America’s College Promise Why President Obama’s Plan Merits Support SARA

America’s College Promise 2 years of community college for free –“First dollar” program lowers sticker price Eligible students enroll at least ½ time No means testing; no application* Continued receipt requires > 2.5 GPA Eligible colleges offer high-quality transfer or occupational programs Funding = ¾ from Feds, ¼ from states * $200K income cap proposed recently

My Assessment ACP is likely to have substantial, positive impacts on college attendance and completion –These impacts will be largest for low-income students, promoting equity ACP is a good policy to pursue at this time –Socioeconomic and political context –Time horizon

My Background Conclusions = Data x Assumptions My perspective is grounded in: –15 years of research on undergraduates –Sociological training in study of inequality –Rigorous quantitative & qualitative research on college affordability –Policy engagement at local, state, & federal levels

More Background Securing America’s Future with a Free Two-Year College Option –Released in Spring 2014 –Discussed with White House –Reflects deep and ongoing collaboration with Nancy Kendall and our team at the Wisconsin HOPE Lab (wihopelab.com)

Costs Are An Impediment Family IncomeCommunity College Net Price/Year% of Income Low ($21,000)$8,30040% Moderate ($52,000) $11,30022% Middle ($81,000)$13,30016% High ($142,000)$14,00010% Annual Cost of Attending Community College Minus All Grants, By Family Income (Dependents)

Costs Are An Impediment Family IncomeCommunity College Net Price/Year% of Income Low ($2,039)$11,400559% Moderate ($13,586) $12,10089% Middle ($29,311)$12,40042% High ($73,120)$14,10019% Annual Cost of Attending Community College Minus All Grants, By Family Income (Independents)

What Happened? States disinvested in public higher ed Real family income declined Investments in grant aid did not rise enough, and shifted to merit aid –Purchasing power of federal Pell Grant is one- third what it used to be

What Do Students Do ? Making ends meet when faced with a net price of $8,000 and up requires: –Borrowing maximum federal loans ($5,500) –Turning to private loans –Working, usually 20+ hours week at minimum wage – 75% of students work –Taking fewer credits, stopping out, and/or sacrificing grades (therefore grant aid)

Result = Talent Loss % of Academically-Prepared High School Students Forgoing College, by Family Income

Result = Talent Loss % of Academically-Prepared CC Entrants Completing Degree or Enrolled in 5 Years, By Family Income

Empirical Evidence No comparable intervention to date –CUNY (early 1970s) is best approximation –California isn’t a good example But we can learn from three types of research studies –Impacts of reducing tuition (5 studies) –Impacts of additional financial aid (4 studies) –Impacts of increased revenue to CC’s (1 study)

Evidence Denning (2014) –Uses rollout of discounts for community college across time and over geography in Texas –Finds that a $1,000 decrease in costs increased CC enrollment among high school seniors by 7.1 percentage points –Students are not diverted from universities to CCs as a result of discount –1/3 of students of students induced to attend CC transfer to a university and 1/4 have a bachelor’s degree within 8 years

Evidence Carruthers & Fox (2014) –Studies Knox Achieves, predecessor to Tennessee Promise Last dollar scholarship makes CC free –Uses propensity score matching –Finds increased high school graduation and CC enrollment among high school seniors by 28.0 percentage points –Finds impacts on college persistence of 21.8 percentage points and increases of 6 additional college credits –Impacts are most substantial for low-income students who would have foregone college

Caveats These estimates may be overstated since methods do not eliminate potential influence of unobserved differences among students affecting outcomes But they may also be understated since the proposed policy is more generous and simple than any examined to date –There may also be benefits of messaging at scale that are not realized in these evaluations

Other Likely Impacts Increased appropriations (federal & state) will stabilize funding for community colleges –Likely increases capacity –May improve quality in part by reducing financial constraints & increasing economic diversity among students Requiring state maintenance of effort is entrée to reducing college costs

Timing Current financial aid system is now 50 years old –Rests on power of choice and vouchers (Pell) –Means-tested –Does nothing to control college costs – no role for states or institutions Move from means-tested to universal approach will take decades to achieve

Running In Place Fraction of Birth Cohort Completing College, by Family Income

Political Strategy Evident bipartisan interest in affordability Working to enhance access to education at multiple time points is most promising –Universal early childhood education –Strengthened K-12 system –Universal community college We have the budget & capacity for action in all three areas All are more sustainable via targeting within universalism

Funding There are many viable options –Reduce waste in current system and reinvest savings –Partly fund via enhanced work-study –Use increased corporate taxes This is where the discussion/debate should focus

Room for Improvement ACP would be a better policy if: –It were simpler: No GPA requirements –It were more inclusive: Add public 4-years –It were more flexible: 60 credits not 2 years Likely next steps: –Proposals from federal legislators –More versions from states –A demo??

For More Information Free College Paper FAQ on President’s Plan See wihopelab.com