Reshaping Our College Delivery System

By Richard Vedder

After my sidekick Bryan and I spent some time yesterday talking to Sandy Baum and a colleague at the College Board about student financial aid, I started pondering what a more optimal system of post-secondary education in America would look like. In devising the "optimal" system, one has to deal with an inherent trade-off: the goal of maximizing educational "output" relative to spending, or the "efficiency" criterion, probably conflicts with an American egalitarian tradition of maximizing economic and educational opportunities for all, and maintaining the income mobility that has long characterized American life. We have a meritocracy, not aristocracy, and the education system needs to be considered within that tradition. Call this the "equity" criterion.

Resolving the efficiency-equity trade-off inevitably involves some compromises. Below I outline one possible way a more optimal system could evolve by, say, the year 2020.

1) In keeping with the goal of equal opportunity, any American with a high school education could enter a community college of relatively low cost. Poorer students would receive aid to help cover costs (see below).

2) Students who graduate from community colleges with associate degrees could proceed to 4 year institutions. Likewise, students whose credentials predict a high probability of success could directly enter 4 year colleges. Anyone foregoing governmental financial assistance, regardless of qualifications, could apply for admission to a 4 year school (it is a free country).

3) Since 4 year residential education is costly and attrition rates are high, the goal would be to limit government-subsidized enrollments collectively at these institutions to about 20 percent of the college age population, recognizing, of course, that some very bright younger or mature older students would also be admitted. The goal would be to educate persons with a high probability for success --kids that are both reasonably bright and motivated, as well as some non-traditional adult learners. Reducing attrition would become an explicit goal.

4) Adult learners and those denied admission to the expensive 4 year schools (either public or private) could demonstrate B.A. or B.S. degree equivalency as certified by groups like Underwriters Laboratories, the College Board, ACT, or CHEA (the umbrella accreditation group)and/or private for-profit companies set up for the purpose. The higher the standards of certification, the better the degree. Students could take tests like the CLEP examination for individual courses, broad area based exams testing broader competencies (some variant on current Graduate Record Exams), coursework formally taken in schools, AP credit, special designed exams done by ACT, College Board, ETS, etc., to get the certification.

5) Government subsidies would be directed to students, including grant funds. While universities could ask students what grants they had, the students would control the money. Tax breaks that promote conspicious consumption on college campuses would be removed, as well as subsidies to upper income persons. Pell Grants would become vouchers (student subsidies) that could be used at any institution, and would be increased for students finishing early and/or showing high performance, and reduced for those tardy in finishing or performing in a mediocre fashion. The government would get out of the student loan business. This plan would appeal to some on the left (given its highly egalitarian nature, and denying aid to the rich), but would appeal to most libertarians and conservatives because it reduces government's role in higher education. Vouchers would grow only at the rate of inflation (or, arguably, inflation plus perhaps one percent).

There is more to the plan, but this is a barebones outline. Surprisingly, some aspects of it are happening anyhow, as public support for state university appropriations erodes, for example. Stay tuned. We hope to be doing some more research into universities becoming more entrepreneurial, cost conscious, and effective.