New White House Report Doesn’t Support Free Community College
The White House Council of Economic Advisors has released a 78-page new report on student debt, combining recent economic research with Department of Education data to paint a picture of what has become the second-largest category of consumer debt in our economy. The report uses the data it presents to argue in favor of the Obama administration’s signature higher education initiative—free community college. But many of the facts contained in the report undercut this argument.
Community college is already the most affordable type of higher education in America, making it an outlier in a sector stricken by relentless price increases. Published tuition and fees for two-year colleges average $3,435 per year—less than the average Pell Grant. Many students do not even end up paying this, though. Tuition is already free for the average community college student once grants and tax benefits are taken into account. Only the average student in the top two family income quartiles pays any tuition. Free community college, therefore, would mostly benefit the upper middle class.
Granted, many students in low income groups still face bills for living expenses, even if they pay nothing in tuition. But President Obama’s free community college plan does not address living costs, only tuition. It is unclear why it should—if individuals are struggling to afford living costs, that is a problem best addressed through the social safety net, not higher education policy.
As a result, community college students end up borrowing very little. Take a look at the following graph from the CEA report, which plots median debt at institutions in several different sectors. The blue data points in the bottom-left corner represent community colleges. Most community college students, from both high- and low-income backgrounds, end up borrowing less than $10,000.
The catch here is that many former community college borrowers have trouble repaying their loans. But, as the CEA’s report indicates, this is because most community college students do not complete their degrees. As the following graph from the report indicates, defaults among community college students who complete their degrees are uncommon—but only 23 percent complete. On the other hand, nearly a quarter of community college dropouts default within three years of entering repayment.
Dropping out of school makes it much more difficult to find a well-paying job that will enable a borrower to make progress on his loans. But student debt is not the cause of such economic distress. As the report states, “[M]any of the students who attended [for-profit and community colleges] may not have received an education that equipped them to find well-paying jobs and manage the debt they incurred, even if that debt was relatively small.”
This is the same report which argues community college should be free. An explicit goal of this policy is to increase community college enrollment. But why is the White House’s goal to encourage more students to attend institutions from which they are not likely to graduate? A free educational experience that does not yield a credential is not particularly useful.
The remainder of the case for free community college laid out in the report rests upon the report’s argument that “free community college … eliminates the information barriers related to the cost and complexities of applying for aid.” The implication here is that instead of the obvious solution—simplifying the paperwork, starting with the 108-question FAFSA—we should spend millions, if not billions, on a roundabout quest to allow a minority of students to bypass the paperwork.
To sum up, the White House wants to make free something that is nearly free, for the purposes of helping students obtain degrees they are not likely to obtain. The CEA has presented some excellent data, but but it has not yet proved the wisdom of free community college.
Preston Cooper is a policy analyst at the Manhattan Institute. You can follow him on Twitter here.
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