Why oppose free tuition?

Why have President Duterte’s 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 country’s 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 can’t be. They must see something objectionable from society’s 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. There’s 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 can’t 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.

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