April 2, 2008 — Gateway to Academia

Has Virginia improved higher education by requiring state universities to admit community college transfers?
By Christopher Herrington

It's officially spring, which means high school juniors have received their first batch of glossy college brochures in the mail. This marks the beginning of an exciting and frantic college selection scramble that will continue throughout the year.

Parents of these students, however, are likely feeling more anxious. Since 1978, the personal consumption expenditure price index for higher education has climbed nearly sixfold, more than twice as fast as overall inflation.

Perhaps budget-constrained parents would be happy to hear that Virginia has begun offering a new discount of sorts on the price of a college degree. As part of the state's 2005 Higher Education Restructuring Act, public four-year colleges and universities have to set guaranteed admissions guidelines for transfer students in the Virginia Community College System (VCCS). Yet, while lawmakers hope this will improve access to higher education, there is much debate over whether a transfer program is an effective policy to meet that worthwhile goal.

Qualified students enrolled in a VCSS school can take advantage of guaranteed admission to 12 public four-year institutions in Virginia, as well as 14 private colleges and universities in the state. Specific guidelines for qualification vary by institution, but in general they involve completing an associate's degree program while taking certain core courses and maintaining a minimum GPA.

According to Jeffrey Kraus, VCCS assistant vice chancellor for public relations, the transfer program holds great potential for helping low-income and disadvantaged students — and their families — with the financial burdens of obtaining a four-year degree. "The public policy we're after is getting more people in and finishing a college degree," Kraus says.

A simple calculation of tuition and fees for transfer students would appear to support Kraus's assertion. Students who spend their first two years of academia at a Virginia community college and transfer to a four-year degree program could save $10,000 on average when compared to the cost of attending all four years at a university. Students may save even more if they live at home during the first two years, something that community college students are more likely to do than four-year students.

Taxpayer savings may also be an incentive for state lawmakers to create these transfer programs. Cecilia Elena Rouse, an economist at Princeton University, concluded in a 1998 paper that it likely costs the state more to educate a student in a four-year college than a two-year degree program. Thus, Rouse noted, "state policymakers should keep in mind that community colleges provide a potentially cost-effective way to increase both access to higher education and overall education attainment."

While these arguments are encouraging, other research indicates that the benefits of a transfer program may not be that clear. A 2006 paper co-authored by Sarah Turner, associate professor of education and economics at the University of Virginia, suggests that family income has little effect on the probability of a student applying to a flagship state university. The paper concludes that qualified students who are likely to apply to flagships are the ones who are already applying. It goes on to note that these universities would likely have limited success at identifying the qualified students who aren't applying.

Of course, application rates don't tell the full story, as admitted students might still choose not to attend a school because of the cost. Still, Turner's research does suggest that interest in these schools is not limited by income. So, a program that facilitates the transfer of community college students to four-year institutions may not significantly change the demographics of the latter's student body. Kraus disagrees, noting, "We're getting a lot of high-achieving students who see the benefit of this route."

Critics of transfer programs make other arguments as well. Elizabeth Monk-Turner, a sociology professor at Old Dominion University, claims that contiguous education in a four-year environment helps keep students on track to graduating with a degree. In a 1995 paper published in The Social Science Journal, she found that "community college entrance exerts a deleterious effect on the odds of achieving a bachelor's degree all else equal."

Kraus refutes this claim. "Transfer students graduate at rates as high or higher than native students," he counters. His argument is supported by Cecilia Rouse's April 1995 paper in the Journal of Business & Economic Statistics. Rouse found that starting in a two-year college instead of a four-year college may lead to students receiving less education overall (taking fewer courses), but it doesn't change the probability of attaining a bachelor's degree.

Additionally, Rouse and Thomas Kane argue in a 1995 journal article that the returns per credit investment in education are roughly the same for community colleges and four-year institutions. They find that average earnings increase 4 to 6 percent for every 30 credits of coursework completed at either two- or four-year colleges. Thus, students who attend a community college — to test the higher education waters, so to speak — will still likely gain in the long run, even if they don't ultimately earn a bachelor's degree.

As these conflicting research papers indicate, there is some disagreement over the anticipated long-run effects of the Virginia transfer program. It may be several more years before there is sufficient data to evaluate the results.

What is clear is that ambitious students in Virginia, regardless of their socioeconomic background, now have another option to access higher education. And, as Jeff Kraus says, "that's a win-win for everyone involved."

Christopher Herrington is an assistant economist in the Richmond Fed's Research Department. Visiting student Charlie Palmer provided research assistance.

Pallais, Amanda and Sarah Turner. "Opportunities for Low-Income Students at Top Colleges and Universities: Policy Initiatives and the Distribution of Students." National Tax Journal, June 2006, vol. 59, no. 2, pp. 357-386.
http://people.virginia.edu/~set5h/

Reynolds, Lockwood. "Where to Attend? Estimates of the Effects of Beginning at a Two-Year College." University of Michigan Working Paper, October 2006.
http://sitemaker.umich.edu/curtislr/

Wellman, Jane V. "State Policy and Community College-Baccalaureate Transfer." The National Center for Public Policy and Higher Education and The Institute for Higher Education Policy, August 2002.
http://www.highereducation.org/reports/

Kane, Thomas J. and Cecilia E. Rouse. "Labor-Market Returns to Two- and Four-Year College," American Economic Review, June 1995, vol. 85, no. 3, pp. 600-614.
http://links.jstor.org/sici?sici=0002

Rouse, Cecilia E. "Do Two-Year Colleges Increase Overall Educational Attainment? Evidence from the States," Journal of Policy Analysis and Management, Autumn 1998, vol. 17, no. 4, pp. 595-620.
http://links.jstor.org/sici?sici=0276