The Economy Needs More Workers with Associate Degrees

Education Next Issue Cover

Forum: Should Community College Be Free?



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WINTER 2016 / VOL. 16, NO. 1

At a June 2015 education forum hosted by the National Journal, U.S. senator Lamar Alexander threw cold water on recent proposals to make the first two years of college free—because he thinks it already is. The senator explained, “Two years of college for a low-income student is already free, or nearly free.”

ednext_XVI_1_forum_kelly_fig-smallIt would be wonderful if that were true. But while the senator’s statement is a reasonable description of how college used to be (at least for some), today’s reality is quite different. Attending college is far too expensive for many Americans. The 2012 National Postsecondary Student Aid Study, conducted by the National Center for Education Statistics, found that after taking all grants and scholarships into account, attending one year of community college runs dependent students from low-income families more than $8,000 in tuition, fees, and living costs (see the green “Net price of attendance” bars in Figure 2). In other words, while it is true that more students are qualifying for and receiving a federal Pell grant, the price after the discount from the Pell is climbing higher and higher (see Figure 1). This is largely driven by living costs, which must be covered if students are to focus their time and energy on school rather than work. Federal loan limits are too low to fully cover these costs, but they are the true costs of degree completion. Tuition and fees are the price of access—living costs are the price of success.

The whole concept of higher education is under debate in America today—public versus private versus for-profit, preprofessional versus liberal arts, in-person versus online. One thing, however, should be clear to all: when large numbers of people can’t afford college at all, the system is broken.

The American people know this. A 2014 Gallup-Lumina Foundation study found that, of those surveyed, a whopping 96 percent said that postsecondary education was important, and 79 percent believed that college wasn’t affordable for everyone in this country who needed it. This is not a partisan issue. Americans want and need college to be much more affordable.
Responding in part to the needs of employers, communities around the country are calling for plans to make at least the first few years of college very inexpensive or even free. President Obama’s proposal, America’s College Promise, would eliminate tuition at community colleges for eligible students, reducing the average annual cost by about $3,800.

ednext_XVI_1_forum_rab_fig-smallSenator Alexander’s reluctance to embrace Obama’s plan is ironic, since Alexander’s home state has been a leader on the issue. In 2014, Tennessee governor Bill Haslam, a Republican, created the Tennessee Promise, which uses lottery funds to cover tuition and fees not covered by the Pell grant or other state assistance to make two years of community college more affordable for all Tennessean high-school graduates. Obama’s plan builds on Haslam’s.

An Associate Degree 
Makes a Difference

Decades ago, a high school education was enough for most folks to earn a middle-class living, build a family, and live out the American dream. Strong U.S. manufacturing and three decades of high economic growth (from the 1940s to the 1970s) sustained millions of relatively high-paying jobs for high school grads.

But the American economy has changed. Completing 12 years of school doesn’t cut it in the current job market. U.S. employers complain of a skills gap. They need many more employees with technical skills than they can find. Workplaces require more technological ability, better social skills, and a broader grounding in multiple disciplines. This is exactly what a postsecondary education offers.

President Obama’s focus on the first two years of college makes sense. Two-year associate degrees pay off. The unemployment rate for people with associate degrees is 25 percent lower than for those with just a high school diploma. Forty percent of people who earn associate degrees go on to earn higher degrees. If the associate degree is completed by the time a person is 20 years old, then 60 percent of the time it is a milestone toward a higher degree. And people with even a couple years of college make significantly more money, on average, than those with none.

What Obama Left Out

The proposals from President Obama and Governor Haslam are a good start, but we shouldn’t restrict the choices of students too much. Students from low-income families, like their more-affluent peers, should be able to attend the public institutions that best fit their academic talents and personal and professional goals. Four-year state universities should not be reserved for the financially privileged.

Obama’s plan has another missing piece. It is critical that we ensure that students not only begin degrees but also complete them. Some may get an associate degree in two years, while others may work more outside of school and take longer to finish. Focusing on completing the associate degree and not on a two-year time period can give students the flexibility to achieve their goals in ways that work best for their individual situations.

To make this work and to fix a long-standing problem in higher education, public four-year colleges and universities must acknowledge that the first degree is an associate degree, not a bachelor’s degree. Two years of credits at a community college result in an associate degree, but students at four-year institutions who lack the money or support systems to persist beyond two years leave with no degree at all. The associate credential should be awarded at both two-year and four-year colleges, even if the institutions differ in the specific programs of study they offer. Doing so will increase competition while enhancing outcomes for students.

While state-by-state and campus-by-campus proposals are already beginning to help students, a national approach is needed to ensure every American has a viable path to achieving a postsecondary degree and a better future. The federal government is still the biggest provider of financial aid. If the federal government doesn’t work with states and communities to achieve their goals, then it is effectively working against them.

A federal-state partnership to make an associate degree free can also bring much-needed accountability to America’s public colleges and universities. Inadequate and inequitable spending hinders college completion rates. A new partnership could help states ensure that spending is sufficient to cover the resource costs of a high-quality sub-baccalaureate education; that spending on instruction takes precedence over amenities; that enrollment capacity expands rather than contracts; and that exclusionary admission practices are reduced. Campuses should be discouraged from chasing luxury dorms and glittery amenities for out-of-state recruitment and instead focus on quality, affordable, near-campus housing. Accountability for these changes should be a prerequisite for the new federal support. These would be part of the terms of a new system, a rejiggered Financial Aid 2.0.

Claiming limited resources, many state and federal proposals have so far focused on tuition. Other costs, like fees, books, and living expenses, go uncovered. This is unfortunate and myopic, especially since these other costs constitute more than half—and often as much as three-fourths—of the total cost of attending college. Covering tuition facilitates access to college, but the other costs need to be addressed to ensure completion. Thus, to be truly effective, “free” (to the student) must truly mean that all costs are considered.

Reduce Waste and Profiteering

With or without the changes I suggest above, many might wonder if there is any realistic path to funding President Obama’s proposal in this era of severe fiscal restraint. This is a critical issue.

We can start with better use of current dollars. Today, federal taxpayer dollars spent on financial aid are spread broadly across all years of education and all types of schools. Many of these schools are private and for-profit institutions that the government cannot hold accountable. We should confine federal spending to public, high-quality, affordable college opportunities. This is not meant as a slight to private or for-profit schools—many of which are wonderful places to attend college. But like many businesses, the private sector of higher education can flourish without government subsidies and may perform even better without government intervention.

Tax credits to offset tuition bills are another way national policy chases its own tail. Cutting the credits could free up money to fund more effective college access strategies, like Obama’s proposal.

Making an associate degree entirely free can be the centerpiece of reform that would dramatically reduce waste in higher education by dealing with the complex and often inadequate web of financial aid that often results in students leaving institutions without degrees. Clearly, with students paying more than $8,000 a year for community college after all financial aid, fixing financial aid is not nearly enough. We won’t succeed in tinkering our way toward accountability by trying to attach strings to existing programs in an effort to promote risk sharing. But the kind of transformative effort I’m calling for would initiate an entirely new approach to boost both students’ and universities’ bottom lines and yield dividends for economies in communities nationwide.

Worth the Money
In my work as an education researcher, I’ve listened to the stories of hundreds of students from all sorts of backgrounds and circumstances. They all understand how important it is to go to college. But too often their hopes are dashed by a system that delivers few opportunities for low- and middle-income students. We can do better.

The benefits of offering the first degree for free are evident for our economy, our country, and our children. Business leaders will get access to the larger pool of skilled, certified workers they are clamoring for. Connecting American workers with good jobs that require an associate degree or higher will help us start to rebuild our waning middle class.

Now is a good time to bring this plan to the forefront of higher education policy. Congress is currently reauthorizing the federal Higher Education Act. At the same time, statehouses are considering a patchwork of reforms—some good, some bad. The iron is hot. Rather than stringing along an antiquated and broken system, it’s time to get to work in order to make the first degree free, stimulate the economy, and provide real security for the middle class.

I was heartened to see President Obama introduce America’s College Promise. While parts of the president’s plan need improvement, the proposal is a step in the right direction.

This is part of a forum on community college. For an alternate take, please see “Tuition Is Not the Main Obstacle to Student Success” by Andrew P. Kelly.




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