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U.S. Urged to Give Incentives to States on College Funding

January 15, 2014

The federal government should create a matching grant program to reward states that maintain and increase their funding for public colleges, by linking the maximum Pell Grant awarded to students in states to per-student funding or higher education, the American Association of State Colleges and Universities argues in a new report. The paper documents the decline in states' funding per full-time equivalent college student since 2000 and the role that trend has played in driving up tuition prices (and student debt). 

The report asserts that the federal government can influence state behavior, citing the maintenance of effort provisions that were inserted into the federal stimulus legislation (and other measures) that provided funds to states that kept their own spending on higher education above certain thresholds. Those efforts have not gone far enough, though, AASCU argues, by rewarding states that at least maintained their spending no matter whether their levels were high or low. "A new model is needed that acknowledges existing levels of per-student state support for public higher education and that strategically leverages federal dollars to incentivize additional state investment."

The association calls for a matching grant program of up to $15 billion a year, with grants to states based on how much money they provide per student compared to the Pell Grant maximum award. (A state's federal grant award would be cut if it reduced its spending on public university operating support.)

The proposed additional spending of billions a year may seem like an unlikely luxury in an era when members of Congress are bickering over millions, but AASCU suggests that funds for the program could be derived from "better gatekeeping of institutional eligibility to participate in federal student aid programs (particularly for for-profit colleges), and "risk sharing" for federal student loans.

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Doug Lederman

Doug Lederman is editor and co-founder of Inside Higher Ed. He helps lead the news organization's editorial operations, overseeing news content, opinion pieces, career advice, blogs and other features. Doug speaks widely about higher education, including on C-Span and National Public Radio and at meetings and on campuses around the country, and his work has appeared in The New York Times and USA Today, among other publications. Doug was managing editor of The Chronicle of Higher Education from 1999 to 2003. Before that, Doug had worked at The Chronicle since 1986 in a variety of roles, first as an athletics reporter and editor. He has won three National Awards for Education Reporting from the Education Writers Association, including one in 2009 for a series of Inside Higher Ed articles he co-wrote on college rankings. He began his career as a news clerk at The New York Times. He grew up in Shaker Heights, Ohio, and graduated in 1984 from Princeton University. Doug lives with his wife, Kate Scharff, in Bethesda, Md.

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