With rising tuition and rapidly growing enrollment at Arizona's public universities and colleges, policymakers are looking for cost-efficient ways to expand capacity.
To help address this challenge, plans allowing community colleges to offer third-year courses and even four-year degrees have been proposed. On its face, such an expansion sounds reasonable. But a closer examination suggests this is not the simple solution it might seem.
One problem with expanding the state's current higher education system is the cost of making an already inefficient system bigger. The latest estimate from the Joint Legislative Budget Committee projects more than $80 million in associated costs to taxpayers from allowing just one community college to start offering four-year degrees. Multiply this by 20 community colleges, and the bill is in the billions.
Such an expansion would also cripple Arizona's healthy market for private colleges. Enrollment growth at private colleges and universities has been outpacing the growth of public counterparts by more than four to one over the past decade. Private institutions in Arizona have also edged past state universities in first-time, full-time freshmen enrollments.
Instead of crowding out the private sector, let's use it to help educate college-bound students in state.
That's what Colorado does. In 2005 it implemented the country's first statewide higher education grant system, called the College Opportunity Fund. Colorado no longer makes lump-sum payments to its public institutions for undergraduate education. Instead, funding goes directly to Colorado resident undergraduates in the form of stipends to use at any in-state college or university, public or private.
Arizona already has a smaller-scale program of this kind called the Private Postsecondary Education Student Financial Assistance Program (PFAP). It awards grants to eligible community-college graduates who enroll in private bachelor-degree programs.
PFAP students must complete their degrees or repay their grants, and the current PFAP graduation rate is 86 percent. Since 1997, the program has helped more than 1,000 financially needy students and saved the state more than $8 million.
The PFAP program could be expanded to make all Arizona college-bound students eligible for grants. Currently, state and local lump-sum funding just for operations, which excludes capital and construction expenses, exceeds $1 billion.
That's enough funding to give every projected resident student who enrolls in state an $8,000 grant to attend a four-year institution or a $5,000 grant to attend a two-year college.
Tying operating funding directly to students and indexing grant amounts to inflation would save an estimated $768 million annually over the current lump-sum funding system, which isn't based on student counts or inflation.
As with the Pell Grant program, Arizona students could use their grants to attend any in-state postsecondary institution, helping make the best use of both public and private capacity. Giving grants to students also introduces competition into our higher education system.
Having to compete for students would put powerful pressure on Arizona's public and private institutions of higher learning to keep costs down and improve performance or risk losing students and their education dollars.
With tens of thousands of Arizona high school students graduating each year, the state's higher education system must grow smarter, not just bigger. Letting students use grants to attend any college or university they choose is a cost-effective solution that fully utilizes public and private capacity while improving access to an affordable college education.
The writer is a Phoenix consultant and former director of the Goldwater Institute Center for Educational Opportunity.