Community Colleges

Earlier this year we published a map of California that showed the differences in net price – the full cost of attendance minus grants and scholarships – for low-income students at public colleges in nine regions across the state.  Counterintuitively, our analysis showed that low-tuition institutions may not have low net prices.  In many cases a California community college (CCC) – by far the lowest tuition school – had a much higher net price than the nearby University of California (UC) or California State University (CSU) campus.  Since publishing our map we have gotten many questions about why this is, given how different tuition levels are across the colleges.    

One important factor is that the total costs of college are not nearly as different for students across the segments as their tuition charges might suggest.  Total costs include tuition and fees, books and supplies, housing and food, transportation, and other college-related expenses.

Certainly, higher tuition colleges cost more overall than lower tuition institutions before financial aid is taken into account.  But they do not cost exponentially more.  Total college costs go far beyond tuition and fees for students at all types of colleges: the California Student Aid Commission estimates that in 2015-16, students at any college living off campus without parents – the way that most students at all three public segments live – incurred about $18,000 in non-tuition costs.  While there are sizeable differences in tuition and fees alone, compared to the total cost of attending a CCC, the total cost of college was only 23 percent more at CSU and 59 percent more at UC.

Another factor that drives net prices is the amount of grant aid available to students at each college.  Grant aid – money that does not need to be repaid – reduces the amount that students need to pay out of pocket for college.  It comes primarily from the federal government, the state, and the colleges themselves.  In 2015-16, the average amount of grant aid available per low-income student (i.e., Pell Grant recipient) was approximately $5,400 at CCCs, $10,300 at CSU, and $25,200 at UC.  The differences in state and institutional aid per low-income student were particularly large, as shown in the table below. 

Importantly, not all aid goes to low-income students. Cal Grants reach middle-income students as well, and some programs, including the Middle Class Scholarship and institutional grants at UC, reach students with six-figure family incomes.  Still, sharp differences in aid availability persist when we calculate average aid across all students.  Per full-time equivalent (FTE) student, the average amount of grant aid was approximately $2,300 at CCCs, $6,400 at CSU, and $10,200 at UC.

These wide disparities in grant aid, combined with the proportionally narrower disparities in total college costs, explain why the lowest tuition colleges in California are often the most expensive.  UC students’ total costs are 59 percent more than CCC students’ total costs, but UC students get 300+ percent more grant aid. The additional grant aid more than covers the cost difference between the colleges, leaving UC students better positioned to attend college full time without excessive work or debt.  

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Beyond the fact that they’re almost all open-admission institutions, there are more differences than similarities between community colleges and for-profit colleges, including when it comes to student debt. New data released by the U.S. Department of Education in conjunction with the updated College Scorecard show just how different. Three comparisons are below.

  1. The vast majority of schools where debt problems are most severe are for-profit collegesInside Higher Ed’s recent analysis looked at schools where the majority of students borrows, and a minority of students is paying down their debt seven years into repayment. Our additional analysis found that, of the 257 schools that meet those criteria, 227 (88%) are for-profit colleges. Only two schools (fewer than 1%) are community colleges.
  1. Community college borrowers are much more likely to be paying down their debt. Three years after entering repayment, federal loan borrowers who attended community colleges were much more likely than for-profit college borrowers to have begun paying down their balance. Most strikingly, the available data on repayment rates by completion status show that borrowers who completed their studies at a for-profit college were about as likely to be paying down their loans as students who withdrew from a community college (53 and 51 percent, respectively). 
  1. Many more students at for-profit colleges are neither paying down their loans nor in default. While available default and repayment rates have some differences (most notably, default rates include graduate students and repayment rates do not), they are comparable enough to identify trends and outliers. Comparing default rates and repayment rates tells you how many students have avoided default but still aren’t faring well: perhaps they’re delinquent, in forbearance or deferment, or in a repayment plan where their balance is growing rather than shrinking. Some for-profit colleges have admitted to what the Department, in its documentation of the Scorecard data, described as “gaming behavior that may push students toward forbearance and deferments, meaning they stay out of default but don’t make progress on repaying their loans and may continue to accrue interest.”

    ​Across all schools, this missing middle group – those neither in default nor paying down their loans – composes on average about 21 percent of borrowers three years into repayment. But at 483 schools, 40 percent or more of borrowers are neither in default nor paying down principal. The vast majority of these schools (79%) is for-profit colleges, including Kaplan University and several Kaplan Colleges and Kaplan Career Institutes, which previously shared a parent company that hired private investigators to track down former students to put them in forbearance. It includes several campuses of Education Management Corporation-owned schools Argosy, Brown Mackie, and the Art Institutes. It includes Harris School of Business, Drake College of Business, and Westwood College. This missing middle group also makes up more than half of all borrowers at several Everest College campuses that remain open for business. While Everest schools are now under new corporate management, the former CEO had this to say about managing cohort default rates during a 2011 investor call: “Forbearance, as you well know, is a pretty easy, just a question you have to agree to it and you’re on your way [sic].”

    ​Forbearance abuse for the purpose of evading accountability is well documented in the for-profit college sector, but has not been documented at other types of institutions. Just 6% of the schools where 40 percent or more of borrowers are neither in default nor paying down their loans three years into repayment are community colleges. 

Any college with default and repayment problems of any scale should be focused on better enabling their students to repay their loans. But as the newly available data continue to underscore, for-profit colleges have by far the farthest to go.

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Many low-income students who get enough aid to cover their tuition still struggle to pay for other basic college costs, including textbooks, transportation, room and board. These make up most of the cost of college for students at public four-year and community colleges. That’s why free tuition alone won’t solve the college affordability problem. The America’s College Promise Act introduced yesterday recognizes this by adding something with the potential to be far more transformative: a "maintenance of effort" provision aimed at making states hold up their end of the bargain when it comes to college funding.

States are critical players in keeping college affordable, but they have also been complicit in the rise of tuition and student loan debt by letting higher education get squeezed out of state budgets. The decline in per-student state funding for higher education has been well documented, as has the resulting impact on public college costs. Without federal intervention, higher education funding is likely to keep getting squeezed out, to the detriment of students, families and our economy. The legislation introduced yesterday includes such an intervention: it requires states to keep their funding levels up, in addition to eliminating tuition at community colleges, if they want to access new federal dollars. That’s why the state maintenance of effort requirement in the legislation is so important.

States can adopt proposals labeled “free college” that do little or nothing to make college more affordable for low- and moderate-income students. That’s what happened in Tennessee: it created a “last-dollar scholarship” that only helps students who don’t get enough from other grants to cover tuition. Oregon is poised to do something similar with $10 million, although some students will receive up to $1,000 for non-tuition expenses. Significantly, Oregon also increased need-based grant aid for low-income students by $27 million, which is critical because only one in five poor students who apply receives this state grant aid due to lack of funding.

We want states to invest in college affordability and debt-free college options, not in programs that may sound good but don’t make college more affordable for low- and moderate-income students. If we’re serious about increasing affordability and reducing debt, we need to help low-income students cover more of their costs. The America’s College Promise Act would free up community college students’ federal Pell Grants to cover non-tuition expenses by requiring states to waive tuition. This helps low-income students cover non-tuition expenses; using Pell Grants to declare tuition “free” for low-income students does not. After all, Pell Grant recipients, most of whom have family incomes under $40,000, are currently more than twice as likely to have to borrow and they graduate with more debt.    

Making college affordable requires state investment in higher education.  We commend the bill’s sponsors for tackling state disinvestment in public colleges—the primary driver of rising college costs and student debt in America. 

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Update: Details of the White House plan are becoming available and make clear it differs significantly from the Tennessee Promise and other “free community college” plans. In particular, the White House proposal is not a “last-dollar” scholarship. Instead, it provides additional federal funding to states that make key reforms, including not charging tuition or fees at community colleges. It is aimed squarely at stopping state disinvestment in public colleges, which is crucial to making college more affordable. Also, unlike the Tennessee Promise, low-income students could benefit. These are clear improvements on the plans discussed in our blog posted earlier today. Still, making tuition free for all students regardless of their income is a missed opportunity to focus resources on the students who need aid the most. Consider California community colleges, with the lowest tuition in the nation and waivers for low-income students. The result? Federal student aid application rates, even among low-income students, have been notoriously low, and part-time enrollment rates sky-high. "Free tuition" is not a panacea.


Many are predicting that President Obama tomorrow will endorse Tennessee’s "free community college" plan. While the Tennessee Promise is well intentioned and more students than anticipated applied for it, many higher education experts have rightly criticized it and other "free community college" plans.

One of the major problems with the Tennessee plan (and others) is that the "promise" isn't actually much of a promise at all. That’s because the "free" moniker only relates to tuition charges – charges which comprise just one-fifth of the actual costs of going to community college. The other costs of college, including textbooks, transportation, and living expenses, are far more substantial – and far more likely to prove a barrier to student success. Yet they’re left out of the deal.

Further, the Tennessee plan (and others like it) is a "last-dollar" scholarship, meaning that it only helps students who don’t get enough from other grants to cover tuition. This is a critically important point because, given the relatively low income of community college students and the relatively low tuition charges at community colleges, it means that the students with the greatest need for financial aid will rarely benefit. Conversely, those with the least need are the most certain to benefit.

Free tuition plans are giant missed opportunities because they put resources where they are less needed when the need is so great in other areas. As shown in the table below, students in the lower income categories need far more financial support to bring college within reach. The vast majority of them (92% for the lowest income group) have "unmet need" even after accounting for available grants and what they can afford out-of-pocket. That’s true of just 9% of students in the highest income category: 91% of those students can already afford not just tuition, but their entire cost of attendance. Surely higher income students would appreciate additional resources, but do they need them? Not according to federal needs analysis, and the vast majority of these higher income students already enroll in college and are the most likely to graduate.

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In addition to providing resources where they are not needed or needed less, these free-tuition plans are also ticking time-bombs. They signal that tuition is all that matters and flat-out ignore the other costs of attendance that determine whether students can get to campus, whether they’re focused on the material or how to pay for their next meal while in class, and whether they have a place to sleep at night.

Currently, many community college students get help paying for these other costs in addition to tuition. As shown above, the lowest income students’ average grant aid exceeds the amount of the tuition they’re charged by quite a bit: their total grant aid comes to about three times (328%) their tuition charge. On average, students with incomes below the median get grants that cover full tuition, with some resources left to help pay non-tuition costs, including fees, books, transportation, food and housing; students with incomes above the median get grants that cover, on average, about one-third of tuition.

If we prioritize covering tuition costs, treating the other costs of attendance as less important, how long until the grants for lower income students – grants which currently exceed tuition – are cut? This isn't a fantastical possibility. Limiting certain students’ Pell eligibility to tuition costs was an idea included in a federal appropriations bill not too long ago.

If resources were unlimited, there would be more merit to free tuition arguments. But resources are in fact so limited that the vast majority of low-income students – the students for whom financial aid will make the difference – aren't getting what they need. Free tuition proposals are politically popular, but regressive and inefficient. They are a lot like higher education tax benefits, where there is broad and bipartisan agreement that much better targeting is needed.

Free tuition proposals don’t just fail to move us forward: they’re a step in the wrong direction. We should absolutely do more to encourage students to pursue higher education and make them aware of financial aid, but this is not the way to do it.

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For college students who need to borrow, at any type of school, federal student loans are the safest and most affordable choice. Unfortunately, some community colleges across the country continue to deny their students access to federal loans. This leaves students with options that range from bad to worse: they could stay enrolled and on track by using riskier and more expensive forms of debt, or they could work excessive hours, cut back on school, or drop out.

In just the past two weeks, media outlets have confirmed that three more colleges in two states have decided to stop offering federal loans. In North Carolina, Southeastern Community College became the latest of many in the state to do so in recent years. In California, a decision by the Yuba Community College District means that neither Yuba College nor Woodland Community College will offer loans for 2013-14. The rationale provided for decisions in both states is that the colleges’ default rates – the share of their federal loan borrowers who are unable to repay – may rise so high that the schools could be sanctioned by the U.S. Department of Education (the Department) as a result.

In all cases, high default rates mean that the college should do more to help their borrowers avoid default. But schools where only small shares of students borrow, including many community colleges, are afforded special protection against sanctions. This protection is based on colleges’ ‘participation rate index’ or PRI, a measure that combines colleges’ default rates with their borrowing rates. Unfortunately, too few community college administrators are aware of the protection or the relevant regulations – even those at the schools most likely to benefit.

Take the recent example of the Yuba District. With fewer than 5% of Yuba’s students taking out loans, the college would almost certainly qualify for this protection – called a “PRI appeal” -- should its default rate rise to levels that would otherwise trigger sanctions. Still, the Yuba Community College District Chancellor could either not find the PRI rules or understand how they applied to his district (excerpted from Sacramento Bee):

“Chancellor Douglas B. Houston said the district unsuccessfully combed U.S. Department of Education regulations in search of assurances that the district could successfully appeal. He said the risk was too great not to act.”

This is a shame. The Department – which encourages federal loan access – must do more to make sure that the right people see and understand these rules. We at TICAS have done what we can, responding to frequent questions from colleges and even creating a PRI worksheet (updated for FY 2010 three-year rates) so they can see how it would work for them. But colleges need to be reminded by the Department that providing access to federal loans is important, and that certain protections from default-rate sanctions are available. Colleges need to understand that while helping students avoid default should always be a priority, concerns about sanctions must be kept in perspective. And colleges need to know that the Department is committed to developing a PRI appeals process that works for schools – providing the assurances colleges need, when they need them – to alleviate the fears that lead colleges to stop offering loans unnecessarily. We hope the Department has taken note of the rash of schools abandoning the federal loan program and takes action before the next release of college default rates in September.

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We submitted this letter to the editor of the Sacramento Bee in response to a June 10, 2012 opinion piece:

In Sunday’s Bee, Student Aid Commission Chair Barry Keene cited our research on college affordability ("State can cut costs without harming aid for students") but, unfortunately, misstated our findings and drew conclusions our research does not support. While many more community college students do need to be applying for federal financial aid, overall there is far less aid available for community college students than for students at other types of colleges in the state. The solution is to increase community college students’ access to financial aid, not scale it back by virtually eliminating their already limited access to Cal Grants as Keene has very troublingly suggested.

Lauren Asher President The Institute for College Access & Success

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Most community college students don’t need to take out loans to cover college costs, but for those who do, federal student loans are the safest, most affordable form of borrowing. Unlike private loans or credit cards, federal loans come with several consumer protections including fixed interest rates, Income-Based Repayment, and Public Service Loan Forgiveness.  Unfortunately, an increasing number of community colleges across the country are choosing not to offer federal loans to their students, and California stands out as the state with the greatest number of community college students – over 200,000 and growing – without access.

Too frequently, colleges make this decision based on inflated concerns about the risks of offering loans to students.  Colleges where too many borrowers default on their loans can lose eligibility to offer either loans or grants in future years, but colleges where very few students borrow in the first place – like virtually all the California Community Colleges (CCCs) – have special protections from these sanctions. (See our Cohort Default Rate Resources Page for more on what cohort default rates represent, why they matter, and individual college rates.) But many colleges – including Victor Valley College, the most recent CCC we know of to stop offering federal loans – don’t know about or understand these protections.  Given how much unmet need CCC students have, the fact that colleges are choosing to take important financing options away from students is distressing.

In recognition of the critical importance of access to federal loans, the Student Senate for California Community Colleges (SSCCC) recently passed a resolution at its Spring 2012 General Assembly to strongly support CCC student access to federal loans and urge all CCCs to make federal loans available to their students. The California Community College Association of Student Trustees felt the issue was so important that the organization took the unprecedented step of signaling their support of the resolution in advance of the SSCCC vote.  We will continue to partner with these student groups to make sure that the colleges are listening to their students, and understand their low risk of sanctions, before making decisions that undermine college affordability and success.

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This afternoon the Board of Governors of the California Community Colleges (CCC) endorsed the final report of the California Community Colleges Student Success Task Force, which lays out eight chapters of recommendations to improve student success throughout the community college system. The Board will present the recommendations to the California Legislature by March 2012.

While there is much to like in the Task Force report, we are disappointed by the lack of attention paid to overall college affordability and financial aid.  Our research has shown that CCC students are leaving hundreds of millions of dollars in federal grant aid on the table simply because they don’t apply for aid, even though total costs can exceed $17,000 per year and many students have such low incomes that they can’t contribute any amount towards college costs. We’ve also found that access to federal student loans is worsening in California in particular. Over 200,000 community college students – the largest number in any state – lack access to federal loans because their colleges have pulled out of the program.  These problems are not unique to California, but they are particularly serious in the CCCs.

The issue is simple. Financial aid supports success by providing students with the time they need to attend class and study, without having to work excessive hours to make ends meet or take fewer classes per term to make room for work.  As we detailed in our comments submitted last month, the lack of substantial attention paid by the Task Force to students’ affordability challenges is a major oversight, and one that we hope will be rectified in the next phase of work.

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For the past few years, we’ve analyzed the share of community college students, nationally and by state, who lack access to federal student loans because their colleges decided to not make them available. North Carolina has consistently ranked poorly in our analyses. To improve students’ access to this important source of aid, last year the state legislature required all community colleges to participate in the loan program by 2011-12. But this year, the legislature reversed course. It passed a bill (NC House Bill 7) that lets colleges opt out of the new requirement, which has not yet gone into effect.

Earlier today, North Carolina Governor Beverly Perdue took a historic step towards ensuring access to aid for the state’s community college students by vetoing House Bill 7. This issue is of critical importance in the state right now. With more students than ever seeking education and training at community colleges, North Carolina now ranks absolute last in the share of students with loan access in 2010-11 (as detailed in our new analysis to be released this month). While we don’t usually share such a major finding in advance, we wanted to call attention to the significance of Governor Perdue’s decision today.

You can read our letter to Governor Perdue asking her to consider a veto here, and our thank you letter to the Governor here.

- Debbie Cochrane Program Director

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