How the University of California Set the Gold Standard for College Affordability

Most students in the University of California system don’t pay a dime for tuition—and administrators pull it off without breaking the bank.

Earlier this year, the West Virginia State Senate unanimously passed legislation making community and technical colleges free, albeit with some controversial conditions. Last year, New York made headlines by creating the “Excelsior Scholarship,” which covers full tuition at the state’s public two- and four-year colleges for families under a certain income level. These initiatives join programs in states like Oregon, Arkansas, Minnesota, South Dakota, and Louisiana, which have their own versions of free tuition. The free tuition debate even received an airing during the last presidential election, with the Hillary Clinton and Bernie Sanders campaigns offering proposals to make college free, or at least debt-free, nationwide.

Of course, politicians can’t wave a magic wand and make tuition disappear. The money has to come from somewhere. Considering the price tag of such endeavors, it is perfectly reasonable for taxpayers to ask: is it all worth it?

Fortunately, California has a decades-long record showing that the answer is a resounding yes—as long as you do it right. ­

The University of California (UC) system stands as one of the premier institutions of higher education in the world. What many don’t realize, however, is that for most of our in-state undergraduate students, it’s also free. Californians whose family income is less than $80,000 pay no tuition at UC’s nine undergraduate campuses. That covers 56 percent of the 180,000 undergraduate California students in the system. Students with family incomes between $80,000 and $165,000, meanwhile, receive varying degrees of discounted tuition.

UC is a model of a public university system that achieves both academic excellence and broad accessibility. It suggests that a successful free tuition effort must meet three essential criteria: one, it must be financially sustainable; two, it must help students attend college who otherwise wouldn’t; and, three, it has to make a difference in student outcomes. California’s program meets all three.

First, in terms of financial sustainability, UC relies on a robust partnership between the institution itself, the state, and the federal government.

At the institutional level, the system sets aside more than $1 billion in tuition and fees each year, to support needy students. This has been the practice at UC since 1968. The percentage of new tuition and fee revenue dedicated to student support has grown over time based on student need. In the late 1980s, 16 percent was reinvested in student aid. Today, that share is up to one-third.

For its part, the state has stood by its commitment to college students. After World War II, California formed a commission, motivated in part to help accommodate the influx of new college students from the GI Bill. One product of that commission was the Cal Grant Program, which today provides up to $12,630 per year to qualifying students and can be used not only for tuition, but also for room and board, books, and other expenses. In 2015-16, roughly 79,000 UC students received an average of nearly $11,000 in state-based financial aid.

The federal government also provides considerable funding for low-income students. In 2015-16, federal grants and scholarships to UC undergraduates, mainly Pell Grants, totaled $485 million, or roughly 17 percent of all grants and scholarships received by UC students that year. The 17 percent may seem small compared to the larger investments by the university and the state, but that federal funding is specifically focused on helping our neediest students.

Participation of all three partners—institution, state, and federal government—is essential to creating a sustainable financial plan for assuring college affordability. But it is much easier said than done, particularly at the state level. When tax revenues decline, higher education is often the first to appear on the chopping block. In a report released last year, the Center on Budget and Policy Priorities called the last ten years “A Lost Decade in Higher Education Funding.” During the Great Recession, states across the nation slashed funding for higher education even as enrollment grew. After accounting for inflation, overall state funding of public two- and four-year colleges was nearly $9 billion less in 2017 compared to 2008. To date, only five states have returned funding to 2008 levels. Moreover, federal support for higher education is highly dependent upon White House priorities, with current budget proposals calling for multi-billion dollar cuts to Pell Grant funding.

But ensuring sustainable funding is only one component of the free tuition equation. The second piece relies on answering a critical question: Does making tuition free help lower-income and disadvantaged students, or is it just a giveaway to upper-middle-class families who could have otherwise afforded college? Why spend all this money if students can afford it anyway?

At the University of California, more than 90 percent of grants and scholarship are based on need, and the results speak for themselves. Currently, 38 percent of UC undergraduates receive Pell Grants, which support low-income college students, with the campuses at Berkeley and Los Angeles enrolling 27 and 34 percent Pell Grant recipients respectively. (At UC Riverside, where I work, more than half of our undergraduate students receive Pell Grants). To compare with other prominent public universities: the University of Michigan enrolls 15 percent Pell Grant students and the University of Virginia enrolls 13 percent—roughly the same totals found at Ivy League campuses.

Focusing on need-based tuition support also makes institutional funding available for supporting other student expenses, such as room, board, books, and computers. Indeed, at most public institutions these expenses can equal or exceed tuition. By focusing funding resources on needy students, rather than a universal approach, precious funding can be directed to students from the lowest economic groups to assist with costs beyond tuition.

Finally, making tuition free can only be justified if it makes a difference. If investing in public higher education isn’t moving the needle on student outcomes after graduation, then it is certainly fair to question the public expense. On this measure, the University of California again serves as evidence for the effectiveness of free tuition.

Stanford University economist Raj Chetty has calculated “mobility rates” for colleges across the country, by examining the proportion of low-income students enrolled by college and the likelihood of each college’s low-income students moving into the top of the income distribution after graduation. The University of California’s average mobility rate is nearly three times greater than the nation’s other public flagship universities and two times greater than Ivy League universities. This means not only that UC enrolls substantially more low-income students, but also that these students earn significantly more than their parents—a cornerstone of the American Dream.

More broadly, the push toward free tuition represents an important part of our nation’s history. The Morrill Act of 1862, which granted federal land to states for the purpose of building universities, embodied the nation’s first major attempt to eliminate wealth as a factor in determining college enrollment. That law was motivated in large part by the recognition that vibrant universities and a highly educated workforce were good for the nation, and that education was not solely a benefit to the degree recipient, but to all of us. If such a belief held in the largely agrarian 19th century, it should surely hold in the highly technical and rapidly evolving 21st century, as income inequality continues to divide the country.

California stands as a testament to the value of investing in higher education. Our forebears believed that public support of post-secondary education would pay dividends far into the future. We now have ample evidence to validate that belief, and we cannot afford to abandon such opportunities for future generations.

Kim Wilcox

Kim Wilcox is the chancellor of the University of California, Riverside.