A new Congress brings a new opportunity to make transformational changes to America’s higher education system. The America’s College Promise Act—a proposed federal–state partnership championed by President Biden in 2021 but not yet passed by Congress—is a ready-made blueprint for far-reaching advances in college affordability. In his fiscal year 2024 budget plan, President Biden proposed a $500 million investment in free community college, laying the groundwork for the eventual fulfillment of this key campaign promise, pegged in the budget plan at $90 billion over ten years.
This commentary reviews how the plan would promote equity, stability, and access across higher education, building on The Century Foundation’s prior, detailed analysis.
America’s College Promise would eliminate tuition and fees for 8 million students every year.
The primary objective of America’s College Promise (ACP) is a game-changing reset to how American society pays for the cost of education at community colleges.
In brief, the plan is as follows. States that participate in ACP would receive new federal funding on the condition that their community colleges charge eligible students $0 for tuition and fees. States must also match a portion of the new federal investment they receive with new annual appropriations for public higher education. Tribal colleges can also participate, under a slightly different funding mechanism.
Accounting for institutional and student eligibility, the total number of students who would be served every year is roughly 8 million, or about 37 percent of all undergraduates. If all states joined the partnership, ACP would likely reach even more students per year than the Pell Grant program, the cornerstone of federal financial aid.
If all states joined the partnership, ACP would likely reach even more students per year than the Pell Grant program, the cornerstone of federal financial aid.
The majority of ACP’s 8 million beneficiaries would be students of color, including 2 million Hispanic students, 1 million Black students, 800,000 students of two or more races, 500,000 Asian or Pacific Islander students, and 70,000 Native American students.
ACP frees the Pell Grant to help cover participating students’ non-tuition costs.
Costs beyond tuition are often the greatest barriers to community college completion. From monthly rent and grocery bills to medical copays and car repair, living expenses add to the financial strain on hard-working students. Disproportionately, community college students are parents, full-time workers, former foster youth, or at risk of homelessness. The best thing for these students to also become is a college graduate, but these expenses force students to make hard decisions about whether they can stay enrolled.
Colleges automatically apply a student’s Pell Grant—a federal need-based award of up to $6,895 for low-income students—to tuition first. If any amount of the grant is left over, the student receives that money as a stipend for non-tuition costs. But under ACP, the elimination of tuition absolves the need for Pell to offset tuition, making all of it available to cover rent, food, transportation, and more. Roughly 42 percent of community college students receive the Pell Grant and, under ACP, would be able to apply all of it to their non-tuition expenses.
In other words, a recipient of the maximum Pell Grant who is charged $6,000 per year in community college tuition and fees would end up with $6,000 more help towards living expenses than they would otherwise. That extra $500 per month puts the cost of rent and groceries much more in reach, thus making their college degree more attainable.
This relationship between America’s College Promise and Pell differs from state promise programs’ relationship to Pell. While state promise programs cover eligible students’ community college tuition, many of them only do so by filling in the remainder of costs after Pell is applied to tuition: if a student is receiving any promise program money, they typically receive no support for non-tuition costs. While state promise programs have been positive developments for college affordability, low-income students would receive significantly more resources under ACP than under a typical state promise program.
Under ACP, existing state programs (roughly $2.2 billion per year) can be converted to financial assistance when the student transfers to a four-year university, or they can be provided to students as more non-tuition aid. And because states must maintain prior years’ funding levels, they are incentivized not to simply scrap their promise programs when ACP takes effect.
ACP would reshape the higher education marketplace for good.
By headcount, community colleges enroll four out of every ten undergraduates in the United States. Once community colleges nationwide are tuition-free, other sectors of higher education would feel additional pressure to keep costs low. For-profit colleges often recruit low-income students with the express intent of charging them more than their program costs, knowing the students can turn to Pell Grants and student loans; the colleges and their owners reap the difference in profits. The predictable, easy-to-understand appeal of free tuition could draw students from the for-profit sector to community colleges, which would require for-profit colleges to compete to a greater degree on quality and outcomes. (This has not historically been their strong suit.)
Moreover, ACP is not a one-time zeroing of tuition that would let tuition once again rise over time. As long as the program is in place, tuition would remain fixed at $0. Higher education is no stranger to cost inflation, but under ACP, at least one component—community college tuition—would be locked in place.
Higher education is no stranger to cost inflation, but under ACP, at least one component—community college tuition—would be locked in place.
State investment in public education would increase substantially, lifting up public universities.
Some public universities have feared the elimination of community college tuition would siphon away their students, although the very opposite may be true. For one, the improvements to transfer that were embedded in ACP within the Build Back Better Act would likely increase the share of community college graduates who matriculate into a public university, on top of a larger base of community college graduates created by the tuition-free guarantee.
But that’s not the whole of it. Public universities in many states would stand to directly benefit from surplus funding under ACP’s federal–state partnership.
Each state must make certain funding commitments to join ACP. First, it must supply whatever funds are needed to eliminate tuition and fees at its community colleges. Second, it must match the new federal funds it receives. The text of ACP in the Build Back Better Act saw a ramp-up period with a lower state share, eventually at 20 percent in fiscal year 2028. (A 20 percent state share means that, for every $4 in federal support, the state must match $1.)
States that currently have high community college tuition prices will need to commit all their federal and state funding under ACP to the elimination of community college tuition. But states with tuition prices below the median will have leftover funds, which can be committed to reducing unmet need at public universities, need-based financial aid, evidence-based institutional reforms, and dual enrollment programs. This overflow funding totals about $4.7 billion per year.
California, which averages just $850 in tuition revenue per full-time-equivalent community college student after waivers, would have an estimated $2.5 billion per year in overflow funds. North Carolina, which averages $1,424 in community college tuition revenue per FTE, would have an estimated $286 million per year left over. States such as these could commit those resources to building strong college completion pipelines from high school through attainment of a bachelor’s degree at a public university.
Public funding for higher education would withstand the next recession—and every one after.
Another win for public universities if ACP is passed: their state funding would not drop off a cliff during the next recession.
When state tax revenues decline in economic slowdowns, higher education is typically the first public service to see its funding slashed. Colleges can charge students more tuition or allow fewer seats, which jails, hospitals, and schools do not have the same flexibility to do. The net effect of cutting higher education funding is that families must pay more out of pocket, faculty get paid less, and the American workforce is worse off for years to follow.
We witnessed this in the extreme during the Great Recession, when annual state funding for higher education fell by $25 billion and remained stubbornly low through much of the 2010s, even as the rest of the economy returned to form.
ACP would not allow this bleak history to repeat itself when the next downturn comes. The text of ACP in the Build Back Better Act required that, at minimum, states participating in ACP must maintain their prior three years’ average funding levels for public higher education per full-time-equivalent student and financial support for public four-year universities’ operating expenses. To assist, the federal government would cover a higher share of the costs of the federal–state partnership—as high as 100 percent—depending on the condition of the economy.
This trigger helps community colleges and public universities. Between fiscal years 2008 and 2012, inflation-adjusted annual state appropriations per full-time equivalent student fell more than 26 percent, both in the community college sector and the public university sector alike. On the eve of the COVID-19 recession in 2020, public university funding per student had made up less of the lost ground compared to community colleges, indicating how much they would have to gain from a year-over-year floor in funding.
The free community college provision can be paired with tuition support at HBCUs and other MSIs, college completion, and more.
Efforts to eliminate racial disparities in degree attainment can—and should—be even more targeted than what ACP would accomplish alone.
President Biden’s budget fiscal year 2024, much like the Build Back Better Act, pairs ACP with tuition subsidies at four-year historically Black colleges and universities (HBCUs) and other minority-serving institutions (MSIs). At these institutions, students with family incomes under $125,000 would qualify for two years of support. In 2015–16, more than 90 percent of bachelor’s-seeking students attending an HBCU or other MSI had family incomes under $125,000. The president’s budget reports a ten-year cost estimate of $30 billion for these subsidies.
Recognizing the distinct and vital functions of these institutions in educating generations of diverse leaders, the pairing of free community college and four-year tuition subsidies helps chart a path to a debt-free education for the communities of color that have historically been most vulnerable to the economic harms of student loan debt.
The pairing of free community college and four-year tuition subsidies helps chart a path to a debt-free education for the communities of color that have historically been most vulnerable to the economic harms of student loan debt.
Community college enrollment continues to lag following a big drop in 2020.
From Fall 2019 to Fall 2021, nationwide community college enrollment fell by 877,000 students, or 17 percent. The latest enrollment totals, reflecting Fall 2022, show only a tiny rebound of 17,000 students since the start of the global pandemic.
Community colleges are the backbone of the nation’s workforce development, producing 2.3 million credentials per year. In 2020-21, community colleges produced 42 percent of the nation’s manufacturing credentials and 27 percent of nursing credentials awarded that year. The American economy needed more community college graduates before the pandemic began, and that is even more true today.
ACP would extend the model of free public education from high school to the completion of an associate’s degree. The first half of the twentieth century saw a high school degree become standard for full participation in the economy, and ACP would enable Americans in the twenty-first century to earn a workforce-ready associate’s degree free of charge, helping our education finance system catch up with the economy’s transformation over the past seventy-plus years.
It’s on Congress to enact America’s College Promise.
America’s College Promise is nearly a decade in the making. First proposed by President Obama in the 2015 State of the Union, the plan would fulfill campaign promises for a nationwide free college initiative that were central to presidential campaigns in 2016 and in 2020.
As a first step, President Biden’s fiscal year 2024 budget includes $500 million in new discretionary funding to establish a competitive grant program to support tuition-free community college. Participating states and community colleges would eliminate certain community college programs’ tuition and fees, reaching an estimated 90,000 students. For scale, this equals 1 percent of the estimated number of students who would benefit under a fully-realized ACP, but importantly, it would establish proof-of-concept for the broader plan. The competitive awarding process could also signal support for tuition-free college from a range of American communities that defies traditional partisan lines. Congress should pass this provision in the fiscal year 2024 budget.
Americans want fixes to the cost of college. One-time debt forgiveness, if it is not struck down by the Supreme Court, is based on the premise that the burdens of paying for college have gotten out of hand. Relief is one side of the coin, but reform must be the other.
President Biden and Secretary of Education Miguel Cardona have been steadfast in their support for ACP, vocalizing their commitment to passing free community college in the announcement of debt cancellation and this year’s State of the Union address. It’s on Congress to enact the bill for America’s workforce, families, and readiness for the future.
TCF’s ongoing work on America’s College Promise is generously supported by the Kresge Foundation. Our September 2021 report on America’s College Promise was generously supported by the Lumina Foundation.