Rather than spending a lot more to make community colleges tuition free, we can make them affordable for all without spending any more government money than we do today.
Making good on his campaign promise, President Biden has proposed to make community colleges tuition-free. In fact, he has raised the stakes by proposing to increase Pell Grant awards at the same time. The problem is that if adopted, these two proposals will require very large amounts of additional government spending, yet are unlikely to achieve the fundamental goal of making community colleges affordable for all students.
The good news is that achieving the objectives of greater affordability, equity, and quality in community colleges can be accomplished within the $200 billion that federal, state, and local governments already spend on higher education in this country. Here’s how.
Reallocate State Resources. States currently allocate four times as much to public four-year institutions as to community colleges — twice as much on a per-student basis. To make community colleges affordable for all, some state higher education funding should be shifted away from four-year schools and directed to community colleges and other postsecondary opportunities, including apprenticeships. The premise of this recommendation is that four-year institutions can get by with less from states by drawing on the higher tuitions they charge and the greater access they have to other resources, such as charitable giving and research funding.
Change State Funding Policies for All Public Institutions. In addition to reallocating resources, making community colleges affordable for all must involve changing how states finance higher education in some fundamental ways.
First, tuition at all public institutions should be pegged to what states determine the average family can pay, with the highest charges at flagship public institutions and the lowest at community colleges. For this to work, states must also be prepared to provide sufficient grant assistance to cover tuition for students from families who can’t afford the sticker price.
States should also be prepared to force greater efficiency by relying on normative costs — a calculation of what institutions ought to spend per student — rather than the traditional practice of allocating funds based on what they report spending per student. States could also support enrollment growth by carving out a portion of core grants to make payments for each state resident an institution enrolls. Each of these system-wide proposals would help community colleges that as a whole spend less per student and enroll more in-state students than four-year institutions.
For this scheme to work, the federal government must also be a partner in these reforms and should be prepared to take the following steps.
Redesign Pell Grants to Cover the Living Costs of Low-Income Students. From its inception, Pell Grants have been available to cover tuition and living expenses for needy students. Over time, however, eligibility has been extended up the income scale so that more than one-third of all undergraduates qualify for aid. These features have sharply reduced the program’s impact despite increased funding. Further increases in the Pell Grant maximum award could mean that more than half of undergraduates will receive Pell Grants in the future.
To make Pell Grants more effective, the benefits should be tied to basic living expenses of going to college and restricted to students from lower-income families. To make this work, states and institutions would be responsible to provide sufficient tuition aid to students who can’t afford pay their tuition. Community colleges students especially could benefit from this change because most of their Pell Grant now tends to pay for their tuition with only a modest amount available to help with their living costs.
Change Funding for Remedial Courses. Millions of college students every year take remedial, below-college level courses. Most are charged regular tuition and many of them borrow to pay that tuition as well as to pay living expenses. More than half of all college students taking remedial courses attend community colleges.
It would be much more effective to no longer charge tuition for remedial courses and to not allow students to borrow to pay for these courses. Instead, the providers of remediation, including community colleges, should be paid through a combination of federal, state, and local resources based on how well they raised the basic skills of these students. This could be fully financed through the reduction in loan subsidies and defaults gained through the prohibition against using loans for remediation.
Pay for Completion. To improve the rate at which economically disadvantaged students complete their educational programs, federal and state governments should give more incentives to institutions to enroll and graduate Pell Grant recipients. For states, this would require setting aside a portion of higher education funding to pay institutions based on the number of low-income and minority students they enroll and graduate.
At the federal level, this could be accomplished by changing the current formula for allocating funds in federal campus-based programs which favors institutions that have provided student financial aid for many years. A more effective formula would be one based on the number of Pell Grant recipients that an institution enrolls and graduates. This would give the full range of institutions more flexibility in deciding which strategies would be most effective in improving participation and completion rates of low income and minority students, including a full range of support services.
These changes in allocating funds would help to improve completion rates at community colleges, which tend to enroll a greater share of low-income and minority students and Pell Grant recipients than four-year institutions.
More generally, policymakers must also recognize the proven effectiveness of early intervention efforts that provide support services, mentoring and last-dollar financial aid for groups of disadvantaged students while in high school or even grade school. This could be accomplished by the federal government establishing a matching program to encourage states and NGOs to start or expand early intervention programs. This effort would benefit community colleges as well as all other postsecondary institutions.
By reallocating some existing resources and implementing the key reforms as outlined above, community colleges and all public institutions can become affordable to all students within what federal, state, and local governments already spend on higher education.