The US Government is Paying More on Education Than Many Countries with “Free Education”

Former presidential candidates Bernie Sanders and Elizabeth Warren have spoken out in favor of “free” public universities. The plan could be funded, as CNN describes it, by a “drastic increase in federal spending on higher education.”



Much of the rhetoric around this issue is based on the idea that public spending on higher education in the United States is considerably lower than in most rich countries.

The narrative is this: “Everyone knows that Americans are incredibly tight-fisted when it comes to spending on government services. “Public spending” on higher education is much lower here than in Europe and Japan, and so much more has to be spent on higher education. ”

But here’s the problem: This statement is not true. The US governments pays more (as a percentage of GDP) for higher education than many other “peer” nations.

According to the 2018 OECD Education at a Glance report, public spending on higher education in the United States is 1.3% of GDP. That equates to public spending in Switzerland and the UK. And it is higher than the expense rates found in Germany (1.2%), France (1.2%), Canada (1.2%), Spain (1.0%), Italy (0.8%) and Japan (0.7%).

But how can this be? we are constantly told how expensive it is to attend an institution of higher education in America.

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One factor is that American universities spend much more on each student’s education, assuming “education” is the right term. In the US, adding government and private sources, we find that far more funds go to US universities than elsewhere.

According to the OECD, “total expenditure on educational institutions per full-time equivalent student” clocks in at $30,003 in the US. This figure is only beat by Luxembourg, which is out of the norm with $48,907. The UK – where residents often complain about the cost of higher education – ranks just behind the US at $26,000.

But few countries exceed the $20,000 barrier. Total spending on higher education in France is $16,145. In Germany it’s $17,036. Higher education centers in Spain only require $12,605 per student.

Amanda Ripley, noted in The Atlantic

The US ranks No. 1 in the world for spending on student-welfare services such as housing, meals, health care, and transportation, a category of spending that the OECD lumps together under “ancillary services.” All in all, American taxpayers and families spend about $3,370 on these services per student- more than three times the average for the developed world… One reason for this difference is that American college students are far more likely to live away from home. And living away from homes is expensive, with or without a lazy river. Experts say campuses in Canada and Europe tend to have fewer dormitories and dining halls than campuses in the US.

What drives much of the spending — both government and private — is the fact that colleges and universities in the United States spend far more on administration and ancillary services than institutions of higher education in other countries.

Ripley also notes:



US colleges spend, relative to other countries, a startling amount of money on their nonteaching staff, according to the OECD data. Some of these people are librarians or career or mental-health counselors who directly benefit students, but many others do tangential jobs that may have more to do with attracting students than with learning. Many US colleges employ armies of fund-raisers, athletic staff, lawyers, admissions, and financial-aid officers, diversity-and-inclusion managers, building-operations and maintenance staff, security personnel, transportation workers, and food-service workers.

Interestingly, Ripley tries to argue that universities spend too much on services because they are too market oriented and compete with other universities to attract students.

But if this were true, why are universities only competing in terms of adding ever more opulent services and facilities? Couldn’t they also attract more students by lowering prices?

The fact is, colleges do not compete on price because, thanks to subsidized student loans, potential students are not as price sensitive as they would otherwise be. In a functioning market, high-priced luxury colleges would lose students to more basic colleges. The result would be a drop in enrollment at the most expensive universities. But, with so many student loans available, students can more easily justify – in their heads – borrowing, so that they can go to college with all of those amenities that Ripley lists.

Notice: This article may contain commentary that reflects the author's opinion.