More Costly to Keep Community College Fees at $26 than $36

To save the state money, fees for the 2.8 million Californians attending community colleges should climb to from $26 to at least $36 per unit, as proposed by Gov. Jerry Brown, according to a recent report by the Legislative Analyst.

Although it seems counter-intuitive, the analyst says that maintaining lower fees at the system’s 180 campuses and education centers actually is more expensive than raising them.

“In effect, the state is paying for costs that the federal government would otherwise pay and does pay in virtually all other states,” the analyst wrote in a January 27 budget briefing. “Thus, a low fee policy actually works to the disadvantage of the state.”

Even with a $10 fee increase California would remain the cheapest community college system in the country.

And, the analyst says, through fee waivers offered by the state to needy students and federal tax benefits, two-thirds of full-time community college students wouldn’t be affected by the increase.

The Democratic governor’s proposed budget would reduce state support of community colleges by $400 million, the money it would take to serve 80,000 fulltime students.

Boosting fees from $26 to $36 per unit would raise $110 million, lowering the net hit to the system to $290 million.

Brown’s proposed increase would cost a fulltime student taking 30 units $1,080, up from $780. Both totals are still lower than New Mexico, which has the second lowest community college fees in the country at $40.

As part of the federal stimulus package, the American Opportunity Tax Credit was created which allows qualified students in their first four years of college – and their parents – to write off the first $2,000 in tuition payments and textbook costs. Of the second $2,000, 25 percent can be written off. The credit is capped at $2,500.

The full credit can be claimed by married filers with income of up to $160,00 and single filers with income of up to $80,000.

For persons who already have a bachelor’s degree, the federal government offers another credit that allows married filers with income of $100,000 or less – single filers with $50,000 or less – to write off 20 percent of the first $10,000 in fees, up to $2,000 each year.

The state’s fee waiver policy is also generous. A community college student living at home with a younger sibling and married parents could have a family income of up to $65,000 to qualify. For the family of student living away from home, the annual income to qualify climbs to $80,000.

“About 90 percent of (community college) students would qualify for either a fee waiver or a full or partial tax offset to their fees,” the analyst wrote.

In part for that reason, the analyst says “the Legislature might consider going even further” and bump fees up to $40.

Doing so would raise an additional $40 million, lowering the net of Brown’s proposed system wide cut to  $250 million and “allow the state to take fuller advantage of the effective federal subsidy of (community college) programs,” the analyst wrote.

If the American Opportunity Tax Credit is made permanent in 2013, as President Obama proposes, the analyst recommends boosting fees to as much as $60 per unit – a total of $1,800 with the remaining $200 for textbooks – all of which would be offset by the federal credits.

Only three states currently charge fulltime students less than $60 a unit.


Filed under: Budget and Economy

1 Comment »

  1. Unless the Community College funding process has changed in the new State Budget, an increase in fees does not provide relief to the colleges, but only to the state’s General Fund. The statement that the fee income would reduce the “hit to the system to $290 million is incorrect. Even if the fee increased the system would still bare a $400 million reduction.

    Comment by Ken H — 2.08.2011 @ 1:21 pm

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