Glenn Hubbard, a professor of economics and finance at Columbia University, was chairman of the Council of Economic Advisers under President George W. Bush.
Given their role in boosting workplace skills, community colleges rightly deserve more attention from policymakers. But offering free tuition is the wrong answer. Lawmakers should instead offer block-grant funding so that these schools can better prepare workers to join our dynamic 21st-century economy.
Community colleges are the logical workhorses of skill development, and their local presence in regional economies makes them attractive partners for employers. Economists have found that two-year associate degrees (or high-quality certification programs) are enough to generate a large premium over the wages of workers with only a high school degree.
Yet community colleges have not proved to be a ready-made solution to economic decline. Many towns where major employers shut down initially had high hopes that local community colleges (or technical institutes) would quickly retrain steel, car or other factory workers in new occupations. But too often those workers dropped out midway, or if they did finish, had no better outcomes than those who never went back to school. Community colleges as presently constituted might work well for kids right out of high school, but we need more creative collaboration between faculty and local employers to meet the needs of mid-career individuals, too.
Free tuition won’t change this dynamic. In fact, it is likely to lead to extra class sections and larger class sizes just when state-level public support withers. It also means little if institutions lack the services to support a student’s education toward better performance and completion. This observation is especially true for the many community colleges that serve economically vulnerable students.
Instead of focusing on the demand side of the education equation, a better approach would focus on the supply side — that is, on how colleges can provide better education that allows students to gain skills and complete degree programs. Such an approach can be found in a 2019 paper that I co-authored for the Aspen Institute’s Economic Strategy Group, which proposes a program of federal grants to strengthen community colleges, contingent on improved degree completion rates and labor market outcomes.
Inspired by Abraham Lincoln’s Morrill Land Grant Act of 1862, the plan sets the ambitious goal by 2030 of raising community college completion rates (or transfer to four-year colleges) to 60 percent (the approximate graduation rate for students seeking bachelor’s degrees). We also aim to increase the share of Americans aged 25 to 64 with postsecondary credentials from 47 percent to 65 percent, the level projected to meet the economy’s skill needs by 2030.
This effort isn’t wishful thinking. Economists have found that increased state funding of community colleges leads to increases in educational attainment and completion, along with increases in credit scores and car and home ownership. We just need the federal grants to have the flexibility to work like state funding.
It’s true that Biden’s American Families Plan includes $62 billion to strengthen completion and retention rates at community colleges. His American Jobs Plan also calls for a $12 billion federal investment in community colleges. But unlike our block grants, this spending comes with a lot of strings attached. The White House has made clear that states would be able to access these funds only if they adopt specific programs, such as child care for students or improved energy efficiency. The administration has also spent far more energy trumpeting free tuition than in promoting this investment, so it’s easy to see which would be jettisoned if needed.
The plan I described earlier, by contrast, would cost $20 billion annually but free up colleges to innovate according to their local context, especially for mid-career students. That’s much less than Biden’s proposed $109 billion and better targeted. Students who can afford the tuition would still be paying it, instead of giving everyone a free ride. These block grants would be a far better investment for our future, as they would pay off in a more productive economy (as well as a stronger society) for many years to come.
The Morrill Act is instructive here. By focusing on the supply side, it broadened access to higher education by increasing the capacity for educating and training students in emerging skills. Through the equivalent of a federal block grant, the act allowed for variation across states in carrying out colleges’ educational missions. And land-grant colleges were positive for local economies beyond training, providing know-how in agriculture and manufacturing.
Community colleges occupy a central role in any successful effort to build a bridge for many more Americans to promising work. But we won’t get there by telling community colleges to do more of the same. We need to empower them to experiment and collaborate with local businesses. Free tuition will just flood the colleges with students and make them less inclined to experiment or collaborate. We can build back better than that.