In the beginning of 2015, President Obama proposed a plan to make the first two years of community college free (i.e., taxpayer funded) for all Americans. But that proposal raises an interesting question: How can four-year colleges and universities compete with a fully accredited free alternative, and what would happen to their enrollment numbers?
Obama’s plan models a program called Tennessee Promise, which grants free community college to the state’s graduating high school seniors. The first applications for this program were submitted by November of 2014, so the impact on four-year universities is as yet unknown, but we can make some reasonable predictions.
According to the Tennessean, “two-thirds of the 60,000 public high school seniors in Tennessee could eventually sign up” for Tennessee Promise, which makes sense because they could get the same credits for free at community college. Then, once they get the free credits, they can simply transfer for their last two years at a four-year university.
But if 40,000 seniors go to community colleges, that would only leave 20,000 potential students for the four-year academic institutions.
Approximately 30,000 in-state freshmen are currently enrolled in Tennessee’s four-year institutions, thus cutting the potential fall 2015 pool by 10,000 Tennesseans.
But we know that some of those 20,000 will choose to go out of state or not go to college at all—because about one-third of high school graduates do not enroll in college the next semester.
That dearth of freshmen at the four-year schools means tens of millions of dollars in lost tuition revenue.
With tuition rates rising dramatically, it would be difficult for four-year colleges and universities to compete in a marketplace where the competition is free. If Obama’s plan is implemented nationally, four-year universities will face a difficult choice: just accept the lower enrollment numbers, lower their tuition rates, or lobby the states or Congress for more subsidies.