In the Nation's Interest

Should Community College Be Free?

President Obama’s new America’s College Promise proposal could be a boost to America’s education, equality, economy and competitiveness.   It would offer community college free for any students who attend at least half-time, earn a 2.5 GPA, and make steady progress toward completing their degree.  Sounds good: We want more Americans – especially those unlikely to obtain training – to achieve high-quality skills and knowledge that employers are demanding.

While the President’s proposal faces an uphill grind in the new Congress, let’s take that goal piece-by-piece and then see how the proposal could be tweaked to meet it.

More Americans...
CED has long noted the growing skills-jobs gap between what U.S. employers demand and the labor force supplies.  Providing more Americans with needed skills training will help close this gap, while simultaneously creating a pathway to the middle class that addresses the rising call for greater equality of economic opportunity.

...Especially those unlikely to obtain training...
The President’s proposal, like any subsidy that aims to change behavior, should target those who aren’t already behaving in the desired manner.   Otherwise, it is simply a wealth transfer to those already engaged in the behavior without the subsidy.  Already 40% of U.S. college students are enrolled in community colleges.  Presumably not all would qualify for the President’s plan, but many would.  At $3,347 per year in average community college tuition, this subsidy constitutes a significant wealth transfer to all current students at public expense without any change in their behavior.

That said, as CED has previously noted, our community colleges do serve as the main gateway for increasing the postsecondary skills and training of the nation’s most disadvantaged students – those least likely to obtain advanced training.  In this sense, the President’s proposal is indeed well-targeted.

...Achieve high-quality skills and knowledge...
If we want more Americans mastering high-demand skills, it’s not enough simply to increase community college enrollment.   Colleges must also provide high-quality training emphasizing the needed skills and ensure successful completion.  Yet community colleges face questions about their low retention rates (only 20 percent of full-time students complete their two-year degree within three years of entering) and often, the quality of their instruction (although many offer highly competitive instruction and training.)   Cost is a factor in students’ inability to complete community college, but with the maximum Pell grant of $5,730 exceeding the average tuition of $3,347, inadequate academic preparation to handle postsecondary training and other factors are equally or more important.

Given these questions, are we to believe that 1) community colleges will be able to improve the quality of their training quickly while simultaneously dealing with the large influx of new students drawn by free tuition; and 2) new students will be substantially better prepared than current community college students?  If anything, the average level of preparation may decline as at least the first year of community college becomes free for those who previously sat on the sidelines.

At the same time, if community college becomes tuition-free regardless of income, many middle-class and higher students may enroll in community colleges to avoid tuition for their first two years before transferring to a four-year college.  This would improve readiness and completion at community colleges but might well crowd out less-advantaged students.

...Skills that employers are demanding
The President’s proposal is expensive.  With the administration’s estimate of 9 million students benefiting, at an average cost of $3,800 per student, the total comes to $34.2 billion, with the federal government covering three-quarters of the cost and the states being expected to cover the balance.   That estimate could be low because enrollment could be even higher.  In Tennessee, over 86% of this year’s college seniors (nearly 56,000 out of 65,000) already have applied for the first year of the Tennessee Promise program, on which the administration’s program is modeled.  And unlike Tennessee, the President’s proposal is open to anyone – not just recent high school graduates.

Given the high cost, let’s look at the likely benefits.

To the extent that students enrolling in community colleges under this program choose and complete training in skills and degrees that are in high demand among employers, then there would be a net benefit to the student (in future earnings) and society (in higher GDP as the stock of human capital improves relative to other countries).

By the same token, if students choose training in skills or degrees that they either fail to complete or that are unlikely to lead to a well-paying job following completion, then they have simply added to public expenditures without benefitting themselves or contributing to growth in the larger economy.  They would be better off gaining experience and earnings in any job than in wasting time on a non-productive degree.

To its credit, the administration’s proposal states that community colleges will be expected to offer “occupational training programs with high graduation rates... that lead to degrees and certificates that are in demand among employers.”  Left unstated is whether the promise of free tuition is limited to students enrolling in those particular “high demand” degrees and certificates, or whether students could obtain the free tuition for any training the community college offers.

Then there’s the question of whether the President’s proposal would lead to cost inflation. Some have argued that publicly subsidized student loans have in fact contributed to inflation in postsecondary tuition over the past 30+ years by (partially) protecting families from the full costs that colleges are charging.  The idea is simple: whenever someone else is footing part of the bill, people are likely to consume more of the good or service in question than they would otherwise, thereby increasing demand and contributing to inflation.

Now don’t get me wrong.  There are huge benefits to having a population with more of the skills needed for “21st century jobs” – benefits of the type called externalities by economists.  That is, enough of the benefits accrue to the larger society and not just to the person obtaining the skills that there’s a net return to society for subsidizing investment in training for those skills, especially for those most disadvantaged in our society.

However, let’s just be sure that we’re investing our scarce public dollars in the real attainment of high-quality skills actually needed by employers.  And that we’re targeting our investment to those who otherwise wouldn’t get those skills without the subsidy. Anything else simply adds to our already large federal deficits and might be seen primarily as a gambit in the increasingly politicized fight for the hearts and loyalty of the middle class.

To that end, any proposal to provide “free” tuition to community colleges should be:

  • Limited to the coursework, skills, and degrees that are in demand by regional employers. This could be certified through annual regional surveys.  Such surveys would provide valuable information to all those seeking employment and training, not just those enrolling in community colleges.
  • Means-tested to target those students for whom affordability is more likely to be a barrier to enrollment.  This will also reduce unnecessary transfers to higher-income students who would have paid for community college for themselves in the absence of the subsidy.

As an association of business leaders, CED is uniquely well-positioned to help lead a needed national discussion of the skills that employers want and require.  Our workers, our economy, and our global competitiveness all will benefit from increased attainment of “21st century skills.”

A bit about the author: This is my first blog post for CED, having just joined the organization as Vice President for Education Research.  Now is an incredibly exciting time in education policy at the pre-K, K-12 and postsecondary levels.  And CED, with its commitment to non-partisan well-researched analysis and reasoned solutions in the nation’s interest, is the perfect perch to watch and comment on this action.

As I blog more about various education issues in the weeks to come, you’ll begin to get a better sense of who I am and my approach to education policy.  Today’s post reflects my commitment to balancing the benefits and costs of policies.  Sure, it’s a totally worthy goal to give more Americans the skills we’ll all need to make the United States more economically competitive. But how much is any proposed policy likely to contribute to that goal? What’s the benefit of that increase? And how does that benefit compare to the proposal’s cost?  This reflects a fundamentally economic approach to the world. In general, I tend to value policies and programs that achieve their benefits most efficiently – that is, the highest benefit at lowest cost.  As we all should, when we’re talking about spending public money.

My approach to education policy has grown out of my training and experience: a PhD in public policy from Princeton University plus 22 years’ experience working at the nexus of research and policy within state and federal government, non-profits, and university think tanks.  Most recently I was Senior Education Research Scientist with the federal Institute of Education Sciences, where I had a ringside seat to observe the most cutting edge research on what works in education.

Future posts will reveal more of my predilections – like a preference for evidence-based solutions and experimentation.  But that will all be revealed as we go forward.  For now, I would love to hear your comments on this and all future posts.  Finally, I should note that the positions in this post represent my personal views and not necessarily those of CED.


1  Interestingly, my search for data on instructional quality across community colleges turned up empty.  Dr. Corbin Campbell, Director of the College Educational Quality project at Columbia Teachers College said via email, “There are very few studies that examine instructional quality across postsecondary institutions, and even fewer across community colleges.”

Monica Herk is Vice President, Education Research at the Committee for Economic Development.