Two numbers haunt the college landscape: $1.3 trillion and 40 percent.
The first is the ever-increasing debt Americans are shouldering to pay off the cost of a degree. But a growing chorus of experts believes that extraordinary sum obscures another crisis: For many, those debts wouldn’t be as devastating had they earned a degree. But only 40 percent of Americans complete a bachelor’s degree in four years.
The upshot is that millions of Americans earning meager wages are on the hook for thousands of dollars with almost nothing to show for it.
A new report by the think-tank Education Trust, issued Thursday, excoriates the federal government and state governments for failing to create a college-finance system that focuses both on cost and on completion.
“Any proposed new federal-state partnership aimed at making college more affordable should simultaneously address completion problems,” the report argues. It advocates for a comprehensive federal-state partnership to make sure both goals are being met.
About two-thirds of the states do fund colleges in part based on student completion and other outcomes, but the expectations and money on the line for bad performances vary from state to state, according to the National Conference of State Legislatures.
States have been slow to re-commit the dollars they used to spend on public colleges before the economy tanked in 2008, passing an even greater burden on to families and students. Today public universities collect more from student tuition payments than from state financial support, when the reverse used to be true.
But Federal aid has also lagged, the report argues, citing data that show the Pell grant – aid typically available for students of families earning $40,000 a year or less – covers just a third of the amount needed to afford tuition at a four-year public university. In the late ’70s, that figure was closer to 70 percent.
“Both the federal government and the state governments have known about these converging trends,” José Luis Santos, vice president of higher-education policy at Ed Trust and a co-author of the report, said in an interview. “If we’re serious about wanting to compete on a global scale, then we can no longer continue on the path that we’re in. And when we run into these big complex giant problems, the state by itself cannot do it; the institutions on their own aren’t going to do it; the federal government by itself can’t do it.”
While emphasizing the need to be mindful of completion as well as costs, Santos did not lay out specific proposals. He did say that minimum performance standards should be set. A previous report by Education Trust identified the worst 5 percent of colleges for their abysmal rates of either enrolling low-income and minority students or ensuring that those students graduate.
But any federal-state partnership that seeks to punish bad performers has to consider context, the report cautions. Some schools, such as certain historically black colleges and universities, have worse than average completion rates but enroll a much higher share of black and low-income students. These schools and other two- and four-year colleges that tend to enroll most of the students who apply are also some of the worst funded institutions in the country.
That’s one reason calls for free community college, for example, can lead to more bad than good. “When proposals make already-underfunded institutions more attractive to low-income students or other students with extra challenges, without providing richer support to those institutions, even maintaining current completion rates gets harder,” the report noted. One remedy at the government’s disposal is to mandate that states spend more money on colleges that enroll a greater share of low-income students.
The government has a history of using nudges to compel states to spend more on the needy. In the 1970s Congress created the Leveraging Educational Assistance Partnership, which gave states one dollar for every dollar they spent on college aid for students who needed it. “The response was dramatic,” the report noted. “In 1971, 21 states had need-based aid programs with an average grant of $240. By 2010, all states had some need-based aid programs, and the average grant was $1,000.”
In 2011, the final year of the program before Congress cut it, the federal government spent $64 million in matching funds while states spent nearly $1 billion.