THE WEEK: If community college is free, what will happen to traditional colleges?

Career College Central Summary:

These changes might motivate some part-time students to increase the pace of their attendance, particularly those who attend sporadically for financial reasons. These students likely already receive subsidies that cover the cost of tuition, but some of those subsidies may still be available, or even be expanded, under the administration proposal, so that the net financial gain to these students from the plan would still be meaningful. Similarly, they might motivate schools to do more to bring remedial students up to a level of performance that would permit enrollment in a degree program.
But the low-hanging fruit is likely to be students currently on the fence between attending community college or a four-year institution. If the administration program succeeds, and participating community colleges offer more programs eligible for transfer to four-year institutions — tuition-free to all comers — then that option will become much more attractive for this sort of student. Community college enrollment may well grow — but a large fraction of that growth may come from students who might otherwise have gone directly to a four-year institution.
What effect might that have, in turn, on those four-year institutions? All else being equal, one would assume that, if a supplier enters the market with a free product or service that is of acceptable quality, other market participants will respond either by focusing on a more quality-oriented market segment (willing and able to pay a premium for a premium product), or by exiting the market entirely.
If the administration's proposal succeeds, for-profit colleges will have a harder time staying in business; it's hard to compete with free. But it is equally reasonable to assume that four-year public institutions, perpetually strapped for funds, will decline to compete to keep those students most attracted by a fully transferable two-year degree. Rationally, they will reorient their own "business models" around a higher percentage of transfer students, with a higher percentage of non-transfer students being either ineligible for significant financial assistance, or of distinctly higher academic standing.

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THE WEEK