Why Many US Colleges Were Once Tuition-Free

The high cost of tuition at American colleges and universities is a relatively recent development. Most public colleges in the United States—and even some private ones—were originally founded as tuition-free institutions. As late as the 1960s, tuition at most state schools was either completely free or low-cost to residents.  

That changed in the 1970s when a sluggish economy put a squeeze on state funding for higher education. At the same time, the advent of federal student loans shifted the burden of paying for college more heavily onto individual students and families. The new tuition charges started low, but quickly snowballed.  

“In the 1980s, you get these year-after-year, double-digit increases in tuition,” says Charles Dorn, a professor at Bowdoin College who studies the history of education in the United States. “By the time we're into the 1990s, a college degree is becoming almost unattainable for people from less-privileged backgrounds. When that happens, you've got people who are shut out of higher education in some ways for the first time historically.” 

Long before tuition became the norm, 19th-century American colleges were small institutions funded by either state governments or wealthy benefactors. Back then, the distinction between a “public” and “private” college wasn’t significant, says Dorn. In both cases, the goal was to provide an affordable education that prepared students to “make some contribution to the public or the common good.”  

College graduates—who were still rare in the 19th century—would go on to become teachers, doctors, engineers and statesmen. These “learned professions” were the leaders of society, so an investment in their education was considered money well spent. 

When the publicly funded University of California welcomed its first class of 40 students in 1869, they paid no tuition. Likewise, when Stanford University was founded by Leland Stanford and Jane Lathrop Stanford, no tuition was charged at its opening in 1891. Explaining the investment, Jane Lathrop Stanford said, “The public at large, and not alone the comparatively few students who can attend the University, are the chief and ultimate beneficiaries of the foundation.” 

With the Morrill Act of 1862, Congress helped establish so-called "land grant” institutions, named for the federal land whose sale funded them (some of that land was freshly stolen from Native Americans).  

Land grant institutions had a mandate to educate working-class students in practical fields like agriculture, engineering and military science. Texas A&M, for example, was originally called the Agricultural and Mechanical College of Texas and was founded as a land grant college in 1876. Owned and operated by the state and funded by land sales, most land grant colleges didn’t need to charge tuition.  

When World War II ended, more than 16 million U.S. soldiers were poised to come home. If all of those veterans tried to enter the job market at once, it could have sent the U.S. economy into a recession, says Dorn, so Congress looked for a way to incentivize at least some returning troops to pursue higher education.  

The Servicemen's Readjustment Act of 1944, better known as the GI Bill of Rights, provided World War II veterans with up to $500 toward an education or training program. Even with that generous grant, policymakers expected fewer than 800,000 returning servicemen to cash in on the offer. In the end, nearly 8 million veterans used the GI Bill to fund their higher education.  

“They absolutely flood the colleges and universities,” says Dorn, “and many places are not ready for the numbers, so they have to build temporary barracks on campus to house these guys.”  

By putting $500 in the hands of millions of young American men, the GI Bill spurred the rapid growth and expansion of college and university campuses. Again, very little of this was paid for by the students themselves because the federal government made it a priority to subsidize higher education.  

Many Black veterans, however, were either denied their GI Bill education benefits or restricted to a handful of underfunded institutions. 

The Baby Boom of the late 1940s and early 1950s meant that an unprecedented number of American youngsters were set to reach college age in the 1960s. Instead of responding to that sudden increase in demand by raising tuition, states like California saw an opportunity to invest in their economic future. Thanks to its booming postwar economy, California had the funds to support a historic expansion of its largely tuition-free higher education system.  

In 1960, California adopted a new “Master Plan” with the explicit goal of providing every qualified high school graduate in California with access to some kind of low-cost or tuition-free college education. The highest-performing students would attend the University of California system, the state's flagship public research universities. The next cohort would enter the California State University system. The rest would attend high-quality community colleges.  

“It's all going to be fully funded by the state, of course, because California has the tax receipts during this period to do something like this,” says Dorn. “The idea is that you’re going to have free college for everybody.”  

California’s tiered, largely tuition-free "Master Plan" was replicated in other cash-flush states in the West and Midwest, but not every state could afford to be so generous, writes education historian John Thelin. In places like Pennsylvania, Virginia and Vermont, tax revenue wasn’t high enough to pay for the necessary campus expansions, so students were charged tuition.  

Dorn calls the decades between 1950 and 1970 the “golden age” of higher education in the U.S. Colleges and universities experienced massive increases in enrollment fueled by the Baby Boom generation and paid for by generous subsidies from state governments. Meanwhile, millions of American students received a high-quality college education, at little or no cost. 

By the early 1970s, however, the driving forces of cheap higher education in the U.S. had fizzled. The last of the Baby Boomers aged past college age, and the U.S. economy was buffeted by oil embargoes and stagflation.  

"As the economy begins this retrenchment, colleges and universities start increasing tuition,” says Dorn. “Places like the University of California system start implementing what they call ‘fees.’ They don't want to call it tuition because they don't want to give up the dream, but the truth is they're starting to charge tuition.” 

Ronald Reagan, who served as the governor of California from 1967 to 1975, fought hard to start charging actual tuition—not just fees—at state universities, but the California Legislature did not approve tuition charges until 1982. Most other states had already given up on tuition-free higher education.  

As state coffers dried up, colleges and universities lobbied the federal government for money to cover their operating costs, writes Thelin, but Congress decided to take a different approach: federal grants and student loans.

Starting in the 1972-73 school year, the federal government offered the first Pell grants, originally called Basic Educational Opportunity Grants, to cover tuition for lower-income students. When middle-class families complained about the increasing unaffordability of college, Congress responded with the Middle-Income Student Assistance Act (MISAA) of 1978, which broadened eligibility for low-interest federal student loans.  

“The loans were so generous,” says Thelin. “Everybody loved it. The banks loved it, colleges loved it, families loved it. But 10 to 15 years later, it would cause all kinds of problems.”  

The easy availability of low interest, government-backed student loans helped allow colleges and universities to raise tuition and fees significantly, contributing to an affordability crisis and hundreds of billions of dollars in student loan debt.