The voices of Urban Institute's researchers and staff
May 16, 2017

Federal and state governments should work together to strengthen public colleges and universities

May 17, 2017

Most people support improving higher education in the United States, but there’s disagreement about how to do that. Should the federal government continue to provide grants and loans students can use wherever they enroll, leaving states to monitor the quality of institutions and the prices they charge? Should the federal government design an elaborate system to ensure states provide free or debt-free access to quality public colleges for all of their residents? Or is there a better model?

States have different populations, different economies, and different spending priorities. Some have strong histories of supporting higher education, while others place more responsibility on students and families. The variation in higher education institutions across the nation is in many ways a strength, and people like Education Secretary Betsy DeVos believe the best way to improve higher education is to leave it to the states.

Leaving higher education to the states, however, creates wide divergences in educational opportunities depending on state of residence. It also creates inefficiency. Even if all states operated their systems as efficiently as possible, lack of coordination across states could lead to an inefficient system overall.

Across the nation, enrollment in public colleges and universities grew 13 percent between 2004 and 2014, but that growth was uneven. In seven states, enrollment declined or rose only slightly (less than 5 percent), while in nine states, it grew 20 percent or more. So some states have excess capacity, while others struggle to provide space for all their students.

It’s not easy, however, to move students across state lines to account for capacity issues, because in most cases, students would face higher, out-of-state prices.

Moreover, competition among states leads many states to aspire to having a top research university. The nation needs high-quality research universities and graduate programs, but these universities don’t have to be in every state. Efforts to bolster a single research university may divert resources from meeting state and national needs for accessible, high-quality undergraduate education, particularly for underrepresented and disadvantaged populations.

A stronger, somewhat modified federal-state partnership could ensure that the costs and benefits of the nation’s research universities are spread more evenly across the country and provide incentives for states to more adequately fund the broad-access public institutions that educate most at-risk students, while ensuring the country maintains an adequate number of high-quality research universities.  

The current system creates additional inefficiency because policies at one level of government can diminish the effectiveness of funding from another level. For example, the federal government puts billions of dollars a year into the Pell grant program to narrow the gaps between students from low- and high-income backgrounds. States that focus their resources on merit-based aid programs or on compensating non-Pell recipients by filling the gaps between need-based aid and tuition for all students undo much of the impact of federal aid.

State responsibility for higher education is well established, and federal intrusion into managing colleges and universities would likely generate serious problems. Lessons from other policy areas highlight the risks of federal government overextension. But the federal government must ensure that its funds are well spent and its goals are met through the state-based system. A more efficient and equitable higher education system would benefit both students and taxpayers.

It is time to strengthen the federal-state partnership. The federal government should design appropriate incentives to encourage states to more adequately fund higher education and to target their funding to increase meaningful opportunities for disadvantaged students.

It is also time to focus on cooperation among states—an idea that gets less attention. States should be able to develop strategies for working together on their own, but federal incentives for these efforts would make constructive change more likely.

Photo via Shutterstock.

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