The blog of the Urban Institute
November 16, 2021

A Chance to Improve Free Community College

November 16, 2021

Although America’s College Promise (PDF) is unlikely to be included in the Build Back Better Act, free community college is still a priority for many congressional Democrats, and variations of the program already exist at the state level. The next time around, whether the program be at the federal or state level, policymakers could make some key changes that would mitigate possible negative effects on education equity.

In addition to making education more affordable for those who already attend community college, free community college could change enrollment patterns by encouraging students who would otherwise not enroll to attend and by encouraging students who are enrolled, or would consider enrolling, in other sectors to switch to community college. Supplemental policies—along with free community college—could help ensure these shifts don’t have negative effects on students or institutions.

Increasing college attendance

Free community college is likely to attract some students who previously would not have pursued postsecondary education at all. Evidence from studies on Knoxville and Oregon’s free community college programs suggests these students would make up a large share of new community college students. If a federal community college program were first-dollar, meaning eligible students receive Pell grant aid for living expenses in addition to paying $0 for tuition, this inducement may be larger than under last-dollar programs, such as Tennessee Promise.

These new postsecondary students could see an average increase of two years of education, according to one estimate. And even if students do not complete a program, they still benefit from a relatively low-cost way of exploring different education and career options.

Shifting enrollment from for-profit colleges

A second group of new students will be those who otherwise would have attended a for-profit college. When for-profit colleges have lost access to federal aid in the past—making them more expensive relative to community colleges—enrollment in local community colleges increased by about 6 percent. Although the performance sanctions of for-profits may have amplified this effect, evidence from these relative price changes suggests some students would make this enrollment substitution.

These students would likely save a significant amount of money by switching to community college (the average net tuition and fees at a for-profit college are more than $10,000), and although comparison of outcomes is less clear, the skills of community college and for-profit college graduates are similarly valued by employers.

Shifting enrollment from four-year institutions

Expanding access to community college may have a negative effect on a third group of students: those who “undermatch” and start at a community college rather than a more selective four-year institution because of reduced community college costs. These diverted students, who currently make up around one-third of new enrollees, may save money (the average in-state net tuition and fees at a public four-year institution are $3,230), but starting at a community college decreases their chances of completing a four-year degree by an estimated 18 percentage points relative to starting at a four-year institution. On average, four-year degrees produce a higher return on investment in the long term, making this enrollment shift costly for students. Undermatching is also associated with decreased social and academic satisfaction in college.

High-achieving, middle-income students may be particularly loan averse and therefore prone to this substitution pattern. High-achieving, Pell-eligible students may also make this substitution, as they would be able use the full grant for living expenses.

Policy options to prevent undermatching

Changing enrollment patterns may force institutions both inside and outside the public two-year sector to adapt. Community colleges may have to expand supports to accommodate increased enrollment and avoid being overwhelmed by the influx of students, something they were unable to do when enrollment spiked and funding declined during the 2008 financial crisis. For-profit and four-year colleges might be forced to improve the quality of their education or lower their costs to attract diverted students back.

But policy could also play a role in mitigating the potential negative effects of enrollment shifts.

To avoid diverting high-achieving students from four-year to two-year colleges, policymakers could extend the tuition-free promise to the first two years of college at all public institutions, including four-year schools.

A less costly approach would be to offer free tuition at all public institutions for families below an income threshold, similar to legislation that Sen. Bernie Sanders (D-VT) and Rep. Pramila Jayapal (D-WA) have proposed. By not limiting free tuition to only the first two years, this approach would also solve the possible retention problem that could arise in four-year colleges if students receive free tuition for two years and then see a sudden increase in costs in their third year.

Another option is to accompany a free community college program with need-based grant funding aimed at supporting lower-income students at four-year institutions. Including targeted support for four-year students as a supplement to the tuition-free program would mitigate some of the substitution toward community colleges for students who would otherwise attend four-year schools.

Further, grants from the proposed Retention and Completion Fund (PDF) would be a critical supplement to a federal tuition-free program that would help improve academic, career, and student supports at community colleges—supports would be much needed because of increased enrollment. These grants could also be used to improve transfer pathways between community colleges and four-year schools, making it easier for students to receive free tuition at community colleges and still complete a four-year degree.

If a universal free community college program is implemented, policymakers should carefully consider these changing enrollment patterns, their associated implications on education equity, and how to mitigate any potential negative effects.


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