mid-14c., "generous," also, late 14c., "selfless; noble, nobly born; abundant," and, early 15c., in a bad sense "extravagant, unrestrained," from Old French liberal "befitting free men, noble, generous, willing, zealous" (12c.), from Latin liberalis "noble, gracious, munificent, generous," literally "of freedom, pertaining to or befitting a free man," from liber "free, unrestricted, unimpeded; unbridled, unchecked, licentious," from PIE *leudh-ero- (cf. Greek eleutheros "free"), probably originally "belonging to the people" (though the precise semantic development is obscure), and a suffixed form of the base *leudh- "people" (cf. Old Church Slavonic ljudu, Lithuanian liaudis, Old English leod, German Leute "nation, people;" Old High German liut "person, people") but literally "to mount up, to grow."
With the meaning "free from restraint in speech or action," liberal was used 16c.-17c. as a term of reproach. It revived in a positive sense in the Enlightenment, with a meaning "free from prejudice, tolerant," which emerged 1776-88.
In reference to education, explained by Fowler as "the education designed for a gentleman (Latin liber a free man) & ... opposed on the one hand to technical or professional or any special training, & on the other to education that stops short before manhood is reached" (cf. liberal arts). Purely in reference to political opinion, "tending in favor of freedom and democracy" it dates from c.1801, from French libéral, originally applied in English by its opponents (often in French form and with suggestions of foreign lawlessness) to the party favorable to individual political freedoms. But also (especially in U.S. politics) tending to mean "favorable to government action to effect social change," which seems at times to draw more from the religious sense of "free from prejudice in favor of traditional opinions and established institutions" (and thus open to new ideas and plans of reform), which dates from 1823.