afford these, providing just free tuition will only help
the better-off students, but still keep poor ones out of college. It could, in short, inadvertently be
antipoor.

The right solution is in fact already in place, in the new Unified Student Financial Assistance
System for Tertiary Education or UniFAST (Republic Act No. 10687), giving targeted and fully
financed college and tech-voc scholarships and loans to those who truly need it. The government
just needs to fund and implement it fully to make this superior instrument work. It may not buy
its sponsors as many votes, but it is the superior solution to a very complex problem.

cielito.habito@gmail.com

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