Tuition Is Not the Main Obstacle to Student Success

The Obama plan for tuition-free community college, America’s College Promise, will go nowhere in the current Congress. But it’s still important to understand what the idea would actually mean for American higher education. For while the media fixated on the “free tuition” part, and skeptics immediately bemoaned the likely cost, the reform is much more radical. Specifically, it would move American higher education from a voucher-funded market to a system with a free public option much like traditional K‒12 public schools.

The idea is rooted in a reasonable conclusion: the current path of federal student aid policy is unsustainable. While grants and loans have boosted college access, flooding the market with easy money that has few strings attached leaves federal policymakers at the mercy of colleges and state policymakers who fund public institutions. Increases in federal aid provide little incentive for these other players to worry about rising tuition, and new evidence suggests that the availability of student loans encourages schools to charge more. When tuition goes up, policymakers increase federal aid to bring out-of-pocket costs down again, only to see those resources gobbled up by future tuition increases.

Advocates of free public college look at this status quo as proof that the market-based model has failed and cannot possibly work. As Sara Goldrick-Rab and Nancy Kendall argue in “Redefining College Affordability,” placing the power in the hands of consumers, with all the constraints that hamper their ability to make a rational investment, fails to hold colleges accountable. The voucher-based market encourages colleges to “increase tuition and fees without regard to how these affect diverse students and families, as long as ‘the market’ supports [it]” and to “pay greater attention to the demands and desires of students and families that can pay more for their services.”

The answer, advocates argue, is to revisit the decision to fund students with a voucher in the first place. Instead, we should move away from the market and toward a model where the feds fund public colleges directly. In return, those public institutions pledge not to charge any tuition or fees. And because the feds directly control the purse strings, the argument goes, they’ll have greater leverage to set quality standards, hold colleges accountable, and require them to implement chosen reforms. Indeed, President Obama’s proposal reads like a federal reform plan for community colleges, complete with a laundry list of new requirements for states and schools.

The Wrong Prescription

Obama’s plan is provocative, but it’s deeply flawed. First, thanks to federal aid, most low- and middle-income students already pay no net tuition to attend community college, yet student outcomes at two-year colleges are poor. Second, free community college could lead students to “undermatch,” which would lower their odds of completing a degree. Third, Washington cannot regulate community colleges to success. Fourth, the combination of tuition caps and direct public funding could actually lead to rationing. Finally, a free public option would stifle innovation and competition.

ednext_XVI_1_forum_kelly_fig-smallLet’s start with the most basic objection: community colleges are already tuition-free for most low-income students (see Figure 2). According to the College Board, students with annual family incomes under $65,000 received enough grant aid to cover the entire cost of tuition at community colleges in 2011‒12 (the most recent federal data available). In fact, dependent students in the lowest income quartile received enough grant and scholarship aid to cover the cost of tuition and leave $3,100 to cover other expenses (the average independent student received enough grant aid to cover tuition with $1,800 left over). Middle- and upper-income students pay a modest amount in net tuition, but that is because government aid is progressive. Free community college would provide a windfall to these families who would pay to send their kid to college in the absence of a free public option.

Though many students already attend community college tuition-free, student success rates are discouragingly low at these institutions. The National Student Clearinghouse estimates that less than 40 percent of students who start at a public two-year college complete a degree or certificate within six years. According to federal data, just one-third of students from the lowest income quartile who started at a public two-year college in 2003‒04 finished a credential in six years. Among independent low-income students at two-year colleges, the completion rate was 22 percent. Even the most affluent dependent students struggled, graduating at a rate of just 42 percent.

It’s not clear why President Obama’s plan to waive tuition at community colleges would automatically improve these outcomes. Now, as Goldrick-Rab points out, students have to pay expenses beyond tuition—books and supplies, room and board, and transportation—and she and Kendall propose a state-funded stipend equal to 15 hours a week at the region’s “living wage.” Obama’s plan would not be as generous, although low-income students would no longer have to spend Pell grant funds on tuition and could use them to defray other expenses (it is a “first-dollar” program).

Living expenses are part of the price of attendance for many community college students—especially adults who are living on their own—and all students have to pay for books. To the extent these expenses exceed grant and loan limits, that’s an argument for experimenting with beefier vouchers for needy students and increased loan limits for others, not creating an entitlement to free tuition for all.

Furthermore, simply throwing money for living expenses at students is unlikely to remove other clear obstacles to success and may well exacerbate them. For instance, how would free college improve student readiness? Federal data show that 68 percent of public two-year college students have to take at least one remedial course; the average student who starts at a two-year college takes 2.9 remedial courses. Very few of these students complete a degree or certificate. Free college tuition won’t fix American high schools, and conditioning cash for living expenses on college attendance would likely draw in even more students who are unprepared for college-level work.

That brings us to the second problem: free community college could actually lower rates of student success. Ironically, the president’s proposal would likely run counter to one of the administration’s other priorities—decreasing the rate at which low-income students “undermatch” at less-selective colleges. The growing literature on undermatch suggests that enrolling in a college that is less selective than they are academically qualified to attend reduces students’ chances of graduating. For instance, a study by Bridget Terry Long and Michal Kurlaender found that Ohio students who started at community colleges were 14.5 percent less likely to finish bachelor’s degrees within nine years than similar students who started at four-year colleges.

Of particular importance here is how policy might induce students to enroll in lower-quality schools. In a study of the Adams Scholarship in Massachusetts, which provides high-achieving students with a merit-based scholarship to attend an in-state public college, Josh Goodman and Sarah Cohodes found the scholarship led recipients to choose less-selective colleges than they would have, and that they graduated at lower rates than peers who attended better schools. In another study, Goodman and colleagues found that lower-achieving students who scored just above the SAT score necessary for admission to a four-year college in Georgia were substantially more likely to complete a bachelor’s degree than those just below the cutoff, most of whom wound up enrolling in a community college.

Of course, it could be the case that free community college would benefit those who would not have attended at all, counterbalancing the negative effects of undermatch. Economist Jeff Denning has shown that a $1,000 drop in the price of Texas community colleges increased enrollment rates among students who would not have enrolled otherwise, but the effects on degree completion were far from definitive. It’s plausible that these students benefit from accessing some college. The question is, at what cost?

Third, proponents recognize that the poor performance of community colleges is a significant weakness in free college plans, but they have outsize expectations about the ability of federal rules to turn these troubled institutions around. Advocates like Goldrick-Rab argue that direct funding will give federal policymakers more power to control the quality of public colleges through rules and accountability requirements. The White House “fact sheet” on America’s College Promise lists what states and colleges would have to do: participating colleges would have to “adopt promising and evidence-based institutional reforms to improve student outcomes,” while states would have to coordinate high schools, community colleges, and four-year schools to reduce remediation rates and, to create incentives to improve, “allocate a significant portion of funding based on performance, not enrollment alone.”

These best-laid plans sound good, but they dramatically overestimate the federal government’s ability to fix colleges. As Rick Hess reminds us, while federal rules can tell people to do something, they cannot force them to do it well.

You’d expect the recent experience with K‒12 School Improvement Grants (SIG) to raise red flags about the feds’ ability to fix troubled schools with more money and mandates. The SIG program has provided more than $5 billion in federal grants to 2,000 of the country’s lowest-performing schools while requiring them to choose one of four “turnaround” models. The results have not been encouraging. While about two-thirds of SIG schools did register modest gains in reading and math, scores at one-third actually declined over the period. The University of Washington’s Robin Lake summed up the evidence: “Given the amount of money that was put in here, the return on investment looks negligible at this point.”

Community college reform is equally challenging. The privately funded Achieving the Dream initiative, which started in 2004 as an effort to apply evidence-based reforms to more than 200 community colleges in 35 states, has disappointed. A 2011 study of the initial cohort of 26 community colleges found that, with a few exceptions, student outcomes remained largely unchanged. It will not be any easier to dictate community college improvement from Washington.

Fourth, it’s not even a slam-dunk that free community college would increase access. Capping tuition at free is effectively a price control that limits college spending to whatever the public is willing to invest. But it would not change the cost structure of colleges themselves, and additional funding may even relax incentives to become more efficient. Proponents argue that existing federal aid resources could cover current costs at public institutions. What happens once the cost of delivery and enrollments increase?

Look at it this way: some economists argue that traditional college will inevitably become more expensive because of the “cost disease.” Like any other service industry that relies on highly educated labor to deliver a product that is heavy on interaction, it is difficult to improve the productivity of traditional college teaching. But to keep pace with wages in the rest of the economy, colleges must pay professors more, which raises costs year over year. Add in the ever-expanding corps of administrators and support staff, and you’ve got a recipe for rising costs. Meanwhile, federal projections predict that college enrollment will grow over time, putting further strain on public budgets. If the public’s generosity doesn’t keep pace with these increases, schools that are prohibited from charging tuition will have to turn students away. Insisting on free tuition could lead to rationing, not open access.

California’s experience during the recession is instructive here: caught between state-mandated caps on tuition and state funding that failed to keep up with an enrollment boom, the community colleges turned away some 600,000 students and reduced course offerings by 21 percent. In response to reduced per-pupil funding from the state, the California State University system reduced enrollment targets for 2015‒16, and trustees have discussed the idea of no longer accepting freshmen at these campuses. Government-imposed tuition caps can wind up keeping students out instead of letting more in.

Finally, a free public option would crowd out innovation and limit competition. There is plenty of innovation going on outside of the public sector, from competency-based programs to career boot camps to new forms of credentialing. Rather than asking how reforms can encourage an array of options (public, private, or for-profit) to emerge that fit the needs of today’s students, the free-public-college crowd wants to simply cram more people through the same old expensive, mediocre model of education.

Education reformers have seen this movie in K‒12, and they know how it ends. Those who have fought for school choice should recognize free community college for what it really is, and instead push for reforms that expand options and choice—not limit them.

This is part of a forum on community college. For an alternate take, please see “The Economy Needs More Workers with Associate Degrees” by Sara Goldrick-Rab.

This article appeared in the Winter 2016 issue of Education Next. Suggested citation format:

Goldrick-Rab, S., and Kelly, A.P. (2016). Should Community College Be Free? Education Next, 16(1), 54-60.

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