Free Higher Education?

The idea of free higher education, at least in public universities, is being promoted by certain circles. Is that a good idea? Education undoubtedly brings a lot of personal benefit to the life of the person receiving it, and, to some degree, also brings benefit to the community. Because of higher education, a person personally benefits by earning a higher income and leading a better standard of living. Society too benefits from having a better educated workforce, higher tax collection, less petty crime and better health.

If society gets more benefit than the individual receiving education, then it might make sense to subsidize education of that individual. However, this may not be true for all individuals. In many cases, the individual benefit from education can exceed the societal benefit. In that case, it may not be beneficial for society to fully subsidize the education of such individuals.

Lets look at an example to make it clearer. Suppose a poor state, in the hopes of having an educated workforce, makes higher education free for all the residents of that state. Now, every individual has an incentive to go for higher education. However, once they are educated, there is no bar that prevents them from moving to another state or country in search of higher pay. So, the poor state spent all its resources to educate the youth, but may not have enough sway to keep them in the state once they graduate.

What if the whole country instituted free higher education, at least in public universities. A much clichéd term in economics is "there is no such thing as a free lunch." If higher education is made free to students, someone needs to pay for it. The only way of doing it is by raising taxes, which may not be popular among the people. Besides, if something is given out for free, people may start perceiving that the quality is low (which may not be true). So, to signal that one is of higher caliber in terms of skills, students who believe they have the ability will go to private schools and pay the fee. If students believe that they have the potential to earn more if they attend a private university, they will continue to take loans and go to private schools, instead of attending the free public universities. 

Therefore, in theory, free higher education sounds good. But if implemented, there might be some negative consequence.