Advantages and Disadvantages of Free Community College

Vice President Biden has proposed two years of free tuition at community colleges. The subsidy would cover all students including undocumented students and part-time students. The federal government would pay ¾ of the subsidy and state governments would pay ¼ of the subsidy. What are the advantages and disadvantage of this proposal? How might the proposal be improved or extended?

Short Answer: The increased subsidy for community colleges expands access to higher education for many students. However, the increase in the relative price of four-year to two-year colleges will result in fewer students from low-income households attending a four-year college. Some students attempt to reduce total student debt by starting higher education at a community college. However, many students fail to transfer from a community college to a four-year college. The proposal will likely result in a decrease in the number of people receiving a four-year degree.

A more effective approach involves combining the subsidy for a community college with a subsidy for a first year of free college at a four-year university.

Advantages of Increasing Subsidies for Community Colleges:

· Community college subsidies can increase access to education for low-income students who might not otherwise have access to higher education.

· Community college subsidies can provide remedial courses at low cost to students who are not ready for a four-year university.

· Community colleges provide technical vocational programs that are often not available at four-year colleges.

· A community college subsidy is highly progressive because people who attend community college make less money than people who attend four-year college.

· The subsidy creates a potential path for a lower-cost four-year degree for people who transfer from a two-year school to a four-year school.

· Subsidies for community colleges are much less expensive than subsidies for four-year colleges and other education subsidies under consideration. The increased subsidy for community colleges has the potential to obtain broad political support. Around 20 states have already adopted tuition free community college. https://www.cnbc.com/2019/03/12/free-college-now-a-reality-in-these-states.html The revenue sharing proposal in the Vice President’s proposal will likely lead to revenue gains for states, which have already adopted free community college because under the proposal the federal government will take up ¾ of the cost of a program already funded by the state.

Disadvantages of increased community college subsidies:

· The increase in the relative price of four-year college to two-year college will result in many highly qualified low-income people going to two-year colleges even if they have the educational credentials for a more advanced four-year college. This change in the relative price could actual decrease upward mobility and opportunity for students from lower-income households.

· There has been a substantial increase in debt incurred for students who attend four-year colleges. The average in-state tuition at public universities has more than doubled over the last two decades. https://www.usnews.com/education/best-colleges/paying-for-college/articles/2017-09-20/see-20-years-of-tuition-growth-at-national-universities In 1989/1990 around half of college seniors from four-year colleges took on student debt compared to 68 percent in 2011/2012. The average student debt level grew by 73 percent over this period. Private student loans, PLUS loans taken out by parents of college students and the number of overextended borrowers have all increased. In 1992, around 2 percent of student borrowers left school with more than $50,000 in debt. This figure rose to 17 percent in 2014. The community college subsidy does nothing to benefit students who obtain their higher education from four-year colleges.

· One study found that 60 percent of community college students in California who planned to obtain a four-year degree were unable to transfer. https://www.communitycollegereview.com/blog/why-60-of-community-college-students-never-transfer Another recent study found that only 13 percent of students who start community college obtain a four-year degree after six years and that 42 percent of students who transfer from a community college to a four-year college get a degree in six years or less. https://nscresearchcenter.org/signaturereport13/ This is lower than the six-year graduation rate for people who start higher education at a four-year college. The increased use of two-year colleges will likely decrease the number of people obtaining four-year degrees and could increase debt if more people fail to graduate on time.

· Many community colleges do not have the same ability to prepare students for highly competitive fields like medicine and law as comprehensive four-year colleges.

Alternative Policies:

Approach One: Combine the community college subsidy with a subsidy for the first year at a four-year college

Comments on Approach One:

· A previous paper comparing the first year subsidy proposal to free-college or debt-free colleges proposals considered by Senator Sanders and Senator Warren https://medium.com/@bernstein.book1958/why-the-first-year-of-college-should-be-free-c3c7ee2cbf8efinds that a one-year subsidy is an economically efficient way to assist students.

· The rationale for the first-year college subsidy is similar in many respects to the rationale for the community college subsidy. The elimination of debt incurred by first year students eliminates payment problems from people who drop out and are likely to have problems repaying loans, reduces interest accrual while in school and reduces cost of subsidizing interest payment on subsidized loans. These advantages should be realized by students at both community college and at four-year colleges.

· The reduction in the relative price of the first year of a four-year college to community college will allow more students from lower-income households to attend four-year colleges.

· The policy should increase the number of people who are able to obtain a four-year degree because many people in community college are unable to transfer to a four-year college and often college credits are lost by people who transfer.

· The combination of community college subsidies with free first-year tuition at four-year schools reduces the need to increase capacity at community colleges.

Approach Two: Create more two-year degree options at major four-year universities while encouraging admission of qualified applicants into graduate school or professional schools.

· Many highly qualified students are capable of entering the workforce or attending law school or medical school after two years of college. People with two years of college course work should be allowed to compete for graduate school given the growth of AP courses in high school and the growth of on-line learning.

· The creation of a two-year option at four-year schools could decrease costs to state government because of the federal subsidy.

· The availability of a viable two-year degree at a four-year college could increase earnings for people who start a four-year program but fail to graduate.

· The existence of a two-year degree option at four-year universities could benefit students who can’t stay in college for economic reasons. Requiring a person to take out two more years of debt to fund additional undergraduate work might prevent the person from getting an advanced degree or cause massive debts after completion of school.

· The existence of more two-year programs at four-year colleges reduces the need to expand capacity at community colleges.

· Education quality could be a lot higher at four-year college than at community college, a major factor for students wanting to go to certain fields like medicine and law.

David Bernstein is an economist living in Colorado. He is the author of the policy primer “Defying Magnets: Centrist Policies in a Polarized World,” available on Kindle and Amazon at https://www.amazon.com/Defying-Magnets-Centrist-Policies-Polarized/dp/179668015X

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