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America's College Promise

On Thursday, January 8, 2015, President Barack Obama unveiled a proposal to partner with states to eliminate tuition and fees at community colleges nationwide.

If this proposal sounds familiar, it is because President Obama introduced a similar idea during his 2008 Presidential election campaign. At the time, he proposed replacing the Hope Scholarship tax credit with the American Opportunity Tax Credit, saying that the increased tax credit will “make community college tuition completely free for most students.”

Although the name of the President’s proposal is evocative of local Promise Scholarship programs, such as the Kalamazoo Promise, the President’s proposal is not directly patterned after them. Promise Scholarships are funded by local philanthropists to provide four years of free college tuition to students who graduate from local public high schools.

The free tuition provided by the America’s College Promise would be restricted to students who are enrolled in public two-year colleges on at least a half-time basis and maintain at least a 2.5 grade point average (GPA) on a 4.0 scale. About a third of the nation’s 9 million community college students currently satisfy these criteria.

Even with free tuition and fees, a community college education would not be completely free. Community college students would still have to pay for textbooks, which can add as much as $2,000 a year to the cost. There’s also the opportunity cost of lost wages while the student is enrolled in college. Students would need to find a way to pay for living expenses, which would not be covered by this program. If students work full-time while enrolled in college, they are half as likely to graduate. The main alternative would be to borrow from federal student loan programs, but the prospect of debt has a chilling effect on college enrollment of low-income students with family adjusted gross income (AGI) under $50,000.

The White House fact sheet about the program does not discuss how the federal government would pay for its share of the program’s costs. Most likely, this will involve shifting money from existing programs, such as the Federal Pell Grant and American Opportunity Tax Credit, to the America’s Promise Program. According to the College Board’s Trends in College Pricing 2014, the average tuition and fees at community colleges was $3,347 in 2014-2015. Subtracting grant aid and education tax benefits totaling about $5,090 yields a net tuition and fees of negative $1,740. In fact, the net tuition and fees at community colleges has been negative since the late 1990s, meaning that community college tuition is already free for most students. The net price after including textbooks, room and board and other living expenses, however, is in excess of $10,000.

A key concern is that this change may be narrowing eligibility for federal student aid, by requiring at least half-time enrollment for the Federal Pell Grant and increasing the minimum GPA requirement for satisfactory academic progress from 2.0 to 2.5. By requiring students to be enrolled on at least a half-time basis and by increasing the minimum GPA requirement to 2.5, the America’s College Promise program would eliminate more than a million community college students from aid eligibility. This could reduce the number of community college graduates despite increasing the graduation rate.

Nevertheless, making community college tuition free would simplify the process of paying for college, by potentially bypassing the need for community college students to file the Free Application for Federal Student Aid (FAFSA). This would enable more students to pursue a college education, by eliminating some of the bureaucracy that acts as a barrier to access.