On March 14, the Goldwater Institute, an Arizona think tank that favors market-based solutions to public policy issues, released a study that education leaders and policy makers in North Carolina should read and consider. Entitled “Cash for College: Bringing Free-Market Reform to Higher Education,” (available here)
the paper argues that Arizona’s higher education system would benefit from the adoption of a new policy that would grant higher education money directly to students rather than appropriating funds to public colleges and universities.
The author of the study, Dr. Vicki Murray, makes a strong case that “Giving grants directly to students would expand their educational options and would help make the delivery of higher education in Arizona more efficient.” Undoubtedly, those are goals worth pursuing.
Like almost all states, Arizona relies on legislative appropriations to fund most of the financial needs of its state institutions of higher education. (The only state to have broken away from this norm is Colorado, which recently adopted a policy similar to that which Murray advocates.) The main benefit that Murray sees from the adoption of a system that funds students rather than schools is that it would introduce a strong element of competition where it is currently lacking. “Student grants would improve the efficiency of postsecondary institutions by making them compete for students in order to receive operations funding,” she writes. She contends further that her proposed system would make higher education finance more transparent, thereby increasing the accountability of institutions.
How would it work? Murray’s plan calls for Arizona to give an annual grant of $8,000 to each student enrolled in a four-year institution and $5,000 to each student enrolled in a two-year institution. Schools would earn those grants for every student enrolled. The funds that schools currently receive from private gifts, endowment income, state and federal grants for capital projects, and student tuition and fees would not be affected by the plan, but even the strongest institutions could not long exist without an inflow of student grant money and that would create an incentive to attract students with their educational programs.
A serious problem with most colleges and universities is that they are more attuned to the desires of their faculty than of students. Arthur Levine, president of Teachers College at Columbia and one of the most serious observers of American education has written, “There is a split between offering courses students want and classes professors want to teach. Students put the emphasis on teaching; faculty at research universities and selective colleges are more concerned with research….For the most part, colleges and universities have resolved these differences in favor of their faculty….(C)lasses tend to be scheduled at the convenience of the faculty member and not the student. There is an imbalance of elective courses in faculty specialty areas over classes students are required to take to graduate.” (Levine’s essay is included in Declining by Degrees, which I reviewed here.
If, as seems likely, Murray’s plan would introduce more of a student-centered ethic in our colleges and universities, it would be of great benefit.
Where could students use their grants? Under Murray’s proposal, they could choose among the state colleges and universities, or the private schools in the state. That would make it similar to the federal GI Bill, which also allows students to choose non-government institutions. Since there is a much more significant private higher education sector in North Carolina than in Arizona, if the plan were to be implemented here, the range of choice – and stimulation of competition – would be correspondingly greater.
What about for-profit institutions? Murray would include them, and rightly so. She quotes Columbia University economist Thomas Bailey, who writes, “The data suggest that students who enroll in for-profit institutions are more likely to acquire a degree or formal certificate of completion.” While many non-profit institutions look with disdain on such for-profit enterprises as the University of Phoenix, there is no reason for the government to reduce the range of student choice by arbitrarily ruling the for-profits to be ineligible.
An important provision of the plan is that if students decide to use their higher education grants, they have to sign contracts with the state “promising to meet the academic standards set by the institutions where they enroll, and to repay their grant in full if they drop out of school before completing their degrees.” That provision could and should be waived in individual cases of hardship, but on the whole, it would serve a good purpose – getting students to take their education more seriously.
Although I am strongly inclined to favor the complete privatization of education, North Carolina, like Arizona, has a constitutional commitment to public higher education. (In fact, the two states have similar provisions regarding tuition; Arizona’s constitution says higher education must be “as nearly free as possible” and North Carolina’s calls for tuition to be as low as “practicable.”) Therefore, in looking for the best policy that is politically feasible, it seems to be worth investigating the student grants approach set forth in the Goldwater paper. We can expect better results from a system where institutions compete for students than where they compete in the political realm for appropriations.