Where More Money Would Matter Most

Spending more on each community college student is the key to national higher ed success, Jay Urwitz argues.

March 17, 2022
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The greatest return this country could get now from increasing spending on higher education would come if it invested more per student in our community colleges.

Community colleges need greater per-capita spending by federal, state and local governments than other institutions of higher education to make up for the critical revenue source least available to them: tuition. Research shows that more dollars go far in increasing retention and graduation rates among community college students.

The need is especially critical now because this economical and highly accessible form of education is in crisis: since 2011, community college enrollment has fallen almost 30 percent.

Currently, flagship public institutions spend far more on core student support—for students who need such support far less. When the federal government and states provide roughly equal inputs to institutions, they disadvantage community college students, whose institutions can’t supplement those inputs.

That disadvantages community college students who not only have less money, but are ​older​ and far more likely to be people of color. Whether the gap in resources is recognized and whatever the motivation for it, this seems like a prime example of structural racism.

Community Colleges Spend Less on Academic Services

The funding situation can be derived from data on sources of institutional revenue and categories of expenditures kept by the National Center for Education Statistics. Looking at pre-pandemic data, in the hope we’ll return to normal, my analysis of 2017 NCES data released in 2020 shows that expenditures for the categories of instruction, academic support and student services per full-time-equivalent (FTE) student vary widely across institution types, with community colleges spending the least.

Community colleges spend $8,911 per student, while bachelor’s-level colleges spend $12,050, master’s-level institutions spend $12,507, doctoral institutions spend $15,569 and research institutions spend $21,725. (Doctoral universities include institutions that fall within the Carnegie Classification’s doctoral/professional and R-2, high research activity categories, while research universities are those classified as R-1—very high research activity.)

Even adjusting for the higher cost of educating graduate ​students​, these differences across institutional types are vast.

Extra Community College Spending Has Big Results

Where community colleges are able to increase their spending, it makes a world of difference to their students. Those institutions, serving students who are less prepared for college and have less money, can then spend on needs such as financial aid and tutoring, counseling and other academic support programs to help students graduate. Contrast that to a flagship institution like the University of Michigan, which ​already graduates 93 percent​ of its undergraduates. Extra spending doesn’t make much difference there.

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Bringing spending closer to that at flagship universities produces a significant, corresponding rise in the rates that community college students graduate and/or transfer to four-year colleges.

The City University of New York has been measuring the outcomes of its Accelerated Study in Associate Programs (ASAP) initiative since the program’s establishment in 2007. Students in the program, who must enroll full-time, study tuition-free and receive a free transit card and financial assistance to help with books. They also benefit from enhanced guidance and more support services.

The annual cost per student, over and above the usual CUNY allocations, is about $3,440. The results of this investment, across tens of thousands of students who have participated in the program, have been impressive: a three-year graduation rate of 52 percent, compared to a 24.6 percent rate for a scientifically matched comparison group. All subgroups of students benefited, and the data suggest the program has been helpful in narrowing existing graduation gaps for Black and Hispanic male students.

The ASAP program is being duplicated at three community colleges in Ohio. Here, the cost of the program per student above that for a control group was $5,500 extra over three years, or $1,833 per year. After three years, 35 percent of program participants had a degree, while only 19 percent of the other students did.

If the dollars go further at community colleges, then that’s where we should be investing.

‘Equal’ Public Support per Student Results in Unequal Ends

How do the disproportionately disadvantaged minorities at community institutions get shortchanged?

Public support mostly comes from the federal government, state governments and, for community colleges, localities.

In fiscal year 2020, the federal Department of Education provided more than $120 billion in student aid, the Department of Veterans Affairs provided over $11 billion more and the Department of Defense provided a much smaller amount. The vast majority of this spending went to individuals through grants, loans and programs such as work-study rather than to institutions.

In 2019, states provided more than $93 billion. About 87 percent of this went directly to their public institutions for operating expenses, while the remainder went to student aid.

And in academic year 2017, localities provided about ​$10.5 billion​, almost all of which went directly to operating expenses at community colleges.

I analyzed the data on state and local appropriations that each institution of higher education reports to the U.S. Department of Education by type of institution. Here’s what I found: research universities received $9,422 per student from state and local governments, doctoral universities receive $7,331, master’s institutions $6,380 and bachelor’s institutions $6,302. Community colleges receive $6,668 per student.

So with the exception of funding for the research universities, which is distorted by the higher cost and funding of graduate students, the states and localities seem to be relatively equal in their allocations of funding, actually allocating slightly more per student at a community college than for students enrolled at bachelor’s- and master’s-level institutions.

Community Colleges Don’t Have High Tuition or Big Endowments

So where do other higher education institutions get more money to spend on academics and student support than do community colleges?

One difference in funds available for student academics is that from private gifts, investments and endowments, where some of the flagship universities ​rival​ the Ivy League. Other major sources for research universities include their auxiliary enterprises and hospitals.

But the biggest difference among types of schools is tuition and fees. In my analysis of NCES data, I found that revenue per FTE from tuition (net of discounts and allowances) is just $2,588 at community colleges. This compares to $4,584 at bachelor’s colleges, $6,808 at master’s institutions, $9,330 at doctoral institutions, and $13,218 at research universities.

The difference in instructional spending ultimately boils down to the inability of community colleges to charge much tuition, and, to a lesser degree, their lack of endowment, gifts and auxiliary enterprises. That can’t be cured by the equal division of government funds per FTE student across types of institutions.

We Need to Increase Federal and State Community College Funding

The responsibility in any new federal funding program for community colleges is to provide the extra funds per student or create incentives for states and localities to do so. States need to substantially reallocate so that community colleges, which can’t charge more tuition given the circumstances of most of their students, get substantially more appropriated funding than is allocated per student to the flagship universities.

The federal government and states cannot provide the same funding in a false gesture of “equality.” To provide truly equal opportunity in instructional and academic support and in student services, we cannot be blind to the unequal inputs that students themselves bring.

President Joe Biden has proposed significant funding for building institutional strength at community colleges. His proposal isn’t likely to be enacted soon, but whenever there is more community college aid, we need to tie it directly to the number of students. The states need to contribute resources that other public institutions can get elsewhere but community colleges cannot.

Flagship universities will continue to attract the research, the sports and the best-prepared students. But it’s the students at community colleges who can best use the money.

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Jay Urwitz is a senior fellow at the American Council on Education and was deputy general counsel of the U.S. Department of Education from 2015 to 2017. He thanks Tayae Rogers, a student at Wellesley College, for her research assistance.


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