Control costs and increase affordability to make undergraduate education financially accessible to all who can benefit.
The Commission believes that, no matter how high the quality of an undergraduate education, it cannot serve its purpose if it is not financially accessible to all who can benefit. In an environment of continuing financial constraint, colleges and governments must put their limited resources where they will do the most good in realizing this commitment. In the Commission’s view, this means targeting institutional operating funds toward programs that promote efficiency and effectiveness in getting students to completion and targeting state and federal support to students who need it most in the programs in which they are most likely to succeed. Increasing the rates at which students succeed in completing their undergraduate programs in a timely way is likely the best antidote to unmanageable student debt. Across-the-board spending cuts are good at avoiding tough choices, but deliberate decisions about where to invest and where to cut back have much greater promise for controlling costs while promoting quality and completion. More broadly, while addressing the challenge of low success rates for a significant portion of the population will require significant investments in the near term, in the long run it will return significant and measurable long-term economic and civic dividends. Strengthening college completion should be seen as an investment in human infrastructure that is critical to the nation’s long-term economic vitality and social cohesion.
The Commission makes the following recommendations for improvement related to controlling costs and increasing affordability.
The federal student grant and loan programs play a valuable—in fact, irreplaceable—role in the American system of financing higher education, but the nation’s aid system is far more complex and confusing than it needs to be, and too much public money is being wasted. The recommendations below should be complemented by more comprehensive interventions that help students understand the potential earnings and debt levels associated with various college credentials and career paths, prevent students from excessive borrowing, and encourage students to complete their credentials in a timely way. The federal government should:
Take further steps to simplify or even eliminate the FAFSA-based student aid application process, relying more on financial information already available from the Internal Revenue Service to determine eligibility.
The Pell system should provide grants that support students completing 30 credits anytime throughout the course of a calendar year, allowing students to take classes when they can and to complete their credentials in a timely fashion.
Design a single income-driven repayment plan in which students are automatically enrolled and loan payments are collected through the income tax system. The plan should include fiscally responsible repayment rates to limit the need for future debt forgiveness.
Develop guidelines for colleges and universities whose students are systematically unable to repay their federal loans to reimburse the government a fraction of the unpaid balance. Institutional risk-sharing that gives a college or university a financial stake in their students’ success at school and afterward appears to be a promising innovation and should be tested, provided that institutions continue to honor their access-related missions and stand behind their commitments to high-risk students.
Track student progress across institutions and provide access to continued aid based upon satisfactory academic progress across multiple institutions. Under the current system, too many “swirling” students move from institution to institution piling up debt without earning a degree, resulting in significant debt and high risk of loan default.
Revise eligibility rules so as not to allow federal financial aid to follow students to low-performing institutions that have extremely low graduation rates.
Develop incentives for states to sustain funding for public higher education institutions and, where possible, to increase it. Federal and state governments should focus their dollars on comprehensive supports and incentives to improve the chances of students from low- and moderate-income backgrounds earning college credentials of value.
Experiment with and carefully assess alternatives for students to manage the financing of their college education. For example, income-share agreements allow college students to borrow from colleges or investors, which then receive a percentage of the student’s after-graduation income.
The states historically have exercised primary responsibility for funding and oversight of public colleges and universities, and this core state responsibility should continue—it is a duty states owe to their residents, as the majority of those who go to college attend their local public higher education institutions. States must ensure that their public institutions are provided with adequate funding to fulfill their missions, in particular those that serve the most disadvantaged students. However, an overall decline in state support represents a central challenge to the core missions of public institutions. Fiscal pressures on states and on state-run colleges and universities are likely to be unrelenting, and it is essential that both government decision-makers and leaders on campus focus on directing resources to the highest priorities:
Direct scarce resources to the students for whom they will have the greatest impact. State governments must weigh carefully the balance of their funding across types of public institutions, recognizing the distinctive contributions made by research universities, regional comprehensives, and community colleges. Because the roles of these different types of institution vary greatly, as do the backgrounds and aspirations of their students, no simple formula can determine how much support each institution should receive from the state. While the balance of priorities will and should vary among states according to a state’s needs and opportunities, the Commission believes that every state should attend effectively to the needs of its most disadvantaged students, wherever they enroll.
State-run student aid programs should prioritize meeting the financial need of highly disadvantaged students. Without additional funding to supplement federal grant assistance, many qualified students may be unable to attend the public flagship or even a nearby community college.
Policy-makers should work with colleges and universities toward improved alignment between funding and program completion. Performance-based funding systems are showing mixed results; continually evaluating these systems and modifying them based on evidence of effectiveness and unintended consequences holds real promise.
Coordinate state agencies in developing comprehensive student support strategies. Many students, whether coming straight out of high school or adults returning later to college, face multiple social and personal challenges that can range from homelessness and food insecurity to childcare, psychological challenges, and even imprisonment. The best solutions can often emerge from building cooperation between a college and relevant social support agencies. These are innovations that states can do a good deal to support and even subsidize.
In the constrained financial environment that exists now and that the Commission believes lies ahead, colleges and universities must continue to be more effective at managing their costs and directing scarce resources smartly if they are to meet the goals of more equitable access and increased completion. Building on the difficult and serious steps many institutions have already taken, the following areas deserve particular emphasis:
Invest in providing students with consistently good teaching. Good teaching raises student learning and satisfaction and raises persistence in challenging majors, as well as degree completion. Once in place, strong and effective instructional systems can better meet institutional and social goals without being more expensive than the less-reliable teaching practices they replace.
Build governance practices that support cost-saving innovation. Colleges and universities of all types need to develop a more robust conception of “shared governance” than has historically been the case. Even though faculty, administrators, and trustees view the institution through different lenses, they share an interest in the institution’s financial success and, even more, its vitality in achieving its mission. Achieving shared goals will require greater openness and more candid discussion among all parties than currently prevail.
Reduce costs per graduate through timely progression to degree completion. Institutional reengineering that results in more students completing degrees in a timelier fashion lowers costs per graduate because of the greater effectiveness in producing graduates. Success requires the full effort of the entire campus, including the faculty, in making efficiency-improving adjustments; for example, through timely tracking of student progress.
Direct financial assistance to students who need it. Colleges and universities should assess their student aid strategies to meet institutional missions and lean toward providing aid to students who are most financially vulnerable.
Make information about prices, aid, and outcomes more accessible and transparent to students. Institutions should think carefully about clarity and equity for students as they design their pricing policies.
Federal and state regulatory agencies, as well as regional and disciplinary accrediting bodies that also hold regulatory sway, should assess institutional effectiveness and guide behavior based on desired practices and outcomes for students rather than focusing primarily on educational inputs:
To promote an increase in responsible innovation, government and accrediting agencies should track institutional and program performance on priority outcomes such as graduation rates, student debt default and loan repayment rates, and job placement/job success or further education outcomes.
To reduce compliance costs and target resources where they can have the greatest impact, apply more thorough institutional review to chronically poor performers and reward strong performers by reducing the frequency and scope of regulatory review processes. Reporting requirements should be simplified where possible and better targeted to control bad actors and to assess the quality of new entrants into higher education.
Increasing numbers of colleges and universities struggle to meet costly federal and state regulatory requirements. The federal and state governments should take steps to consolidate and streamline confusing regulations, review and reduce unfunded mandates where appropriate, and eliminate extraneous and tangential rules while retaining and where possible improving worthwhile consumer protections. Regulations, put forth in a clear and comprehensible manner, should be related to education, student safety, and stewardship of federal and state funds. The costs and burdens of regulations should be estimated accurately and regularly.