The Effect of Tuition-Free Community College

Christopher Lau
Working Paper:

A popular proposal to address the rising cost of higher education in the United States has been to provide tuition-free access to community colleges. This paper examines the effect of such a policy on college access, consumer welfare, and student outcomes accounting for equilibrium responses from for-profit and four-year competitors. I find that free community college increases enrollment by 26 percent, welfare for all students, and degree completions by 20 percent. I compare these findings to more fiscally practical implementations of free community college. Programs that only cover tuition after accounting for other sources of grants increase enrollment by 10 percent and degree completions by 10 percent, but provide no benefit to low-incomes students. Need-based programs that make community college free for low-income students increase enrollment by 12 percent and are beneficial to low-income students, but harm middle- and high- income students and only increase degree completions by 4 percent.