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Purdue Economist: Community College Funding Presents New Risks

Bill Erickson

 A Purdue economist says President Obama’s push to offer two years of government-funded tuition at community colleges may backfire.

The President will seek approval from Congress to offer two years of federal and state-funded community college, with the federal government paying for three-fourths of tuition and states pays the remainder.

Timothy Bond says the initiative’s discrimination against four-year institutions may lead to students sacrificing quality of education for a lower cost.
“Four-year institutions right now have some policies in place that try to discourage from taking two-year equivalent or the equivalent courses at two year institutions," Bond says. "The economics department at Purdue, we discourage people from taking courses at Ivy Tech because we just think we do a better job at teaching this material. That could be a drawback to this policy because of the preferential treatment to what is an inferior good.”
Still, Bond says he does not anticipate a substantial decrease in four-year school enrollment.
Bond believes college completion rates are likely to decrease under the plan, because more people will start college if it’s free but eventually drop out. But he says the policy may help those who do graduate get jobs.
“So in that sense, since employers are not able to pay for college, community college, in some respects because they can’t guarantee they’ll get the benefits, you might see some positive impact on the employers with the government stepping in and encouraging students to get these skills that are valid in the labor market,” he says.
Bond believes the policy will most benefit low-income students. He says he’d like to see incentives added for four-year institutions as well.

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