KY Policy Blog

Kentucky Should Get Involved In Debate About New College Affordability Strategies

By Ashley Spalding
July 22, 2014

While recent discussion of the student debt crisis has focused largely on federal proposals to make student loan payments easier to manage, several states (not to mention Starbucks) are experimenting with new strategies as well. Given Kentucky’s growing college affordability challenges, the state should get involved in this conversation while keeping in mind the specific shortcomings of particular ideas.

Driven in part by dramatic increases in tuition rates across the nation, cumulative student loan debt in the U.S. has reached $1.2 trillion and continues to grow. These trends are largely the result of states disinvesting in higher education. In Kentucky, tuition has more than tripled since 1998—with students facing even more tuition increases when the 2014-2015 academic year starts in the fall. State funding for Kentucky’s public universities and community colleges has declined by 27 percent (in inflation adjusted terms) since 2008.

Beginning in Fall 2015, neighboring Tennessee—through a new program “Tennessee Promise”—will be offering free tuition and fees for up to five semesters to students enrolled full-time in two-year degree and technical certificate/diploma programs. About 40 percent of graduating seniors (more than 25,000 students) are expected to apply. Just about half of those who qualify will likely participate as many will end up enrolling at colleges that do not meet the program’s eligibility requirements.

Students can use Tennessee Promise at any of the state’s 27 colleges of applied technology, 13 community colleges or any in-state independent or four-year public university offering an associate’s degree. Participating students are required to apply for federal student aid, including Pell Grants, and the state picks up any remaining balance after all financial aid sources (excluding loans and work study) are applied. In order to remain eligible for the program, students must maintain satisfactory academic progress (2.0 GPA) and complete at least eight hours of community service each semester.

Tennessee will pay for the program through the state lottery largely by shifting around funds in the existing lottery-funded scholarship programs—by raising the state’s HOPE scholarship amount for students attending community colleges from $2,000 per year to $3,000 per year, while reducing the award amount for those attending four-year institutions for freshmen and sophomores from $4,000 to $3,000 per year.

Although Tennessee Promise is an important effort toward addressing college affordability and increasing college attendance and degree completion, the program will not reach low-income adult Tennesseans who need college in order to qualify for good jobs and better support themselves and their families. The program is not available to adult students who have earned a GED or previously graduated from high school; in order to qualify, students must enroll in college right out of high school. While this restriction is in place because it would cost the state much more to cover a larger pool of potential students including adults, low-income adults face many barriers to college degree completion and are an important part of increasing any state’s educational attainment rates. Also, while free tuition is a huge help the full cost of attending college is much higher, and those housing, books, food and transportation expenses can be a barrier for low-income students. An additional concern is that the exclusive focus on two-year degrees could harm access to four-year institutions.

Another model, “Pay It Forward,” has also been gaining attention in numerous states. Pay It Forward defers the costs of attending college until after a student graduates or leaves school; students then pay a percentage of their incomes to the state for a set number of years. Oregon passed a law in 2013 to study whether or not such a pilot program would be feasible; in this legislation students would owe up to three percent of their incomes for up to 24 years. At least 19 states have recently considered legislation for the implementation of such a program—including Mississippi, Washington state, Michigan and Florida.

Critics, however, have pointed out that, among other problems with the model: students are still going into debt (the total amount that most students pay is greater than if they had paid tuition and fees up front); the full cost of attending college (i.e., books, transportation, room and board, childcare) is not addressed; and the model does nothing to reverse the trends of state disinvestment in higher education (and could accelerate it). Using the University of Oregon as an example, according to University of Wisconsin professor Sara Goldrick-Rabb, “…under Pay It Forward, the average student will still need to work 20 hours a week and pay about $28,000 (somehow) in order to get a bachelor’s degree—after which, up to 3 percent (maybe more) of annual income will be taken by the state for a period of 24 years.” Goldrick-Rabb’s own national-level proposal, known as “F2CO,” includes free tuition, fees, books and supplies for the first two years of any two- or four-year public university or college (regardless of whether or not the four-year colleges offer associate’s degrees)—which would be funded by redirecting existing federal financial aid and some state money.

Other states have considered various ways to address college affordability. Mississippi legislators recently deliberated a program similar to “Tennessee Promise,” and legislation proposed in Oregon in 2013 would have initiated a study of the viability of free community college tuition and fees. Tuition was actually free at California’s two-year colleges between 1960 and 1984, when the state succumbed to fiscal pressures and began charging enrollment fees. It is also important to note that 30 cities across the country have programs that offer graduating high school students free college tuition—for instance, Kalamazoo (Michigan), Pittsburgh and El Dorado (Arkansas).

These programs and ideas reflect important innovations in the area of college affordability, although they are not without their downsides. Participating students may still go into substantial debt, and low-income adult students in particular may be left behind. Still, it is encouraging that states are looking for creative solutions to the very serious college affordability crunch that students across the country are facing. Kentucky should join in this conversation.

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