‘Free’ college in Europe isn’t really free
The recent passage of New York State’s Excelsior Scholarship – the first program in New York to offer free tuition at public colleges and universities – has been heralded as a model for other states to follow.
The program offers free tuition to families making up to $125,000 a year.
Many European countries, like Germany, already offer free college, and they do so for all students regardless of family income level.
But “free” is a relative term since tax payers absorb that cost.
European countries often differ greatly from the US in substantive ways. Their college enrollment percentages, for example, are much lower than in America.
Europe also traditionally has higher taxes than the US, which allows those countries to offer additional social services.
The Organisation for Economic Co-operation and Development (OECD) released its 2017 report on the tax burden on earnings among member countries.
Their report ranks countries by their tax wedge percentage. The tax wedge is the dollar measure of the income tax rate. The countries below with the red arrows offer free college, with the exception of the US. There are other European countries that offer free college, but the countries below are the most well-known examples.
While the tax wedge is certainly not driven solely by free-college tuition costs, the countries that offer this benefit have much higher income tax rates than the US. If the US were to go the route of European countries that finance free college by taxing the income of citizens, the tax wedge of 31.7% would likely increase.
Germany, with particularly high income taxes, has one of the most inclusive debt-free college programs, offering free college to foreign students as well.
In New York, the state will need to increase spending on higher education to fund the program, which it estimates will cost about $160 million the first year.