NCPA - National Center for Policy Analysis


May 17, 2006

Allowing Arizona community colleges to offer third-year courses and even four-year degrees is a bad idea that would cripple the state's healthy market for private colleges and universities. Instead, the state could use the market to help educate college-bound students in state, says Vicki Murray of the Goldwater Institute.

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 at public colleges, excluding 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, says Murray.

Source: Vicki Murray, "Grant Plan Opens Doors for College," Goldwater Institute, March 22, 2006.


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