MSU Dean: Obama’s free college plan is not best path to a degree

Donald Heller

In a Bridge Magazine column this week, Chuck Wilbur voiced support for President Obama’s proposal to offer two years of community college free to all students across the country. Wilbur is right that expanding access to higher education is critical to Michigan’s continuing economic recovery from the worst recession in generations. But his support of the president’s plan is misguided, and will not result in the best use of the state’s limited resources.

In responding to Wilbur’s column, I first feel obligated to correct his misreading of history. He stated, “For the first time in our history, a sitting president has recognized we need to make a two year post-secondary degree as universally available as a high school diploma.” This is not true; 18 years ago President Bill Clinton, while campaigning for a second term, promoted exactly the same notion, stating that the country needed to, “make 14 years of education – at least two years of college – the standard for all Americans.”

Clinton chose to go about this differently than Obama, however. Rather than giving grants to students, as the current president has chosen, Clinton opted to make use of the tax code through a series of tax credits and deductions for students and parents. Another difference is the Clinton tax credits could be used for the first two years of any college or university, not only community colleges.

The Clinton program did not succeed in creating a universal 14 years of schooling, and it is unlikely that Obama’s plan would accomplish this either. It is difficult to understand exactly how the program will work, because the White House has yet to release many details. But from what has been divulged, it is already clear that there are major problems with what the president has proposed.

One of the things we do know is that the program is potentially very expensive. While the White House estimates the cost at $60 billion over 10 years, an estimate by David Leonhardt of The New York Times puts the annual cost at $15 billion. The president’s proposal also requires states to kick in 25 percent of the cost for each student. It is unclear whether the states – most of which cut spending on higher education during the recession – will take on this commitment.

Here in Michigan, a conservative estimate would put the state’s share of the cost to offer two years of community college for free at approximately $170 million. This is 70 percent greater than the state is currently spending on financial aid for all college students.

Whatever it costs, the president will have a hard time selling a fiscally conservative Congress on the need for new spending on the government’s student aid programs. And if this is not going to be a new stream of funding, it leads one to question where the money will come from. While the president has proposed a series of increased taxes on higher-income Americans and banks, it is unlikely he will get Congress to go along with this funding strategy.

Will it come from existing funding for Pell Grants, the primary federal grant program for low- and moderate-income students? Or from the Department of Education’s Federal Direct Loan Program? These are important questions to determine whether the president’s proposal is a wiser use of the money than other options, and the same questions need to be asked about Michigan’s proposed participation in the program.

Another problem is that the offer would be open to anyone, without considering the financial circumstances of the student or family. I understand the appeal of offering a universal benefit like this – it helps build political support for the program. There are also benefits to publicizing the idea of offering the first two years of community college for free to all students. This can help lessen the “sticker shock” that affects many low-income students who want to go to college, but who think it is too expensive and do not have good information about financial aid.

However, offering this benefit to all students is a largely inefficient use of the money if the president’s ultimate goal is to increase college access and degree attainment. Providing public subsidy to some students who would enroll in a community college even without the government’s assistance will unlikely have much impact on their college-going behavior. The money would be more effectively spent targeting students who truly have financial need, and whose behavior can be influenced through the subsidy.

The country may, in fact, be better off if the $3,800 grant could be used for students attending four-year universities, as well as community colleges. There is definitive research showing that students who earn bachelor’s degrees receive much larger economic returns, on average, than do those earning associate degrees. And while some community colleges do a good job of preparing students for transfer to four-year institutions, the research also shows that most students who start their post-secondary career at a community college will never earn a bachelor’s degree.

While the president’s intentions are good, there are still many unknown pieces of his proposal that need to be fleshed out. Until they are determined and the concerns raised here are addressed, President Obama’s good intentions may be foiled by a poorly-designed program, and the State of Michigan would be wise to hesitate before committing to participate.

Donald Heller is dean of the College of Education at Michigan State University.The views expressed here are his own, and do not represent those of Michigan State.