3 Ways Obama's Free Community College Deal Will Help You

Advertiser Disclosure ▾

This page contains affiliate links from which we receive a compensation. Like many publications Wise Bread is supported by affiliate commission from partner companies whose products appear on our site. This may influence which products we write about and the location and order in which products appear. We aren't able to cover every product in the marketplace.

Wise Bread Picks

• Travel Rewards Credit Cards
• Cash Back Credit Cards
• 0% Balance Transfer Credit Cards

President Barack Obama's 2015 State of the Union address proclaimed that community college should be as free and universal in America as high school. If passed by Congress (currently unlikely, given the political polarization in Washington), the plan could make the first two years of community college free, allowing many to obtain free Associate's Degrees, reduce the total cost of a four-year degree, or obtain necessary job skills and training. (See also: 8 Cheap Ways to Continue Your Education Without Going Back to School)

Whether the pursuit of a new degree is in your future or not, here's how a program geared at making it happen could benefit the economy, and by extension, your pocketbook.

1. Economic Growth Would Soar

Putting a college degree in the hands of more Americans would be beneficial for everyone. Here's why.

Right now, there are more jobs requiring college degrees than there are college educated people in the job market. It's no wonder that the value of a college degree is $300,000 — close to an all-time high. But a free two-year community college program could help restore the balance.

Such a job market would also drive economic competitiveness. After all, competition is the backbone of the U.S. economy, and it's vital to a thriving job market. If the U.S. were able to close the educational achievement gaps between white children and minority children with the President's proposed free community college program, the economy would be 5.8% larger by 2050 (nearly $2.3 trillion) according to a study by the Center for American Progress. The cumulative increase in GDP from 2014 to 2050 would amount to $20.4 trillion, or an average of $551 billion per year.

A community college expert, Josh Wyner of The Aspen Institute, told PBS NewsHour, "The fact of the matter is that we're projected within the next decade to need an educated work force… where 60% of Americans have a college degree. And, today, just over 40% have one." He added, "In today's society, in order to have a chance to get into the middle class, in order to fuel economic growth for our country, we need more people with a college credential."

2. The Wealth Gap Would Narrow

In the last decade, the college attendance rate has dropped significantly for students from low and middle-class families. Among the reasons is a steady decrease in state funding for tuition, which has made the price tag of a college degree more expensive than at almost any other time in history. The fallout is that a higher degree has become something enjoyed by the haves and, unfortunately, a luxury out of reach for the have-nots. "We have got a gap between rich and poor that's growing in our country," Wyner said in his PBS NewsHour appearance. "And we still have lots of Americans, low-income Americans, African-American folks in the country, who don't get access to higher education."

But increasing access to community college through the program proposed by the President could help many low-income Americans enter the middle class, equipping them with the ticket they need to be competitive in the workforce. And a stronger middle class would help foster a healthier economy, triggering a ripple effect that could benefit Americans in all socio-economic brackets.

One demographic that would particularly benefit from the President's zero-cost education plan is Hispanics. About half of all Hispanics who attend college are enrolled in a two-year community college, more than any race or ethnicity, according to U.S. Department of Education data.

3. Social Security and Medicare Will Have Brighter Futures

When the Baby Boomers retire, the federal budget will feel the pressure. More retirees means more people drawing from benefit programs like Medicaid, Medicare, and Social Security. But the President's free community college deal could ease some of this pressure by creating a higher-earning workforce that's better able to financially sustain such programs for the future. As Americans earn more, they'll pay more in taxes and thus provide future budget relief.

A study by the Center for American Progress estimates that closing the racial and ethnic educational achievement gaps would boost Social Security tax contributions by $877 billion by 2050. Similarly, Medicare tax revenues for the Hospital Insurance Fund would increase by $265 billion from 2014 to 2050, providing a substantial lift to Medicare solvency. In other words, the study concludes, strengthening the educational achievement of our youth will help provide economic security for future generations.

Were the President's plan to become law, would you or anyone you know take advantage of it?

Like this article? Pin it!