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What If...
February 4, 2013 - 4:05am

This is a “think out loud” piece, rather than an actual proposal.

What if financial aid went directly from the federal (or state) government to the student, rather than running through individual campuses? The students could use the aid to attend any accredited institution.

It’s not an entirely new model.  When I graduated high school in western New York back in the 1980’s, New York State awarded “Regents scholarships” to students who met certain academic criteria.  (I don’t remember what they were.)  At the time, the scholarships were a hefty $250 a year -- inflation-proof since the 1950’s, according to local legend -- so they didn’t mean much.  (Even then, private college tuition was well into the five figures.)  But they were applicable to any accredited college or university in the state.  The idea, we were told, was to keep bright minds around.  Which might have worked, had the dollar figures adjusted to reality.

Private scholarship funds sometimes work that way, too.  A local Rotary club might award some scholarships to promising local high school graduates, which they can take with them wherever they go.  Even national merit scholarships used to work that way, and I assume they still do.  A student who received a national merit award could take it with her anywhere in the country.

The models I’m aware of tend to be merit-based, rather than need-based, but it’s not entirely clear to me that they have to be that way.  

As I understand it, one reason to run financial aid through individual campuses is to be able to adjust for differing total costs of attendance.  A student who chooses a private four-year residential college will probably need more aid than a student who lives at home and attends a community college.

If most aid came in the form of grants, that might be an argument for keeping the current system.  But even a “full” Pell grant comes nowhere near covering the full cost of a year at a typical private college, or even state university.  At the more expensive places, “aid” is typically a combination of discounts, grants, and (increasingly) loans.  There’s nothing stopping colleges from discounting on their own, if they choose; students would then knit together packages of grants and/or loans and shop around.

One might object that this would put too much power in the hands of the student.  But if we have a public good to be served by underwriting higher education more than individual students would -- and I strongly agree that we do -- then we should underwrite it directly.  It’s far more transparent and less labor intensive to simply increase appropriations to public colleges and universities than to run everything through a complicated set of hurdles.

Even better, shifting the resources from the colleges to the students would free up colleges to experiment with competency-based learning, different definitions of seat time, and other innovations that are either explicitly or effectively barred under the current system.  As long as the caliber of outcomes was the same or better -- that’s where accreditation comes in -- then I don’t see why we shouldn’t be able to try to find new and potentially more appealing ways to get there.

The politics of the shift are a little tricky.  Right now direct operating support for public colleges and universities tends to come from the states, while the bulk of financial aid comes from the feds.  (I’m ignoring research grants for present purposes.)  There’s a pretty good argument to be made that the shift, over the last ten years, from state support to student support has amounted to a shift from state to federal aid.   What if we ratified that shift and addressed it directly?

I’m sure there’s a host of issues I haven’t considered, both positive and negative.  Wise and worldly readers, what do you think?  Would the efficiency gains of a single system be worth it?

This is a “think out loud” piece, rather than an actual proposal.

What if financial aid went directly from the federal (or state) government to the student, rather than running through individual campuses?  The students could use the aid to attend any accredited institution.

It’s not an entirely new model.  When I graduated high school in western New York back in the 1980’s, New York State awarded “Regents scholarships” to students who met certain academic criteria.  (I don’t remember what they were.)  At the time, the scholarships were a hefty $250 a year -- inflation-proof since the 1950’s, according to local legend -- so they didn’t mean much.  (Even then, private college tuition was well into the five figures.)  But they were applicable to any accredited college or university in the state.  The idea, we were told, was to keep bright minds around.  Which might have worked, had the dollar figures adjusted to reality.

Private scholarship funds sometimes work that way, too.  A local Rotary club might award some scholarships to promising local high school graduates, which they can take with them wherever they go.  Even national merit scholarships used to work that way, and I assume they still do.  A student who received a national merit award could take it with her anywhere in the country.

The models I’m aware of tend to be merit-based, rather than need-based, but it’s not entirely clear to me that they have to be that way.  

As I understand it, one reason to run financial aid through individual campuses is to be able to adjust for differing total costs of attendance.  A student who chooses a private four-year residential college will probably need more aid than a student who lives at home and attends a community college.

If most aid came in the form of grants, that might be an argument for keeping the current system.  But even a “full” Pell grant comes nowhere near covering the full cost of a year at a typical private college, or even state university.  At the more expensive places, “aid” is typically a combination of discounts, grants, and (increasingly) loans.  There’s nothing stopping colleges from discounting on their own, if they choose; students would then knit together packages of grants and/or loans and shop around.

One might object that this would put too much power in the hands of the student.  But if we have a public good to be served by underwriting higher education more than individual students would -- and I strongly agree that we do -- then we should underwrite it directly.  It’s far more transparent and less labor intensive to simply increase appropriations to public colleges and universities than to run everything through a complicated set of hurdles.

Even better, shifting the resources from the colleges to the students would free up colleges to experiment with competency-based learning, different definitions of seat time, and other innovations that are either explicitly or effectively barred under the current system.  As long as the caliber of outcomes was the same or better -- that’s where accreditation comes in -- then I don’t see why we shouldn’t be able to try to find new and potentially more appealing ways to get there.

The politics of the shift are a little tricky.  Right now direct operating support for public colleges and universities tends to come from the states, while the bulk of financial aid comes from the feds.  (I’m ignoring research grants for present purposes.)  There’s a pretty good argument to be made that the shift, over the last ten years, from state support to student support has amounted to a shift from state to federal aid.   What if we ratified that shift and addressed it directly?

I’m sure there’s a host of issues I haven’t considered, both positive and negative.  Wise and worldly readers, what do you think?  Would the efficiency gains of a single system be worth it?
 

 

 

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