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The Problem

Virtually all the growth in the college-age population over the next two decades will come from groups that are currently excluded from or underserved by America’s colleges and universities. It is imperative that we increase both the number of these students accessing postsecondary education and the odds that they will graduate. This includes low-income, first-generation and students of color who stand to benefit the most from not just attending, but also completing a college degree. Unfortunately, colleges currently serving these students have the least financial resources -- and colleges with the most financial resources enroll far too few students from these groups. This creates a public policy problem where our nation’s health -- economically, politically and socially -- depends on educating a far broader swath of society than we do today.

To get this done, many institutions will have to increase the number of low-income students that they enroll and, of critical importance, increase their academic success. After all, access without completion is a false promise.

Important policy proposals are being offered to address this national imperative, and we hear critiques from both sides of the aisle. Progressive Democrats have created proposals for free college and doubling the size of Pell Grants. Recently, the Community College Student Success Act was introduced by Democratic senators Brian Schatz and Sherrod Brown. This bill would provide funding for community colleges to develop robust student support services for low-income students. President Biden proposed a similar policy in the American Families Plan, which would invest $6.2 billion annually to support student success.

Similarly, the America’s College Promise Act proposes $1 billion annually in its Student Success Fund. These efforts are what Third Way and others often refer to as a “Title I”-type program for higher education that would provide a federal subsidy for colleges that enroll large numbers of Pell-eligible students. Outside the policy realm, coalitions have taken a different approach, advancing initiatives that advocate for expanding more Pell enrollments at highly selective colleges, which is a necessary but insufficient way to improve access and outcomes. The primary focus of these efforts is to increase graduation rates of low-income students.

There are good reasons for these proposals. Low-income students are most often awarded grants from the nation’s premier need-based aid program, the Pell Grant program, and are relatively easy to track. Unfortunately, only 49 percent of Pell students who enroll at four-year colleges graduate in six years. At community colleges only 30 percent of Pell-eligible students graduate, and only 20 percent of Pell students complete their program at for-profit institutions.

Simply pouring more money into our current Pell program, without funds for colleges to put in place successful student support programs, produces suboptimal results and could even have a negative impact on measures of student success. Tamara Hiler, director of education at the Third Way, has observed that unlike in K-12 education, the federal government does little to recognize and reward postsecondary institutions that enroll an above-average share of Pell students and to provide them with additional resources and capacity to help improve student success. This is why we are starting to see more proposals that support evidence-based strategies to strengthen completion and retention rates at community colleges and institutions that serve students from our most disadvantaged communities.

Republicans, however, have criticized proposals for doubling Pell Grants. They suggest that most of the money will go to subsidizing colleges rather than helping students to afford college and boosting graduation rates. Such critiques resurrect the Bennett hypothesis, which suggests that federal aid enables colleges to increase their costs, thus diminishing the effects of aid on access and success for low-income students. The evidence for this effect is mixed at best.

These proposals for federal funding are important steps in attempting to advance the need for the nation to establish a success agenda for all students seeking upward mobility through postsecondary education. And there is good reason to support them, since the evidence is increasingly clear: money matters, and when underresourced colleges receive new money, they boost completion rates. To strengthen the proposals outlined above, policy makers should ensure: (1) all public and nonprofit colleges are eligible to participate, (2) participation comes with accountability and program improvement standards, and (3) funding is sustained and meaningful.

The current proposals could go further to address these three issues. For example, the Schatz-Brown proposal excludes four-year colleges and universities, while free college proposals could integrate more accountability features. Such inconsistencies mean the institutions that enroll millions of Pell-eligible students will be ineligible from supporting them via Title I-type funding. Additionally, these Democratic proposals focus largely on access and improvement, while Republicans are likely to call for greater accountability. There are ways to meet in the middle by incorporating improvement and accountability measures to ensure postsecondary institutions do not simply enroll but also graduate more low-income students.


There is growing momentum behind the idea that higher education needs a Title I-type program. We strongly support these efforts. To maximize the policy’s potential impact, we believe any federal Title I-type program in higher education must establish both ambitious and achievable thresholds on two key metrics: (1) the percentage of Pell Grant students enrolled and (2) the percentage who graduate or successfully transfer to another postsecondary institution.

The design is straightforward: postsecondary institutions that reach these thresholds would receive a per-Pell-student federal subsidy. The more successful a college is in enrolling -- and graduating -- Pell students, the more student subsidy the institution would receive. This would not only reward those already serving low-income students well, but would also provide the needed resources to help colleges improve these metrics over time. If colleges simply serve too few Pell students, they are ineligible. And if they are not showing improvement over time, then they could become ineligible from participating. However, this wouldn’t happen overnight, nor should it be a punitive system of accountability. Instead, the policy would focus on improvement where institutions falling short of given metrics would develop plans for improving and be held accountable for making progress.

These thresholds will be determined by using an analytical tool we have developed that draws upon extant federal databases to identify empirically derived and realistic enrollment and graduation thresholds. This tool, which we will roll out to legislators and policy analysts soon, allows us to treat different levels of higher education differently according to their missions.

For example, different eligibility thresholds will be required for two-year colleges. In their case, counting students who successfully transfer and continue their education will be considered a successful academic outcome. Alternatively, four-year colleges and universities enrolling too few Pell students would be expected to expand access and not simply be rewarded for having high graduation rates. With this tool, we can also model the potential impact this policy has on minority-serving institutions and the number of Pell Grant recipients and students of color enrolled in eligible (or noneligible) institutions.

The design of our proposal is elegantly simple. It blends improvement with accountability, something both Democrats and Republicans care about. The metrics are easy to measure. And the program would create incentives and rewards for postsecondary institutions to both enroll and graduate more Pell students. The subsidy per student should be sufficiently large to enhance student support systems that are often needed for low-income, first-generation students to be successful. The subsidy would also be scaled by each college’s baseline performance levels and improvement on each. Ultimately, these incentives and rewards will help the very colleges that already play an important role in addressing a national priority -- the need to enroll and ensuring the academic success of more low-income students. At the same time, it creates incentives for colleges to improve both access and completion.

Call to Action

If, as a nation, we are truly interested in educating a larger percentage of students who are underrepresented in colleges and universities today, then it is clear that we need to encourage and support two- and four-year colleges and universities to be engaged in this effort. This proposal is an achievable, effective and accountable way forward. It is imperative that we help less advantaged students climb the escalator toward upward mobility. As a nation we will be acting in enlightened self-interest. Our economy and our democratic institutions need them.

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