Problem
Despite continual increases in college attendance, college degree attainment has stagnated. Current financial aid is not well targeted and provides little support for increasing postsecondary quality and completion rates.
Proposal
This paper proposes a federal matching grant for institutions that implement free college plans. The grant would be restricted to spending on instruction and academic support services, and would set limits on administrative costs for participating colleges. The proposal would also establish a pilot program of additional spending on programs shown to increase degree completion among low-income students.
Abstract
A college degree is more necessary than ever. However, with college prices rising rapidly, higher education is becoming less attainable for many. Growing public concern about college costs has led several states to propose or enact “free college” plans. Free college is politically popular, yet lower prices do not directly address the main crisis in U.S. higher education—low completion rates. Although college attendance rates have risen steadily in the United States for the past two decades, bachelor’s degree attainment has not improved at all. Increasing college completion rates will require more than just cutting prices—we must also improve the quality of the education students receive, and help them to complete their program of study and earn a degree.
A growing body of evidence points to the importance of academic supports and mentoring for student persistence and degree completion. Academic supports work, but are costly, and decades of state higher education budget cuts have left public institutions with large classes taught by less-qualified instructors, and little in the way of counseling, mentoring, and other core services.
This paper proposes a 1:1 federal matching grant for per pupil spending by public institutions in states that implement free college proposals. The purpose of the proposed program is to provide states with an incentive to rein in college costs, while maintaining or increasing spending levels so that quality does not suffer. The matching grant would be restricted to the core spending categories of instruction and academic support. To ensure that federal funds are spent wisely, the matching grant includes a maintenance-of-effort provision and a rule that restricts administrative spending to its preprogram spending share. Cost estimates for the program range dramatically depending on the number of states that commit to making college tuition-free. Yet even if the program were adopted in all 50 states, the cost to the federal government would be no more than one third of current spending on federal financial aid programs.
