The Federal Reserve Board’s 2021 Survey of Household Economics and Decisionmaking (SHED) holds some interesting information for community colleges. Raising attendance costs reduces the community college value proposition, especially among students who borrowed to finance their educations.
For associate degree holders, the ongoing presence of student loan debt determined the perceived value of the degree. Regardless of the relatively low cost of a community college education, borrowing to finance a degree is common. Nearly 4 out of 10 students between the ages of 18 and 29 borrowed to finance a degree. Among students 30-44, the number of borrowers jumped to 46%. Thirty-eight percent of associate degree students between the ages of 45 and 59 financed their educations. Among students aged 60 and over, 20% borrowed funds to earn a degree.
The community college value proposition issue arose when the Fed asked respondents to assess the value of their higher education. The presence or absence of student loan debt strongly influenced the respondent’s perceived value. Among respondents who never had student loan debt, 49% said that the value of their education outweighed its costs. Thirty-nine percent of those who never borrowed for their educations said that the costs and the benefits were about the same, while 11% of respondents who never borrowed said that their degree was not worth its cost.
Among those who borrowed, but then repaid their debts, 49% said that the value of their associate degree outweighed its cost. Thirty-one percent said that the cost and the value of the degree were about the same. Nineteen percent said that their associate degree was not worth its cost.
Debt determines community college value proposition
Among those who borrowed and still had outstanding debt, the community college value proposition shifted dramatically. Thirty-one percent of respondents said the value of their degree outweighed its cost. Thirty percent said that the cost of the degree and its value were about equal. Thirty-nine percent of respondents who still owed money for their educations said that their associate degree was not worth its cost.
So, raising the cost of an associate degree diminishes its value for students who must finance their education.
That has specific relevance to the Washtenaw Community College Trustees’ plan to shop off the cost of building new buildings and pay for years of accumulated facilities neglect to the students. The margins on an associate degree are too narrow to raise costs. That’s because the economic boost one gets from an associate degree today (less than $3 per hour) is too small to justify the cost of attendance when one includes interest on student loan debt. When the institution raises the cost too high, its enrollment will decline.
In other words, now is not the time to add $5 per credit hour to pay for “technology infrastructure.” Not to mention that the cost of technology decreases over time – unless, of course, the institution chronically neglects its technology infrastructure. (That might be worth a discussion with whichever “Executive-in-Residence” was responsible for maintaining the technology infrastructure, just to better understand why the technology infrastructure was not adequately maintained.)
Photo Credit: R Miller, via Flickr