system
Given the following post, respond as if you're commenting on Reddit:
human
How can countries (Germany, Sweden..) sustain “Free University” , economically

Were hearing a lot of discussion surrounding free college at US universities with most saying it’s not feasible economically. This certainly appears to be the case. How can other countries, mostly European, sustain this? Is it due to receiving funds through the EU or a strong reliance on international students?
gpt
In the same way that other countries who don't subsidise tertiary education do.

In the US a student takes out a loan to go to university, so they now have a debt, over the course of their lifetime they have to pay that back, however the fact they have a university degree means they are now more likely to pay such a debt back due to having a higher earning potential. Every month they are earning, a percentage of their income goes to pay off that debt. This functions the same as a tax does, except it is not based on their income so the impact of the payments is more varied.

In a hypothetical European country the debt is absorbed by the state which pays it off via having an increased tax rate. Countries do this as the economic contribution of a university graduate is higher than that of a non-university graduate so even after the cost of the university tuition is paid off the economic contribution keeps on being higher.

A secondary benefit is that the government funding is spread out and thus the debt accrued by a single individual is not an anchor around their neck. Therefore young graduates are more likely to spend their money rather than use it to pay off the debt which benefits the economy (assuming inflation doesn't get too high).

The level of organisation is important, e.g. the state guaranteeing loans can result in universities charging more and lenders giving out the loans as they know the government will back them, this can result in spiralling tuition costs. States directly awarding bursaries or tuition fees while regulating universities is a better solution as costs are prevented from spiralling but if tuition costs are squeezed too hard the universities are prevented from competing with other countries universities due to lack of funding.

**TLDR** its not free, you are just paying back the government with a slightly higher tax rate rather than having to pay off loans.