This page explains the timeline of American universities and tuition from the Land Grants to Sallie Mae, to today. We also answer the question “can America return to tuition-free public universities?
State University tuition used to be free, it is still free in some parts of the world. Can we still accomplish this today in America?
TIP: For purposes of this article, we use the terms college an university interchangeably, even though universities confer advanced degrees while colleges do not. To be clear we are saying state schools established by the Land Grant Act were tuition free with low fees, but thinking college used to be free is a misreading of the facts.
A Summary of the History of College Tuition in the US
Before we go into detail on the history of college tuition in the United States, let’s do a quick chronological overview of how we went from free tuition at state public schools in the 1800’s to a student debt crisis in the 2000’s.
Private colleges sprang up in the US before the American Revolution, and tuition was relatively minimal, but not necessarily seen as a good investment for the average American.
Tuition-free state universities began to appear after 1825 and surged after the Morrill Land-Grant Act in 1862.
Almost all public universities remained tuition-free until the 1960’s when large numbers of college students became involved in the civil rights movements.
States began to cut funding to state universities across the nation.
State universities started charging tuition.
Federal student loan programs and other financial aid programs were created to ensure low-income persons could still have access to colleges.
Following easy access for students to college financing, both public and private universities start hiking tuition.
This cycle never ends: state funding cuts to public colleges, tuition hikes at public and private universities, increased federal student loan limits and programs, repeat.
From 1976 to 2012 the average tuition cost rose 1,120%, faster than other product or service.
In 2011, for the first time in US history, State College funding was primarily from tuition paid by students instead of state funding.
FACT: College has never been “free” in the US, most state schools may have been “tuition free” following the Land-Grant Act, but they did charge fees for non-instruction costs like housing, healthcare, infrastructure, and technology.
The History of University Tuition in the US and it’s Purpose
1636 to 1825 | Only Private Universities
Harvard, the US’s first University, was founded in 1636 before the American Revolution. It focused on training clergymen. It also offered instruction in civics, medicine, and law, but primarily through the liberal arts. Though it is difficult to establish what tuition rates were at its inception, we know that 70 years later, tuition at the few private colleges in the US was about 10 shillings a year. To put that in perspective, it “amounted to the cost of about a pair of shoes and two pairs of stockings.”
Despite its relatively low cost at the time, only wealthy Americans attended college. It was seen as cost prohibitive because the cost of room and board, as well as, the loss of income while a person was attending to studies. Additionally, most careers at that time required no degree, license, or certification to perform. Most skilled labor instruction was provided through apprenticeships. Those who attended college in this era rarely completed degrees; instead, they focused on specific courses and instruction.
1825 to 1960’s | Growth Public Universities
Early Tuition-Free Universities
In 1825, Thomas Jefferson provided a $15,000 endowment for University of Virginia. This was the first state university that was intended to be tuition-free from its inception. Students could study a range of fields from law, science, medicine, and civics. Unlike the private institutions that preceded it, University of Virginia did not include clergy education.
The Free Academy of the City of New York (now the City University of New York) was founded in 1847 and provided access to education based on academic scores alone.
The Morrill Land-Grant Act of 1862
The Morrill Land-Grant Act was first submitted to Congress in 1857 after a growing political movement to establish agricultural colleges in the US. Congress passed it in 1859, but President, James Buchanan vetoed it. In 1961, it was submitted to Congress again and was enacted in 1862 right in the middle of the American Civil War.
The Land-Grant Act is still around and still important today, this video explains it’s importance well.
This Act provided each state 30,000 acres of federal land for each their members of Congress to create state universities for agriculture, engineering, and Reserved Officers’ Training Corps (ROTC). These land-grant universities were not restricted from also providing liberal arts instruction, but the intention of these universities for to improve the workforce for an economy that was rapidly industrializing through higher quality and greater access to education. The Act expressly prohibited any state “in a condition of rebellion or insurrection” from eligibility for the grant. However, when the Civil War concluded, states that had attempted succession gained access to the land-grants.
The Morrill Land-Grant Act of 1890
In 1890, the Congress again passed a Morrill Land-Grant Act, but this time, the focus was on ensuring educational access for persons of color. It required that each state demonstrated that race was not a criterion for admission or that a separate university be designated for students of color. It a cash grant, but the same legal standing applied, so the ‘land-grant’ name stuck.
1960’s to Now | End of Tuition-Free Universities
As discussed above, by the 1960’s, college attendance had risen in the US dramatically. This was fueled by several factors including:
State, federal, and business initiated requirements for degrees, licensing, and certifications for performing various types of services.
Growth of the middle-class and higher family incomes made a college age dependents’ income less necessary for supporting the family and provided disposable income for room and board while attending college.
The GI Bill had ensured that veterans had financial assistance for education
Civil Rights and Social Changes in the 60’s
During the Civil Rights Movement, public college students became actively involved in pushing the country forward in diversity acceptance. Many in politics felt threatened by this, and state funding for public colleges began to shrink. This trend intensified during the late 60’s and early 70’s with free speech, civil rights, and anti-war movements.
This loss of public funding, which was concurrent with increases in tuition led the federal government to develop federal college grants and student loans. The Higher Education Act of 1965 was designed to improve access to college education for low-income Americans. This was the first time that federally sponsored college education loans were financed by private for-profit banks and not directly through federal tax dollars.
This policy was further expanded in 1972 with the creation of the Student Loan Marketing Association (aka Sallie Mae). At that point, the US Treasury would buy student loans from the bank. Sallie Mae became fully privatized and for-profit in 2004 but was again brought under federal control in 2010. Though these loans are backed federally, they are not subject bankruptcy laws and, by their very nature, continue the fairly new trend of placing the burden of most college tuition costs on students.
Easy student loan financing for both private and public colleges and the competitive nature of private for-profit colleges contributed to a dangerous cycle. It allowed both public and private colleges to raise tuition continuously without fear of decreasing enrollment. This led to states cutting funding again and again. The federal government’s response was to raise the student loan limits per credit hour and access to grants repeatedly.
Between 1976 and 2012, average tuition rates for college had risen 1,120%. This is faster and higher than any other product or service in the US. Despite this, students aren’t receiving a 1,120% better education. In fact, far more oversight and accountability have been focused on the K-12 school system than on the outcome from any colleges or proprietary training schools.
In 2011, for the first time in US history, the primary funding sources for public colleges was tuition paid by students.
Can the US Return to Tuition-Free Public Colleges?
The short answer: yes. For around 100 years the US had a successful and far less expensive model ensuring low-income families could send their children to college. Easy access to student loans has not only left low and middle-income families with mountains of debt, but it appears to create a profit hungry higher educational system constantly raising tuition. Student debt now tops all other debt in society except mortgages and is having a dramatic affect on the economy. Young adults with high student loan debts are less likely to buy a home, get married, have children, start businesses, or make any major purchases. These decisions actually slow the economy.10]
This video uses financial numbers from 2014 to show that paying for public college student tuition would actually cost less that we spent in tax dollars.
You may be finding the above video hard to believe. So lets actually break down the numbers for 2012:
The Cost of Tuition for all Public College Attendees
According to the National Center for Educational Statistics, in 2012 the total tuition for all students at public colleges was $62.6 billion.
This includes the tuition for all students who attended state universities and community colleges in the US during 2012. It does not include the costs of books, activities facilities fees, or cost of living expenses. Prior to the 1960s state universities usually received per student funding from the state from tax revenues, but sometimes states simply gave lump sum grants regardless of student attendance. Students and their families were only expected to pay for living expenses, books, and administration fees. For the sake of this comparison it would have cost American taxpayers $62.6 billion in 2012 if we returned to the previous model of financing public college education.
The Cost of Tax Benefits, Grants, Guaranteeing Student Loans for College
Tax Benefits – According to a IRS report, because of the American Opportunity tax credit, Americans received $4.5 billion in tax refunds. An additional $266 million was used used to eliminate tax obligations and $4 billion was used to offset tax obligations. Another $10.5 billion was used to offset tax obligations because of the non-refundable education credit. Basically, $19.3 billion was either paid out to Americans or was simply lost tax revenue because of tax benefits for educational expenses.
Grants – According to the Federal Student Aid report, Americans received just over $34.1 billion in Student Aid Grants and $965 million in Work-Study Grants, totaling $35.1 billion in grants for education.
Guaranteeing Student Loans – That same report showed the government made payments to banks of $1.8 in interest subsidies for loan forgiveness, deferral, and refinancing. Another $9.6 billion was paid to banks in various attempts to guaranty student loans against default. The cost of guaranteeing student loans cost a total of $11.4 billion in 2012. To put that in perspective, in 2012 $20.8 billion of previous loans were in default.
In 2012, the federal government paid out or simply lost revenue totaling $65.8 billion to assist Americans with the rising costs of education. This is $3.2 billion more than would have needed to simply pay for all the tuition costs for every student who attended a public college (which was about 75% of all students who attended every college in 2012).
To make matters worse, Americans took on an additional $107 billion in personal student loan debt in 2012 alone.
While some students would likely still have acquired students loans even if they had no tuition costs, this number would have been significantly lower. These student loans are government backed, meaning the government (taxpayers) are liable for any future defaults or loan forgiveness on these loans. Thus, the cost of guaranteeing student loans is likely to rise in the future.
Things to Consider About Returning to Tuition-Free Public College
Returning to the previous model for funding public higher education would be a difficult transition and would require a well thought out plan. This is especially true for low-income students already attending private for-profit colleges. Additionally, recent graduates have already assumed mountains of debt and would be significantly disadvantaged by comparison.
Despite the challenges, it would likely reap benefits over time. A free (or even sliding scale) state college tuition model means a significant price competition for private for-profit colleges. As a result, for-profit colleges would likely reduce tuition costs to maintain a competitive position in the higher education market.
College was never free, but it did used to be tuition free in America. The cultural changes of the 60’s completely changed the face of higher education, despite recent pushes to a return to a focus on education over capital, things simply aren’t that black and white.