Starting from Scratch

A New Federal and State Partnership in Higher Education
Policy Paper
Feb. 18, 2016

Imagine students attending colleges and universities around the country having their financial needs met without the use of federal loans, Pell Grants, and higher education tax credits. In “Starting from Scratch: A New Federal and State Partnership in Higher Education,” New America’s Higher Education Policy Program shares its vision for redesigning the federal and state financing of higher education.

For too many families, paying for college has become an obstacle to financial stability, rather than the pathway to opportunity. Presidential platforms promise free or debt-free college, but these plans are built atop the existing, broken system of financing higher education.

The Higher Education Policy Program’s plan would scrap this foundation, and create a new federal and state partnership that would produce more affordable, socioeconomically diverse college campuses — rewarding schools that keep tuition affordable for low-income students with more funding, not less.

"We can't solve the nation's student loan crisis by tinkering around the edges. The only way to halt the explosion of borrowing is to stop lending so much money, by replacing debt with a federal-state financial partnership that actually works. State governments have been getting a free ride for decades, with students and families bearing the consequences. Any plan that sustains the current system is a plan for financial misery that students don't deserve," said Kevin Carey, Education Policy Program Director and one of the report’s authors.

The proposal would achieve this by:

  • Changing the allocation of federal higher education funding from a voucher program to a formula-funded grant program, eliminating federal loans, Pell Grants, and tuition tax credits altogether; 
  • Lowering the overall costs for students to eliminate unmet need for living expenses such as room and board, transportation, and child care costs as well as tuition; 
  • Holding colleges accountable for student outcomes; 
  • and Halting state disinvestment by encouraging states to invest in both public and private higher education.

The Higher Education Policy Program’s plan also includes a set of outcomes-based accountability metrics designed to ensure that public dollars are well targeted and meet the needs of students for a high-quality, affordable education that leads to success after college.

Read more about this proposal in their paper.