‘Free’ community college is great marketing, questionable economics

Dec 23, 2018 by

A new state law that promises free tuition for first-year, full-time students at most California community colleges gets an A for marketing but a C for economics.

While it may have the intended effect — encouraging more students to go full time — it will also have the unintended consequence of shifting some college costs from the federal government to the state. That’s because some middle- and high-income students who could have recouped first-year tuition on their federal tax returns will have it paid by the state instead.

Lawmakers might want to study this before they pass a new bill that would extend free tuition for full-time students in their second year.

AB19, the California College Promise law, took effect this fall. It waives enrollment fees for first-time college students taking at least 12 units each semester (considered full-time) during their first year at a participating community college. The community colleges charge these fees — $46 per unit — in lieu of tuition, and they’re often called tuition. The waiver does not cover books, parking or other expenses.

Students must be California residents and complete the federal student aid application or, if they are undocumented, a California Dream Act application, to qualify. There is no age or income limit, but students are disqualified if they have already taken at least one college course (excluding ones taken during high school or the summer after).

Many first-year students who will qualify for the new College Promise fee waiver would have gotten free tuition anyway under the decades-old Board of Governors fee waiver program.

Low- and middle-income students can get a Board of Governors waiver, regardless of their year in college or course load, if they meet income or need requirements and are California residents (even if they are undocumented immigrants). They also must maintain a 2.0 grade point average. (This has been renamed the College Promise Grant, but most people still call it a Board of Governors waiver to distinguish it from the new AB19 first-time-student waiver.)

About 42 percent of California community college students get a Board of Governors waiver, and it pays for about two-thirds of units taken.

Most students who don’t qualify for a fee waiver can recover their fees by claiming the American Opportunity Tax Credit on their federal tax return. A student, or parents who claim the student as a dependent, can get this dollar-for-dollar credit for up to $2,500 per year spent on tuition, fees and books. Taxpayers can claim this credit for up to four years, but they can’t take it if their income exceeds $90,000 (single filers) or $160,000 (married).

This credit easily covers a full year of California community college tuition — $1,104 for 12 units per semester — with plenty left over for books.

Source: ‘Free’ community college is great marketing, questionable economics – SFGate

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