Free Community College in Detroit Would Further Hinder Economic Growth



Ever since President Obama called for free community college in his 2015 State of the Union address, critics have argued that the measure would simply tack on two extra years to the tax-payer funded k-12 system. Critics have also warned that such a policy would strain taxpayer resources, while being duplicative of existing aid, such as Pell Grants (which can be used to cover tuition at community colleges). Yet the city of Detroit, already mired in economic turmoil, is considering transitioning community college to a taxpayer funded subsidy free at the point of delivery.

The city of Detroit, up until recently, had robust private sector scholarship funding that made community college for high school graduates virtually free for recipients. Unfortunately, Detroit’s new pledge to offer completely “free” college tuition to any high school graduate who wants to enroll in the community college system will be a disservice to the citizens of Detroit.

Prior to the passage of the Detroit Promise Zone Program launched last week, Detroit served as a solid example of how private businesses and philanthropists can increase access to higher education. However, according to CNN, “scholarship funding will eventually move away from private donations toward earmarked tax funds.”

Under this policy, the private market for donations will continue for two more years and city taxpayers will cover any remaining costs that students have to attend community college. According to the Detroit Free Press, “Beginning in 2018, the Detroit Promise will be funded by increases in property tax revenue based on the 6 mills of the State Education Tax; the program will capture half of any increase in property tax revenue from the [state education tax], officials said.”

There are several problems with this policy. The most glaring is that it is completely unnecessary to ask the citizens of Detroit to pay for something that the private market is already taking care of.  The Detroit Promise Zone Program will grant students, regardless of family income, two years of free community college paid for by property taxes excising the private philanthropists who have dedicated funds to the scholarship program. Shuttering this important relationship between the business community and higher education and shifting the burden to taxpayers will further hinder the economic growth Detroit so desperately needs.

Additionally, since philanthropists fund them with their own money – and have a vested interest in the impact of their contributions – privately funded scholarships are better positioned to avoid the adverse effects that government subsidies have on higher education tuition costs. The Federal Reserve Bank of New York found that for every dollar of Pell Grant money that an institution receives, they raise their tuition by forty cents. This is likely why the cost of a four year college degree has increased by 538% between 1985 and 2013. We should not make the same mistake in the community college system.

Instead of subsidizing programs on the backs of the American taxpayer, we should be encouraging innovation and efficiency in higher education to mitigate the drivers of college cost increases. This starts with restoring private lending in the marketplace so that government subsidies do not raise the cost of tuition indefinitely. A state subsidized community college program will only exacerbate tuition inflation, hurt Detroit’s economy, and put taxpayers on the hook for this bad policy decision.

With Detroit’s present economic crisis, the city should not further risk its stability by asking taxpayers to pay for an education that students already receive while doing nothing to address the true drivers of tuition hikes.

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