Free Isn’t Easy for Higher Ed; Private Schools Push Back at Tennessee Plan for No-Cost Community College

Free Isn’t Easy for Higher Ed
Private Schools Push Back at Tennessee Plan for No-Cost Community College
March 19, 2014 7:40 p.m. ET

Tennessee Gov. Bill Haslam wants every high-school graduate in his state to be able to attend a community or technical college free of charge, a goal he says will strengthen the workforce and attract investment.

To fund the “Tennessee Promise” plan, estimated to cost about $35 million a year when fully implemented, the governor wants to trim the money Tennessee spends on scholarships at four-year colleges.That part of the proposal has prompted pushback from private colleges, which worry the lower scholarship awards will hurt their enrollment. This week, the governor moved to ease the colleges’ concern by restoring half of the proposed cut in scholarships for freshmen and sophomores.
Versions of legislation containing Mr. Haslam’s plan are being presented to committees in the state General Assembly this week.
The Tennessee Independent Colleges & Universities Association estimates the new plan would reduce net scholarship funding to the state’s private colleges and universities by $1.1 million annually. Claude O. Pressnell Jr. , president of the association, said, “We look forward to continuing to work with the governor and the General Assembly to return the four-year scholarships to their original levels.”
Mr. Haslam said he was open to compromise, but “the numbers have to work.”
Reaction to the governor’s plan taps into tensions in higher education between those who believe its role is to better train workers for a changing economy, particularly at community and technical colleges, and others who think education should maintain its classical role of preparing students to be critical thinkers.
Mr. Haslam, a Republican who is running for re-election this fall, said in an interview that businesses in the state and those considering locating there have told him they worry about finding enough qualified workers. Boosting the number of Tennesseans with college degrees is “going to take some extraordinary measures,” he said.
James L. Catanzaro, president of 12,000-student Chattanooga State Community College, agrees. Many four-year colleges have “delivered a lot of people into the workplace who are not prepared for the workplace. And unfortunately, they carry a lot of debt,” he said.
The Tennessee Chamber of Commerce & Industry, the state’s largest business organization, strongly supports the legislation.
Private-college leaders say reducing education’s value purely to a student’s earnings potential is a mistake. “A college education is more than just jobs,” said H. James Williams, president of Fisk University, a historically black four-year college in Nashville.
The idea of free tuition for all community-college students has been pushed in other states. California made tuition free statewide in 1960 and continued until 1984, when funds ran out. Former Tennessee Gov. Phil Bredesen, a Democrat, proposed something similar in 2006, but the idea never got out of the legislature. Massachusetts flirted with the idea in 2007 before the recession hit.
Now with state coffers growing as the economy improves, the concept has been revived. Oregon’s Gov. John Kitzhaber signed a law to examine the feasibility and results will be reviewed next year. In Mississippi, a bill passed the state House but died in a Senate committee this month.
Tennessee’s plan would involve about 26,000 community-college students annually, according to Mr. Haslam’s chief of staff, Mark Cate. The students would have to maintain a 2.0 grade-point average to receive the scholarship.
Under a current state program, eligible Tennessee students enrolled at four-year colleges can receive $4,000 a year in scholarship funds while community-college students get $2,000 a year, funded by lottery revenue.
With the governor’s revised proposal, freshmen and sophomores at four-year colleges could receive $3,500 a year while juniors and seniors could receive $4,500. His earlier proposal would have reduced aid for the first two years at four-year colleges to $3,000, but increased it in the final two years to $5,000.
The state would spend less at four-year colleges and universities under the revised proposal because some students don’t make it to their junior year.
At community colleges under the governor’s plan, students could get scholarships of $3,000 a year, plus be required to apply for additional federal or state aid. Any tuition still not covered would be picked up by “Tennessee Promise.” The average annual tuition at Tennessee community colleges is $3,787, according to the governor’s office.
Tuition on average is $7,833 annually for four-year public universities in the state and $22,683 for private, four-year colleges, Mr. Haslam’s office said.
Bethany Johnson, a 21-year-old student at Chattanooga State Community College, predicts the new plan for two-year schools will “completely change how Tennessee does higher education.”
“More people will be willing to go to college,” said Ms. Johnson, who is holding down two jobs while going to school. “And they’ll be able to finish quicker because they can afford it.”

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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