Strengthening Partnerships between Businesses and Community Colleges to Grow the Middle Class

Strengthening Partnerships between Businesses and Community Colleges to Grow the Middle Class

February 5, 2016

Most first-time college students enroll in certificate or associate degree programs, indicating that the role of America’s more than 1,000 community colleges is more critical than ever. By offering students an affordable education and training close to home, community colleges may be the only option for some students who are raising children, working, in need of remedial classes, or can only take classes part-time. They are also uniquely positioned to partner with employers to create tailored training programs to meet economic needs within their communities.

That’s why the President proposed the America’s College Promise plan to make two years of community college free for responsible students, letting them earn the first half of a bachelor’s degree or earn skills needed in the workforce at no cost. Inspired by programs in Tennessee and Chicago, America’s College Promise would create a new partnership with states, and would require everyone to do their part: community colleges must strengthen their programs and increase the number of students who graduate, states must invest more in higher education and training, and students must take responsibility for their education, earn good grades, and stay on track to graduate. Today, the Administration is announcing a new plan to cut taxes on businesses willing to work with community colleges to create or expand quality programs in in-demand fields.

The Community College Partnership Tax Credit

Stronger incentives are needed to connect community colleges and businesses. Jobs relying on education and training from associate degrees will grow faster than any other training source in the coming years. At the same time, we know there is greater need for more skilled workers with technical associate degrees and postsecondary certificates. Two industries each have more than 1 million job openings today: professional and business services; and education and health services. Teaching these in-demand fields often requires regular investments in up-to-date equipment and retaining highly-skilled instructors, which can be a challenge for underfunded community colleges.

The country’s most successful community college programs often thrive because of strong partnerships with local employers and industry. To promote this close collaboration, the Administration is calling for new tax incentives to encourage employers to play a more active role in funding and directing educational options at community and technical colleges.  This newly proposed Community College Partnership Tax Credit builds on the Administration’s work to make training programs job-driven, and will enable graduates to acquire a more productive set of skills that are in demand by regional employers when they enter the local workforce.  Under the proposal:

  • Employers would strengthen community and technical colleges through contributions like designing curriculum, donating instructors and equipment, and creating job-based learning opportunities.
  • Once students complete the program, employers would be eligible for a tax credit for hiring them. Employers can earn a one-time $5,000 tax credit for hiring a qualifying community college student graduate full-time. 
  • States will designate eligible partnerships between community colleges and employers through a competitive process. They will be encouraged to focus incentives on contributions that support low-wage workers in moving into higher skill, higher wage jobs.
  • A total of $500 million in credits would be available for each of five years, from 2017 through 2021.

Students with associate degrees earn roughly $10,000 more than those with just a high school diploma. While community college graduates benefits directly, their employment and contributions also offer significant benefits to the nation and the economy as a whole.

Building on Progress to Strengthen Community Colleges for Rigorous Education and In-Demand Training

Other key Administration efforts to support community colleges to expand opportunities to rigorous education and in-demand training include:

  • Supporting 1900 In-Demand Training Programs Since 2010: Over just the past four years, this Administration has invested approximately $2 billion for 700 community colleges to partner with employers to design education and training programs that prepare workers for jobs that are in-demand in their regional economies, such as health care, information technology, and energy. These programs are promising—by the end of 2014, more than 1,900 new or modified training programs had been launched. In addition, 85 percent of the more than 176,000 individuals who had enrolled in these programs either completed a program or continued the program into a second year.
  • Providing two years of community college free for responsible students: States and communities across the country are making community college tuition-free. In the past year, 13 states and communities have created new programs to provide free community college, including statewide programs in Oregon and Minnesota and local efforts in California, Illinois, Indiana, North Carolina, Ohio, Pennsylvania, Rhode Island, Texas, and Wisconsin. In Congress, Sen. Baldwin (WI) and Rep. Scott (VA) have proposed the America’s College Promise Act of 2015, and at least 16 other states have introduced legislation to make community college tuition free. A quarter of community college presidents believe it is likely that their institutions will offer a tuition-free (or nearly free) program within the next two years, which would almost double the number of tuition-free options available to students, according to a recent survey from the American Association of Community Colleges.
  • Promoting college access and success through dual enrollment: In 2014-15, community colleges received one-third of all Pell Grants, totaling $10.1 billion. Now for the first time, high school students nationwide will have the opportunity to access Federal Pell Grants to take college courses through a new Department of Education Dual Enrollment pilot offering up to $20 million in Federal Pell Grants. Dual Enrollment has been shown to increase grades in high school, enrollment in college following high school, persistence in college, credit accumulation, and credential attainment – particularly for low-income and first-generation students. Community colleges offer more than 70 percent of dual enrollment courses taken by high school students nationwide. More than 1.4 million high school students took courses offered by a college or university for credit through dual enrollment.
  • Expanding “learn and earn” training opportunities through apprenticeships: The Department of Labor awarded $175 million in American Apprenticeship Grants to 46 public-private partnerships marrying the efforts of employers, organized labor, non-profits, local governments, and educational institutions to expand high-quality apprenticeships. This investment will help train and hire more than 34,000 new apprentices in high-growth and high-tech industries as diverse as health care, IT, and advanced manufacturing while scaling up proven programs in construction, transportation, and energy over the next five years. There are now 75,000 more apprentices in training than when the President first launched the American Apprenticeship Initiative in 2014.