Making a Case for the College Completion Fund

President Joe Biden in April announced his intention to push for over $200 billion in new higher education investments, many of which would go directly to redressing racial and economic equity gaps. The American Families Plan calls for making community colleges tuition-free, investing in Historically Black Community Colleges (HBCU)s, Tribal Colleges and Universities (TCUs), and other Minority Serving Institutions (MSIs), and increasing the maximum Pell Grant. Those investments are significant and would go a long way towards making higher education more affordable for marginalized students.

But a less talked about investment in the American Families Plan is the $62 billion fund to increase college retention and completion rates. The plan, called the “College Completion Fund” by advocates, would invest in the colleges and universities that serve high numbers of low-income students, “[providing] funding to colleges that adopt innovative, proven solutions for student success, including wraparound services ranging from child care and mental health services to faculty and peer mentoring; emergency basic needs grants; practices that recruit and retain diverse faculty; transfer agreements between colleges; and evidence-based remediation programs.”

For a long time, research has shown that inequity in higher education not only exists in enrollment but also in retention and completion. Low-income students and Black and Latinx students drop out of college at a higher rate than their wealthier and white peers. And the colleges that enroll most of these students, which tend to be community colleges, regional public four-year universities, and minority serving institutions, receive far fewer financial resources compared to public flagship universities or more selective private colleges. Those disparities leave under-resourced institutions trying to do more with less, and contribute to equity gaps in student success and college attainment. The College Completion Fund, therefore, would be critical to these colleges, incentivizing them to invest in programs and services that have been proven to boost student success.

Details for the proposal have yet to be released by Congress or the Administration, but it is possible to make some baseline estimates for where the College Completion Fund might impact colleges and universities. In this analysis, we use the share of Pell recipients as a cut-off and look at data from the Integrated Postsecondary Education Data System (IPEDS) to see which colleges and universities could benefit from the creation of the College Completion Fund.

Who Benefits?

The American Families Plan calls for providing funding to the institutions serving high numbers of low-income students. Similar to the existing Strengthening Institutions Program which is a federal program that invests in capacity building at institutions with a high percentage of low-income students, the share of Pell recipients can be used as a criteria to determine which colleges would be eligible for the College Completion Fund.

On average 35 percent of students across all sectors receive Pell Grants. At public two-year colleges, the average rate of Pell recipients is 31 percent, compared to 34 percent at public four-year and 33 percent at private institutions. While the share of Pell students at private for-profit colleges seems large, since nearly 75 percent of all undergraduates enroll in public two-year and four-year colleges, the public sector altogether serves more than 70 percent of Pell recipients.

For this reason, Congress should target the fund to support students at public institutions. However, targeting the fund to only public institutions effectively leaves out private non-profit HBCUs, TCUs, and other MSIs which provide critical access to colleges for generations of minority students, but for years have been underfunded by the federal and state governments. At New America, we believe these institutions should be able to access the College Completion Fund as well.

If average Pell share is used as a cut-off, there would be 1,155 public institutions, HBCUs, TCUs, and MSIs eligible for the Fund. These institutions enroll more than 30 percent of the total undergraduates, 37 percent of students of color, and 43 percent of Pell recipients. (See figure below.)

Except for Wyoming, all 50 states and the District of Columbia would have at least one institution eligible for the College Completion Fund. States with the most students eligible for the fund include California (90 eligible institutions with total enrollment of 825,027 students), Florida (58 eligible institutions with total enrollment of 813,820 students), Texas (76 eligible institutions with total enrollment of 695,978 students), and New York (65 eligible institutions with total enrollment of 597,542 students). These states also have the largest undergraduate population in the U.S. (See figure below.)

The College Completion Fund, which prioritizes practices and interventions that have been proven effective to raise graduation rates, could greatly benefit eligible institutions—which tend to be under-resourced due to the large number of low-income students they serve. Looking at graduation rates for institutions that might be eligible or ineligible for the fund, we see that while the numbers are pretty similar in the public two-year sector, the gap is much larger among public four-year colleges. At eligible public four-year institutions, graduation rate was on average 49 percent in 2019, compared to 65 percent at their ineligible counterparts. For Pell recipients, graduation rate was 42 percent on average at eligible institutions, compared to 52 percent at ineligible institutions. (See figure below.)

The gap is wider among HBCUs and TCUs. Since most of HBCUs and TCUs would be eligible for the fund, we compare the graduation rates from HBCUs and TCUs with the national rates. Average graduation rates at HBCUs and TCUs were 40 percent and 26 percent respectively, compared to 53 percent nationally. Pell recipients at HBCUs and TCUs graduated at 35 percent and 23 percent respectively, much lower than the national average of 44 percent. Graduation rates across all eligible MSIs were also lower than the national average. (See figure below.)

Conclusion

Institutions need more help to serve their underserved students better. The College Completion Fund, which would provide extra funding to community colleges, public four-year institutions, HBCUs, TCUs, and other MSIs that serve a significant number of low-income students, allows these institutions to improve support and services for their students, helping underserved students persist and complete their degrees, and potentially bridging the equity gaps that exist in retention, completion, and labor market outcomes. While the details are still thin, the analysis shows that if passed, the fund will become a critical investment for at least hundreds of colleges and millions of students across the country for years to come.

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