State of the Union

Obama's Free Tuition Plan Is a Subsidy for Colleges, Not Students


Your tax dollars at work.

California has a very cheap community college program. Annual tuition can cost less than $1,500 a year. According to this college calculation service, you're likely to spend more on books than you will on your classes.

California also has a problem in that its community college system already cannot accommodate all the students who want to attend. In 2012, California reported having 470,000 students on waiting lists. The inability to provide classes for students was blamed on budget cuts, of course, not on its economic model. They did raise tuition rates, though, from $20 a unit to $46 a unit.

You cannot look at California's community college system and conclude that subjecting all community college students even further to the vicissitudes of government spending commitments is a good idea. Yet, this is exactly what President Barack Obama is proposing. Obama's "America's College Promise" proposal, reported yesterday and formally introduced today, would provide "free"—as in subsidized by federal and state governments—community college educations. Here's how the White House says it will work:

Enhancing Student Responsibility and Cutting the Cost of College for All Americans: Students who attend at least half-time, maintain a 2.5 GPA while in college, and make steady progress toward completing their program will have their tuition eliminated. These students will be able to earn half of the academic credit they need for a four-year degree or earn a certificate or two-year degree to prepare them for a good job.

Building High-Quality Community Colleges: Community colleges will be expected to offer programs that either (1) are academic programs that fully transfer to local public four-year colleges and universities, giving students a chance to earn half of the credit they need for a four-year degree, or (2) are occupational training programs with high graduation rates and that lead to degrees and certificates that are in demand among employers.  Other types of programs will not be eligible for free tuition.  Colleges must also adopt promising and evidence-based institutional reforms to improve student outcomes, such as the effective Accelerated Study in Associate Programs (ASAP) programs at the City University of New York which waive tuition, help students pay for books and transit costs, and provide academic advising and supportive scheduling programs to better meet the needs of participating students, resulting in greater gains in college persistence and degree completion.

Ensuring Shared Responsibility with States: Federal funding will cover three-quarters of the average cost of community college. States that choose to participate will be expected to contribute the remaining funds necessary to eliminate community college tuition for eligible students. States that already invest more and charge students less can make smaller contributions, though all participating states will be required to put up some matching funds. States must also commit to continue existing investments in higher education; coordinate high schools, community colleges, and four-year institutions to reduce the need for remediation and repeated courses; and allocate a significant portion of funding based on performance, not enrollment alone. States will have flexibility to use some resources to expand quality community college offerings, improve affordability at four-year public universities, and improve college readiness, through outreach and early intervention.

So right off the bat I see a huge incentive for further grade inflation for community colleges. Remember, of course, the free money getting tossed around is going to college faculty and administrators, not to students. It's not the students being subsidized, it's the college. So they're going to do everything in their power to keep these students attending, even if it results in students leaving college with associate's degrees they can barely read, which will subsequently devalue the degrees in the eyes of employers.

Even in an era of grade inflation, though, community colleges also have terrible completion rates for students seeking two-year degrees. The Chronicle of Higher Education offers a handy map showing completion rates lower than 10 percent in states like Indiana and Rhode Island after three years of attendance. The best state, South Dakota, has a 52.9 percent completion rate. For-profit colleges, for all their criticism for taking advantage of students (and federal subsidies), have a higher graduation rate than community colleges.

But to be clear, having a low completion rate over three years shouldn't necessarily be seen as a criticism of the community college system. What community colleges allow is the ability for people who cannot commit (for a variety of fiscal or personal reasons) to a traditional education model to nevertheless advance their educations. They may take a few classes and drop out because they have to prioritize other parts of their life, at least for the time being. Maybe they'll come back in time. Maybe not. Sometimes it's a money issue, but not always. In fact, the White House acknowledges exactly what community colleges are:

By 2020, an estimated 35 percent of job openings will require at least a bachelor's degree and 30 percent will require some college or an associate's degree. Forty percent of college students are enrolled at one of America's more than 1,100 community colleges, which offer students affordable tuition, open admission policies, and convenient locations.  They are particularly important for students who are older, working, need remedial classes, or can only take classes part-time. For many students, they offer academic programs and an affordable route to a four-year college degree. They are also uniquely positioned to partner with employers to create tailored training programs to meet economic needs within their communities such as nursing, health information technology, and advanced manufacturing.

Okay, so why is this program needed at all? If the White House's position is that community colleges are accessible and affordable, why a new program? What they're offering doesn't appear to be a loan. If a student falls into the extremely high drop-out rate for students, the government (and the taxpayers) don't get the money back. So the White House is promoting a program funded by taxpayers to subsidize—wait, I mean further subsidize—a system that has baked in an extremely high failure rate.

But again, this program is not a subsidy for students. It's a subsidy for faculty and college level administrative bloat. The Weekly Standard notes that the White House declined to detail the cost of the proposal, but the math is easy to calculate. The administration states that 9 million students would "save" $3,800 a year. That puts the cost at $34 billion, split between the federal government and states who participate. Community college presidents across the country are drooling.

Remember, the blame for skyrocketing college costs has been laid squarely at the feet of bloating administrative staff in higher education. One study states from early 2014 states administrative staff led to a 28 percent boom in the higher education workforce, even in the middle of this recession (while faculty salaries remained fairly flat). Community colleges actually lost both part-time and full-time faculty members during the recession, but nevertheless gained an average of three administrative positions per 1,000 students.

Now scroll back up and read the second bullet point in the president's plan. It should be obvious now that that calls for "evidence-based institutional reforms" sounds good but is, in actuality, code for "MORE ADMINISTRATORS! WE NEED MORE ADMINISTRATORS DOING STUDIES AND PROVIDING MORE 'STUDENT SERVICES' OVER HERE!"

Ultimately what will happen is that the subsidies will be consumed by this bloat and community colleges will not be able to expand to actually accommodate additional students, so we'll see more students being forced to wait, or tuition costs will quickly rise above the administration's subsidy (which doesn't seem to have a cap, but obviously is going to have to or god help us all) in order to get more money to actually pay for the classes the students need. This is exactly what's happening at four-year colleges already.