Why Free Community College Solves The Wrong Problem

House Democrats have released their draft plan to make free community college a reality across much of the country, at a price tag of over $100 billion. The obsession with a zero sticker price for community college is odd, given that community colleges are already one of the most affordable sectors of America’s higher-education system. Average tuition is less than $4,000 per year, and after existing financial aid is applied, the typical student pays no tuition at all.

The more pressing concern at community colleges is not the price of admission, but what that tuition payment is buying students.

Most students say the top reason for pursuing higher education is increasing their earnings power. Some programs at community colleges will help them realize that potential. Consider the A.S. in Registered Nursing degree at California’s College of the Sequoias. According to federal government data, graduates of this program will earn a median salary of $81,400—well above the U.S. median income and even most four-year college degrees.

Nationwide, more than 94 percent of community college associate’s degrees in registered nursing yield median salaries of $50,000 or more. Career-oriented fields in health care and manufacturing are usually good choices for students who want to see a financial return on their educational investment. But America’s community college sector is not a uniformly powerful engine of upward mobility.

In 2019, over 400,000 students graduated with an associate’s degree in liberal arts or general studies, making this the most popular field of study for community college graduates. But 87 percent of these programs yield median earnings of $30,000 or less. For context, young adults with only a high school degree earned a median salary of $35,000.

To be sure, many students with associate’s degrees in the liberal arts intend to transfer to a four-year college and earn a bachelor’s degree. But few students who attempt this route actually succeed. Among community college students who declared their intention to earn a B.A., just 16 percent reached that goal within five years of starting school. A majority earned no credential at all.

Not all career-oriented programs at community colleges perform up to standard, either. Ninety percent of certificates in cosmetology yield median earnings below $20,000—well below what a typical high school graduate earns. Even fields with a reputation for high earnings, such as business, do not always deliver. Two in five community college associate’s degrees in business administration have a median payoff below $30,000.

Free community college might enable students to graduate with less debt, or no debt at all. But less than one in five community college students currently borrow, thanks to relatively low tuition and generous existing aid. The biggest problem in the sector is the uneven quality of the education on offer.

In addition to shaky earnings outcomes, community colleges also suffer from poor completion rates. Just 40 percent of community college students will earn a credential within six years. While President Biden had originally proposed an additional $62 billion to help community colleges retain and graduate their students, Congressional Democrats slashed that fund by over 80 percent in their legislative proposal. (The budget for the free community college plan, by contrast, remained largely intact.)

Congressional Democrats’ plan for free community college simply offers a blanket federal subsidy with little regard for quality differences between institutions and programs. The scheme might improve access to community college—but if so many students fail to graduate or realize economic gains from their education, what is broader access really worth?

The economic value of higher education is a function of two variables: the price and the payoff. Congressional Democrats are singularly focused on the price. Perhaps federal policy should do more to boost the payoff.

Instead of a one-size-fits-all program to make community college free, Congress should use the federal purse to reward community colleges that produce good results. Here’s one idea: the Department of Education could award community colleges $6,600 for every one of their graduates who earns more than $45,000 three years after finishing school.

The biggest problem in the sector is the uneven quality of the education on offer.

A community college which graduates 150 students into jobs that pay more than $45,000 per year would receive almost $1 million from the federal government. But a college where no students earn above $45,000 would receive nothing.

The system would create a powerful financial incentive for community colleges to scale up those programs that show strong financial returns—and perhaps close ones which aren’t worth students’ time. Community colleges could use the proceeds to improve the quality of their education, provide supports to boost graduation rates, or cut tuition to attract more students.

Why $6,600? The Urban Institute calculates that the Democrats’ plan would give states $6,600 per student every two years to make community college free. That money should be repurposed to subsidize economic value rather than free tuition.

The $45,000 threshold is roughly $10,000 above the median earnings of a young adult with only a high school degree. Community colleges which produce these outcomes are almost certainly creating real economic value for their graduates. According to federal data, about 25 percent of existing community college programs, mostly in health care, yield median earnings above $45,000. Those are the programs we should encourage schools to focus on.

The cost of college is important, but more important is value relative to cost. Modest tuition fees in exchange for an economic payoff is a much better deal than zero tuition for a program with no financial value. Broader access to community college means little unless the economic value of the education is assured. If Congressional Democrats are determined to lavish over $100 billion on America’s community colleges, they can surely find a better way to spend that money than free tuition with no strings attached.

Preston Cooper is a visiting fellow at the Foundation for Research on Equal Opportunity.