College & Workforce Readiness

States Eye Plans to Lower Cost Barriers to College

Free community college, ‘pay it forward’ on table
By Caralee J. Adams — March 04, 2014 8 min read
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Persistent worries about the cost of higher education are prompting state leaders to propose a new stream of plans to increase college affordability and expand access for their students.

Gov. Bill Haslam of Tennessee drew national attention last month when he proposed providing two years of free community college to recent high school graduates. Also in February, the Mississippi House approved a similar two-year pilot program to cover gaps in community college tuition for students who have exhausted other aid. (However, the legislation to create the pilot died in committee in the Senate this week.)

In Texas, the state’s higher education coordinating board—responding to a challenge by Gov. Rick Perry to come up with a low-cost baccalaureate option—in January launched a competency-based bachelor’s degree program. Officials estimate that a student could earn a degree in about three years for $15,000 or less.

Elsewhere, states are freezing tuition or batting around the idea of not having students pay tuition until after they graduate.

Bills to advance that “pay it forward” model have been introduced recently in at least 19 states, though no state has adopted such a system. The closest step came when the Oregon legislature last year approved a measure mandating a study of the idea’s feasibility.

And last week, the Oregon House followed the state Senate in approving a bill to study making community college free.

Despite the activity across states, some of the proposals—whether giving a free ride in community college or the “pay-it-forward approach—are getting a mixed reception. Experts say states have a history of making promises that can be tough to sustain.

“What catches states is that it sounds good, but once the population changes and the cost structure remains, they are faced with a really big bill,” said Matt Gianneschi, the vice president of policy and programs at the Denver-based Education Commission of the States.

But state leaders are feeling pressure to respond to frustrated consumers who fear that college is financially out of reach at the same time that the college-for-all push continues.

“States are recognizing they can’t just put money into the same old system. To deal with the volume of students and the rising costs, they have to find ways to innovate,” said Mr. Gianneschi. “To graduate those who don’t see themselves as college material, you have to put new ideas on the table.”

Recent data indicate a large increase in college costs. Over the past five years, the average published cost of tuition and fees has climbed by 27 percent for public four-year institutions (now at $8,893), and 29 percent at public two-year colleges (now at $3,264), according to the College Board. Those figures are adjusted for inflation.

However, last year marked one of the smallest one-year increases in those costs across both sectors in recent history, the data show.

Plenty of states have supported initiatives, often at great expense, that help make college education either free or low-cost for some students. One prominent strategy is merit- or need-based programs, such as the Georgia HOPE Scholarships and the Michigan Promise.

The popularity of such programs, however, has sometimes outpaced financing. Michigan ended its “promise” program in 2009, and Georgia in 2011 adjusted eligibility and funding levels to cut costs. That said, Georgia Gov. Nathan Deal, a Republican, just proposed a merit-based grant program covering full tuition at technical colleges.

Tennessee Promise

In his Feb. 3 State of the State address to Tennessee lawmakers, Gov. Haslam, a Republican, announced his plan for a free two-year education at a community college or a college of applied technology.

“Through the Tennessee Promise, we are fighting the rising cost of higher education, and we are raising our expectations as a state,” he said. “We are committed to making a clear statement to families that education beyond high school is a priority.”

The governor’s proposal, as with the one in Mississippi, is designed as a “last dollar” program, in which tuition and fees are paid for recent high school graduates after deducting all other state and federal scholarships.

The program would also call for the deployment of volunteers to mentor students during the last semester in high school and the first semester in college. That feature would help the program go beyond expanding college access to improving retention, said Randy Boyd, a special adviser to the governor for higher education. Since 2008, Mr. Boyd has worked with tnAchieves, a nonprofit program that operates in 27 counties and was the template for the Tennessee Promise.

An evaluation of the local program issued last year by the Center for Business and Economic Research at the University of Tennessee found that students in tnAchieves were 20 percent more likely to pursue postsecondary education than a similar set of those who did not participate.

State officials estimate the Tennessee Promise would help 25,000 students a year at a cost of about $34 million. Gov. Haslam has proposed that the program be financed through an endowment set up with a reserve from lottery funds.

But he’s encountered criticism, including from U.S. Rep. Steve Cohen, D-Tenn., who said in a statement that he would rather see lottery proceeds pay a larger amount of tuition under the state’s HOPE scholarships, which offer merit-based aid at eligible two- and four-year institutions. Rep. Cohen argues that the governor’s plan, which also would reduce the size of HOPE scholarship awards at four-year colleges for freshmen and sophomores, would create a disincentive for students to attend the state’s “best” universities.

One complaint with providing free community college for all is that it would end up covering families that may not need the assistance.

A better use of state dollars is to expand targeted scholarships for low-income students and to provide adequate funding of public colleges and universities to keep tuition down, argues Sandy Baum, a senior fellow at the Urban Institute in Washington and a research professor at George Washington University.

Mr. Boyd, the governor’s adviser, defended the plan, saying it would be a big help to some middle-class families. “Those above the [income] threshold for [federal] Pell Grants still have a financial challenge,” he said. “Just because your family makes $60,000 doesn’t mean you have the financial means to go to college.”

State Rep. Gerald McCormick, the Republican leader in the Tennessee House, said the proposal has bipartisan support and that he expects it will be approved, possibly this month, without significant changes.

Pay It Forward

The plan approved last month by the Mississippi House was modeled after a tuition-guarantee program now operating at six of the state’s community colleges and supported with a combination of private and public dollars.

Noell Vanasselberg, a counselor at rural Tremont High School in northeast Mississippi, said she tells 9th graders about the tuition-guarantee program at nearby Itawamba Community College, which has been available for the past four years.

Hearing that they can get two years of free tuition is an eye-opener for many, she said.

“It gives them kind of a hope or motivation,” she said, helping to keep them from dropping out and “see past” graduation to further educational opportunity.

Each year, about 25 of the small school’s 35 graduates go on to community college with the help of the program, she estimated.

The House-approved bill to enact the program, which died in the Mississippi Senate, was projected to provide aid to 6,800 students in the first year, at a cost of about $3 million. The estimated price tag for the second year was $4.5 million.

Another approach to bringing college within reach of more students is the pay-it-forward bills cropping up in states.

Under that model, students go to college tuition-free, but sign a binding contract to pay a percentage of their adjusted gross income (about 1.5 percent at community colleges and 4 percent at four-year institutions) for 20 years after leaving school. A trust fund would be established to enable the next generation to attend, similar to the concept of Social Security.

“Pay-it-forward is not a panacea, but an innovative tool to open up higher education to middle- and low-income students,” said John R. Burbank, the executive director of the Economic Opportunity Institute in Seattle, which has championed the idea.

Last July, state lawmakers in Oregon passed a college-affordability bill that mandated a study of the feasibility of a pay-it-forward pilot.

“Pay-it-forward is seen as a potentially creative approach to help finance higher education in a fairer way than conventional loans, which place such a burden on students, particularly those not in lucrative professions,” said Ben E. Cannon, the executive director of the Oregon Higher Education Coordinating Commission, which is conducting the review.

Some policy experts say it will be hard for the pay-it-forward model to catch on because of the initial cost.

“It would have to have a very, very large investment of funds upfront,” said Michael Dannenberg, the director of higher education policy with the Education Trust, a Washington-based research and advocacy group. “I suspect that’s part of the reason you are seeing a lot of calls for study rather than actual implementation.”

The legislature in Washington state came up with a simple way to address college affordability last year: freeze tuition.

Lawmakers there also have explored the pay-it-forward approach, though no measure has passed a full chamber.

Competency-Based Program

On another front, the Texas Affordable Baccalaureate Degree Program began in January with a “soft launch” that included just 12 students at South Texas College and Texas A&M University-Commerce, said Van L. Davis, a director at the Texas Higher Education Coordinating Board. The goal is to have enrollment of 250 students by year’s end.

The new approach—spurred by Gov. Perry, a Republican—has students progressing at their own pace in six seven-week terms offered year-round. Faculty members helped design the curriculum for the program, offered largely online. Students must master each competency with 80 percent passing grades to move on in the program.

The cost of a degree for brand-new students is expected to be $13,000 to $15,000.

Ultimately, observers say, it’s hard to predict which flavors of state initiatives will prove successful and gain more widespread support.

“Major policy changes incubate over a period of time,” said Mr. Dannenberg of the Education Trust. “They are first seen at the local level, then the state level, and then there is a base that coalesces around an idea.”

Special coverage on the alignment between K-12 schools and postsecondary education is supported in part by a grant from the Lumina Foundation, at Education Week retains sole editorial control over the content of this coverage.
A version of this article appeared in the March 05, 2014 edition of Education Week as States Pitch Plans to Pay For College


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