Things to Consider on “Free” Community College Education

I’m a fan of the Community College system. In general, I think it’s a wise move for an aspiring degree holder to attend a 2-year institution to get the general prerequisites out of the way prior to transferring to a 4-year university. It’s cheaper, and the delta in the quality of education (for those prerequisites) is negligible.

Community Colleges also have – especially over the last decade or so – increasingly become more agile and responsive to the demand side of the equation in workforce development, i.e., the employers. Virginia’s Community Colleges in particular are very good about recognizing that employers are just as much their customers as are the students enrolled. Not only do Community Colleges provide general education prerequisites, but they provide entry- and certificate-level training for in-demand skilled trades, including cyber trades. At a time when there is a yawning gap in the labor market, and that gap continues to grow as skilled workers exit the workforce into retirement, growing new workers in these areas is essential for a diversified and productive economic portfolio.

So when Tom Periello, who is seeking the Democratic nomination for governor, suggested that Community College be free – i.e., paid for by taxpayer dollars – I resisted the temptation to reject wholesale his proposal as a leftist boondoggle in granting new entitlements at taxpayers’ expense.

There is a case to be made in the world of workforce development – although it should be made sparingly in my opinion – that general funds (taxpayer dollars) can be used to encourage the labor supply to meet the labor demands. That employers’ needs for entry- and certificate-level workers can be met by a statewide collective contribution to education providers, who in turn provide teach the necessary skills to meet the employers’ needs. This is one justification for secondary education, after all.

Tom Periello’s proposal, at least at face value, does not do this. Without seeing any details, it appears to be a blank check for any high school graduate or adult learner to enter into the Community College system and take advantage of any degree program therein. If that is the case, then the program quickly becomes not an investment in workforce development, but a fiscally reckless endeavor.

Consider that Virginia’s Community College System graduates just over 30,000 students per year[1], with average tuition at $4,275 per year (or $8,550 for two years). In the best case scenario – that all these graduates completed their requirements in just two years – that equals about $128,250,000 per year in new spending, or $256.5M for the student lifecycle.

(I am admittedly not taking into consideration the possibility of Pell grants here because those are, in the end, paid by taxes, as well. Additionally, there would likely be federal resistance in providing Pell grants for state-funded education.)

Considering that Community College graduates make about $6,750[2] more per year than high-school graduates, that yields an additional $388 per year per graduate in taxpayer revenue. By those numbers alone it would take over 22 years for the degree to pay for itself.

But what Periello appears to be proposing is not just to subsidize the actual degrees or certificates or licensures, but the actual attendance at and participation in Virginia’s Community College System – regardless of completion.

So if we take every full-time student in Virginia – over 111,000 students statewide – and assume an average annual tuition of $4,275, that equals over $475M in new general fund expenditures. If we add part-time students into that mix – an additional 142,000 students – and assume for simplicity’s sake a an average ½ tuition of $2,137.50, that brings the grand total in new tuition expenditures to a staggering $778 million dollars.

But there may be a simpler way to calculate this, given Periello’s initial proposal. VCCS’s total budget in FY2016 was $1,676,561,112 – that’s $1.7 billion dollars. Only $405M of that money is paid for by general funds (taxpayer dollars). The rest ($1.25 billion) is paid for by tuition, fees, grants, and other revenue streams that are not taxes.

That means a total general fund subsidization – free tuition, waived fees, etc. – of VCCS could be as high as $1.7 billion, or $1.25 billion in NEW expenditures. Even if we subtract the amount of grants VCCS received — $105,000,000 in FY 2014 – that does not move the needle very much. Again, this is about $5,000 per student per year regardless of completion, which (if they all graduate in two years) would take over 25 years to actualize a net gain in taxpayer revenue.

Keep in mind, this also does not account for the increased enrollment in VCCS as a result of total subsidization. If Community College is “free,” there will naturally be more high-school graduates attending to further their education. Increased enrollment creates a need for new faculty, new staff, new buildings and infrastructure, new land, new equipment, and so forth. That would necessarily raise the cost of tuition – paid for by the citizens of the Commonwealth – so these numbers would eventually be much higher.

With all of this in mind, it does not appear this is a wise workforce development investment at all. And it’s not because community college is “not worth it.” But in an economy in which employers themselves increasingly are starting or expanding specialized and proprietary apprenticeship or on-the-job training programs specific to their needs, there are alternatives to subsidizing general workforce requisites.

In the spirit of satisfying a growing demand for skilled labor, perhaps it’s not the Virginia Community College System we should be looking at. Perhaps we should not presume it’s necessary to expand subsidized education to meet those demands, but rather we should modify the goals of existing public education. Perhaps – and here’s a crazy idea – we should look to secondary-education institutions to train their students generally to adapt to an automated economy; teach skilled trades and customer service; teach robotics and cyber at a younger age. But that’s a conversation for another time.


[1] Source: Virginia Community College System (VCCS)

[2] U.S. Census Bureau, American Community Survey

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