To increase college completion rates, invest directly in public postsecondary institutions

College students at graduation ceremony.

Late last week, Congress agreed to spend an additional $4 billion over the next two years on programs to improve college completion rates.

How should these resources be used?

In a recent Hamilton Project paper, I propose a program that would increase per-pupil spending at public postsecondary universities through a federal matching grant. Providing federal matching grants directly to institutions to spend on core instruction and academic support services would increase college completion rates and help close the income gap in postsecondary attainment.

While federal support for higher education has grown in the past decade, nearly all of that increase has come from spending on need-based financial aid, student loans, and tax credits. At the same time, state support for public institutions of higher education has stagnated, even as enrollment has risen. Due to these budgetary restrictions, many public institutions offer large classes and provide few support services for students. These are support services that many students, particularly poor and first generation college students, would find invaluable in helping them complete their college degrees.

This figure shows the levels of state and federal higher education spending from 2004-2015.

In a recent academic paper, Chris Walters and I estimate that a 10 percent increase in state funding for public institutions leads to a 17 percent increase in spending on academic support programs. There is substantial evidence that spending more per student, particularly on instruction and academic support services, increases early academic standingcourse completionsGPAs, and most importantly, college completion rates. For example, the CUNY ASAP program, which provided wrap-around academic and student support services to community college students, nearly doubled graduation rates.

This figure shows the bachelor's degree completion rate per student spending.

To raise college degree attainment rates, I propose that Congress support a 1:1 federal matching grant for states that implement free college at their public postsecondary institutions. Building on recent academic research showing the benefits of spending on core instruction and academic support services, institutions would be required to use the federal resources exclusively on these activities, while simultaneously freezing administrative costs. While my research suggests that institutions of higher education will invest in mentoring and student supports when provided with additional resources, by restricting the matching grant to these categories, it is guaranteed that much of the money will be well-spent.

If the $2 billion per year were allocated only to states that have already adopted free college proposals, I project that this would be sufficient to pay for the matching grant program under a variety of scenarios. If all 50 states were to enact free college plans, program costs would range between $10 billion and $14 billion for two-year colleges and between $19 billion and $29 billion for four-year colleges.

The budget agreement has provided policymakers with an opportunity to use new evidence on what works to increase postsecondary graduations rates. The best investment a young person can make in themselves is earning a college degree; we should use federal resources to support this critical investment in our nation’s workforce.