By Mary Clare Reim
(Tribune News Service/TNS) – Many Americans are understandably worried about the ever-increasing cost of college education. Recent proposals from politicians to offer free tuition at public universities make calls for free community college seem reasonable in comparison.
However, subsidizing even two years of higher education can have harmful effects on both students and taxpayers.
Overall, community colleges have a bad track record of getting students on the path to upward mobility. If policymakers are considering further subsidizing the community college system and enabling all students to attend for free, we must first establish whether this is a wise investment.
For starters, low-income students who wish to pursue an associate’s degree already have ample financing options. According to College Board, Pell Grants cover nearly the entire cost of tuition at public two-year institutions, with the average Pell Grant award for these students amounting to $3,200 of the average in-state tuition of $3,440. Considering that the cost of community college is miniscule compared to that of a four-year degree, it is not surprising that only 17 percent of students participate in federal loan programs.
Yet, even though the financial burden of attending community college is relatively low, students still have trouble paying off their loans. Far more community college students default on their loans (38 percent) than students at four-year colleges and universities (10 percent).
Additionally, community college students graduate at shockingly low rates. Only 20 percent of students graduate within 150 percent of the time that their program is supposed to take. While many experts have argued that this number is so low because many community college students transfer to four-year universities, it turns out that only two in 10 do so. Once transfers are accounted for, the Community College Research Center found that only 38.1 percent of students who enrolled in community college in 2009 earned a two- or four-year degree within six years.
Even if community colleges were performing well, offering additional subsidies would do more harm than good. If the four-year system is any indicator, further subsidizing the community college system will raise tuition prices.
Economists have noted in recent years that the more the federal government offers aid to students, the more universities are encouraged to raise their tuition prices, knowing that students won’t feel the immediate impact of that increase. Last year a report from the Federal Reserve Bank of New York found that each dollar in Pell Grants alone leads to a tuition increase of 40 cents.
Worse, when one takes into account all federal loans, each dollar an institution receives leads to a tuition increase of 60 cents. This explains why, according to Bloomberg, the cost of college tuition and fees has increased 1,120 percent since 1978.
Unfortunately, “free” community college is anything but. Policies that claim to offer free tuition, whether at a community college or a public four-year institution, put no downward pressure on prices. This shifts the ever increasing financial responsibility from the student to the taxpayers, and the true price of tuition will continue to increase exponentially. Such policies look to the cause of the problem, federal subsidies, as the solution.
A better option would be to reign in federal subsidies to drive down college prices and open up private lending in the market place so that more students can attend college at a reasonable price. Additionally, a more diverse market of alternative schooling models, such as vocational or online learning, could offer specific skill sets to students wishing to streamline their education at a lower cost.
By contrast, free community college will only lead to a financial bubble for future generations to solve. As the country considers ways to provide better options for our children, this proposal deserves a big fat F.
Mary Clare Reim is a research associate in education policy in The Heritage Foundation’s Institute for Family, Community and Opportunity.