Study finds free college model would create $2.6 billion in state costs

PHOENIX — A free college model would create an additional $2.6 billion in state costs, an Arizona Chamber Foundation and Rounds Consulting Group study found.

Jim Rounds, president of Rounds Consulting Group, said it’s tough to find the return of investment in large, broad education programs, though some specialized programs are easier to see the direct economic impact.

“We wanted to figure out what would be the implications of Arizona if we took that on,” Rounds told KTAR News 92.3 FM.

The result: Each $100 million in annual college tuition costs would have to create 22,000 jobs by year 10 for the state to break even, the report found.

The state brings in about $2.5 billion from tuition, Rounds said, which makes up about a quarter of Arizona’s budget.

Rounds said that to make up for it, there would need to be “significant” tax increases, which could be “devastating.”

“However, I’m a believer that we need to invest in the things that make the economy tick, and that includes K-12 and community colleges and universities, but we just have to be very strategic,” he said.

The 2016-17 average tuition rate for the three universities in Arizona, $10,962, was twice as much as the amount an average student actually paid after financial aid, $4,054, the study found.

The free tuition proposal has been more prominent in recent years as national student debt balances have skyrocketed.

In 2018, national student debt broke the $1.4 trillion mark — almost 70 times more than the total debt 15 years ago.

The average student debt of Arizona universities is $22,367, which is less than the average national debt of $27,000.

Students attending community colleges also often accumulate debt despite a significantly lower cost than that of a four-year university.

“A number of students, not quite knowing what they want to do with careers, they might try community college for a little bit, take out a loan, and then they don’t get that higher-paying job to pay it off,” Rounds said. “We’ll need some programs that help keep those students engaged in school.”

While he recommended researching changes, Rounds doesn’t think Arizona needs to do anything drastic with the cost of college tuition.

“I feel like our higher-ed system has been managed very well here, but we have to make sure that it doesn’t become a problem going forward,” he said.

“If we’re strategic and we don’t just do something simple without analysis, like, say, free tuition for all, but we do maybe identify some additional programs that need to be funded that might have to do with high-tech work force, and connections with community colleges, and even more connections with K-12, those types of things, I think we need to support,” Rounds said.

KTAR News 92.3 FM’s Griselda Zetino contributed to this report.

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