Obama’s free community college plan
David Leonhardt writes:
The plan — which would require congressional approval — would apply to students attending a two-year college, including part time, so long as the college offered credits that could transfer to a four-year college or provided training that led to jobs.
David’s article is excellent and has much useful information:
As Reihan Salam of National Review notes, community college tuition is already low. In fact, it’s zero, on average, for lower-income families, after taking financial aid into account. Vox’s Libby Nelson wrote, “Community college tuition for poorer students is often entirely covered by the need-based Pell Grant.”
One potential implication is that by making community college universally free, the government is mostly reducing the cost for higher-income families.
Calculating the completion rate at community colleges is difficult, this estimate does some work to get it up to 38 percent. What would the completion rate be for the marginal students encouraged under the Obama plan? We don’t know, but I’ll guess at 20-30%, no more. That’s the real problem.
Furthermore some of the value of education is signaling to the labor market that you are able to finish college. I do think the learning component of education is generally more important, but for “marginally not attending community college individuals” — who are often regarded with suspicion by employers — I would not be surprised if the signaling component were one third or more of the value of a degree. To that extent, pushing more marginals into the degree funnel lowers the value of the degree for the others who were getting it already by lowering the average productivity of the pool of finishers. That would lower the efficiency gains from the program and also partially offset some of the intended distributional consequences.
Mike Konczal likes the idea, and believes it may lower higher education prices more generally. Libby Nelson at Vox considers it to be a middle class benefit. Neil McCluskey at Cato is negative. Carrie Sheffield is critical. Here is a look at potential winners and losers in the higher education sector. The plan could lead to federal money replacing state money, rather than leveraging it.
Citing the growing economy and improving labor market, Andrew Flowers noted:
…college enrollment is declining for recent high school graduates (those 16 to 24 years old). And it’s falling fastest for community colleges.
Overall my take is that the significant gains are to be had at the family level and at the primary education level, and that the price of community college is not a major bottleneck under the status quo.