By Dr. Watson Scott Swail, President & Senior Research Scholar, Educational Policy Institute
With all the talk about increasing the number of students gaining access to a higher education in a way that is either free or more affordable than currently offered, it is perhaps worth a dialogue about whether state governments are the appropriate vehicle to house the public higher education system. This is not to say that many states are not doing well with their public postsecondary systems. It can be argued that many, if not most, are. But we also know that some states have issues with providing programs of a consistent educational quality that are also affordability and equitable. There are other issues, too, including access to emerging programs and highly-technical certificate and degree programs that vary greatly from state to state.
Regardless, the challenge remains that state higher education remains unequal for the public good. My purpose is not to create a ranking of states on these issues. A variety of rankings already exist, and as I have written, the rankings are limited in their utility for “quality.” That stated, rankings do tell us, whether we like it or not, that the institutions in the top 100 or top 500 (world) are likely a lot better than some of the other institutions that do not make the list. Read my AACRAO Journal piece, In Search of a Better Mousetrap for more on this issue.
But this Swail Letter isn’t about rankings. It is about how we can better provide a public good that is effectively affordable and accessible by the masses.
Currently, it is hard to argue that our higher education is not accessible. Most individuals that want to go to postsecondary education can. Depending on how we define affordable, we can also argue that postsecondary education is largely affordable. The Devil is always in the details, especially about equity and opportunity.
Our two-year community college system is largely very affordable for students. With lifelong learning credits and other tax vehicles, community college is close to free for many students. There are other costs, of course, such as living and transportation costs, and opportunity costs that drive up the total cost of attendance more than simply tuition and fee charges. But it remains largely affordable for what we can assume (key word) is a decent quality education.
The equity and affordability issues come more at the four-year public and private levels, where tuition and fee charges are 3-10 times that of a two-year public institution, and total cost of attendance is far more expensive. This is where serious equity issues by income and other demographic variables exist, such as race/ethnic composition. Ultimately, income and ability to pay is one of the greatest burdens to higher education access, and it is largely unequal at the state level. The matriculation rate from high school to college in 2014 varies from 44 percent (Idaho; Alaska) to 75 percent (Massachusetts). The percentage of citizens by state with a BA or higher also varies greatly by state, with West Virginia And Mississippi the lowest (21 percent) and Massachusetts the highest (44 percent). And further, the variation in states by enrollment by income differ at an even larger rate. Recent data from The Pell Institute below illustrates that states range from 10 percent to 56 percent in expected higher education enrollment of low-income students, with an average of 34 percent.  The summary from these data is that northeast states have the highest participation rates on average and by income while southern states have the lowest. Educational opportunity is not equal across states.
Figure 1. Estimated college participation rates for students from lowincome families by state: 2016.
There are many reasons for the variations as described. Regardless of that dialogue, in the end, the problem remains that they exist. And when we see states having low-income access rates below 30 percent while others are well above 40, we have a problem. This is, in large part, a product of leaving higher education to state decision making. Different states, due to political-geographical issues, put different values on a higher education and also have different financial means to deliver. It is a complex situation.
For argument in this Swail Letter, what if we posit that public higher education should be moved from state authority and moved to the US Department of Education? Let me state it again: what if we moved the entire public system of higher education to the federal government? Except with some state funding programs, the feds currently handle almost all of the financial aid programs for Title IV institutions and also provide billions in transfer funds to institutions via research and other programming. If the feds were to also be in charge of public higher education, they would have a better opportunity to ensure equity and opportunity across the states.
In the past, the federal government, through Congress, established the land-grant institutions and our HBCUs. The feds also created the Pell Grant, Stafford loan programs, Federal Work Study, and other programs to help make higher education more affordably for low-income students. By letting the federal government house all of public higher education, it would be easier to create financial programs to ensure price equity for students, as well as consistent access to programs across the country, while still allowing for local control.
Regarding cost and price, the government could put cost containment systems in place since all institutions would reside within the same system. Purchasing could be centralized to a degree with an effect of increasing the purchasing power of institutions and tamping down increasing costs. There could be some regulations of human resource management and costs, although I am not sure how that would work out per se. Some may cry that this is socialism, but we already do this at the state level. Again, local control could be left in place as long as federal regulations provided parameters on costing.
On the student end, it would be much easier to invoke a pricing system based on ability to pay, so that students would have a much better idea of the cost of their education. Even with the addition of net cost calculators on college sites, it is still difficult to determine the actual cost of going to college without serious internet time. Even then, the data provided by institutions are ballpark estimates at best and not true estimates for the individual.
States and institutions would still be in charge of recruitment and admissions and everything else they currently do, but the federal government could impose guidelines to meet equity and perhaps even cost containment goals. Think of this more of an EU system, where students could choose to go anywhere in the nation without differential costs beyond room and board.
The system I imagine would have five separate cost tiers associated with public four-year college. The number “five” is at best arbitrary, but less tiers would be problematic and more would be perhaps unwieldy. Low tiers would include both low-cost programs (e.g., English) and high-need areas (nursing). High tiers would include costly programs (e.g., medicine) and high-demand programs (e.g., Law). Law is a good example of a relatively low-cost program with a high-ticket price due to demand. Law programs are cash cows for institutions, which is why we see so many law schools around the country. If someone can’t see a tiered system working, Australia put in place a three-tiered pricing system in 2007 to meet the same need.
On the pricing side, we would use ability to pay, from some sort of income algorithm, to determine where a student resides on a separate five-level continuum. And yes, it could certainly be more complex if warranted. But it would stand that using IRS data to determine level is the best and easiest way to go.
The price of a higher education, which I assume right to be total Cost of Attendance (COA), inclusive of tuition, room, board, books, and associated pieces, would be based on the nexus of the education tier and a student’s ability to pay. Using a simple matrix, I use a simple multiplier of tier versus level to create a price indexing for four-year institutions. Those who are in the lowest level would pay minimally, with an increasing price as both income and tier increase. Such a system would provide a level of equity by choice and ability to pay. The second graphic illustrates the matrix if we assumed that each “point” in the system was worth $1,000 (again, completely arbitrary). The lowest two-semester tuition, fee, and room and board fee would be $1,000, while the highest would be $25,000 in this scenario. If we decided that each point was worth $2,000, then the range would be $2,000 to $50,000. Remember: this is total cost of attendance for an entire academic year (two semesters), so it includes subsidies for living expenses for those on the lower rungs of the economic ladder. Even so, a low-income student who takes a fifth-tier program would be capped at a rate at no higher than the lowest value for a high-income student. At this point, students have decisions they can make about their education and federal and other loan programs could offset these differences. The taxpayer has put in his and her two cents. Any additional costs would be born by the student. This system would create the basis for an equal and affordable higher education for all students, requiring everyone to pay something, even at the lowest levels.
Figure 2. Pricing Matrix for Federal Public Higher Education System.
There are many questions and perhaps problems with a system such as this. Surely, many states would not want to lose control of their higher education system. However, many may want to jump at the possibility of not having to pay for their system. I can see that this type of system may work best at the public four-year level and less well at the two-year level. Perhaps the two are differentiated somewhat. Certainly, for any serious funding system like this, there would likely be more need for entrance examinations to gain entrance to the four-year system which opens up another can of worms. It is arguable, to be fair, that we are too lenient in who gets into our four-year system at a massive cost to taxpayers and students. Students would have to certainly meet academic minimums to participate, thus, our open enrollment institutions would have to be less open. For those worried about the equity agenda in this, it simply means we have to teach students up before that level, perhaps in community college, but certainly in secondary schooling. The purpose is not to close doors but to further pry them open them by reducing inequities by income. To do that would also require a national recommitment to ensure that students come out of high school college ready, regardless of whether a student goes to college or not.
Such a system doesn’t necessarily mean we can cap costs and control the exponential cost of college, but it could provide a mechanism to get there. Local and state governments are unable to keep up with the escalating cost of higher education, and they never will. It is the nature of higher education as an expensive commodity when compared to other market basket items, due primarily to the high human resource costs associated with the venture. By taking the system to the federal level, there may be more impetus and potential for cost controls, affordable pricing, and increased equity.