Recently, President Obama proposed making the first two years of community college "free" for all students. Maintain a "C" average, make reasonable progress toward a college credential, and the federal government will pay 75 percent of your tuition with the states picking up the rest.
The president's proposal isn't the first. Tennessee, Illinois (Chicago), Michigan (Kalamazoo), and Georgia have already launched zero tuition initiatives, while others are planned in Minnesota, Mississippi, Oregon, and New Mexico.
All these programs share common challenges, including how to pay for them... e.g., with new taxes, cutting offsetting benefits, lottery income, and/or donations... and how much they will cost given the likelihood of higher enrollments.
Some think the concept of free tuition is un-American and smacks of socialism. Others are open to the idea of free tuition but feel that states are better laboratories for testing what works best.
This latter group has a valid concern. First, Obama's proposal may never be approved by Congress. Second, the diversity and complexity of our higher education system makes it difficult to see how zero tuition will help or hurt a state, especially one as unique as New Hampshire.
Some Higher Education Facts and How They Relate to New Hampshire
Tuition isn't the total amount students and/or their parents pay for college. So "free" tuition does not mean a free college education. In New Hampshire, community college students pay about $6,500 for tuition and fees and an equal amount for books, transportation, food, and other expenditures. That's two to three times more than students pay in nearly all other states.
All colleges are subsidized by direct appropriations, tax benefits, student access to state and federal scholarships, and/or subsidized loans. That includes non-profits, as well as "for profit" institutions. The issue is not whether to subsidize, but how much. In New Hampshire, the subsidy for state colleges and universities is very small compared to other states, whether measured by the amount we spend per $1,000 of personal income, or per capita state appropriations, where we rank dead last among the 50 states.
Enrollment numbers are misleading because only half of all college students actually graduate and the time they take to graduate is longer. A key issue is whether zero tuition will increase the number and rate of completions. In New Hampshire, there is plenty of room for improvement. The six year graduation rates are 20 percent for community colleges and 40 percent for our 4-year universities, among the worst in the nation.
Numerous studies show that more education produces higher taxes and lower unemployment. A congressional study a few years ago estimated that each year approximately 170,000 highly qualified high school seniors were not going to college, many for financial reasons. Unfortunately the report never calculated the lost tax revenues. It's staggering. We are not talking billions, but trillions of lost taxes over the working lives of these individuals. In a nutshell, that's why more education beyond a high school diploma is fiscally beneficial for both the individual and the state.
Unfortunately New Hampshire is extremely unfriendly when it comes to paying for higher education. Our residents pay more for a college education than nearly all other states. An unintended consequence is our state leads the nation in average student debt, $32,795 in 2013 according to the Project on Student Debt.
What zero tuition means for New Hampshire
There aren't many win/win deals in life, but "zero tuition" can be one of them.
First, students and their parents will be better off economically, especially as the savings reduce student debt. The average savings nation-wide are $3,800 under the Obama proposal. But New Hampshire is well above the average, so individual savings will be closer to $6,500, with the federal government picking up $4,875 of the tab for each student.
However these savings will only be realized by students if they stay on a two-year time table for an Associate Degree and a four-year time table for a Bachelor's Degree. Total costs and student debt escalate once extra years are added. Any zero tuition plan must impose deadlines regarding degree completion.
Second, our state will be better off from a strictly fiscal perspective as we create a more skilled and educated population, one that has higher levels of employment and pays more taxes. New Hampshire's ability to compete will improve as we make our state more attractive to young knowledge workers. Lowering the price of a community college education to zero is a first step. Only Vermont charges a higher tuition. The other 48 states have a huge price advantage. In California, tuition and fees average $1,000. In Texas, a student at Austin's Community College currently pays about $2,000 versus $6,500 for a New Hampshire student. Closer to home, in Massachusetts, the tuition (and general fee) is about $2,000 per year. In Maine, annual tuition is about $1,700.
Zero tuition for New Hampshire's community colleges will help keep young people in our state. We need to retain and import budding entrepreneurs, not export them. The same goes for other knowledge workers. Right now our students are leaving the state in record numbers to attend schools elsewhere.
Tailoring the Obama Option and Other Proposals to New Hampshire's Needs
New Hampshire can do nothing and lose students or become a "college friendly state." That choice won't disappear if the Republican Congress kills the Obama proposal. Other states will implement zero-based plans, paying for them with lottery or other revenues. They know the value of being college friendly.
New Hampshire can become "college friendly" by establishing a zero tuition program for its community college students and by reducing tuition and fees at our 4-year public universities, which frankly are over-priced compared to other state systems.
As a first step, our leaders need to determine the likely number of students who will enroll, the staff needed to teach and retain them, the funding source, and the amount of funding the program will need given likely higher enrollments, student eligibility, acceptable grades, completion times, and other issues.
Zero tuition is not a "free ride". Zero tuition means our state would return to a place where students are paying 25-to-30 percent of their out-of-pocket costs for a college education. Together let's fashion a program that makes New Hampshire a college friendly state, one that will enrich us in many ways while giving a helping hand to college students who want nothing more than a chance at the American Dream.