Report Shows Small Increase in State Scholarships Could Raise Degree Attainment and Reduce Cost to States

​A new CIC report shows that a $1,000 scholarship increase would encourage students to choose private colleges and universities over similar public institutions. The increase, in the form of state grants, would raise degree attainment rates and save the public tax dollars in 22 of the 24 states studied.

Issued in April 2017, Utilizing Independent Colleges and Universities to Fulfill States’ College Degree Attainment Goals expands on CIC’s 2015 report, The Cost-Effectiveness of Undergraduate Education at Private Nondoctoral Colleges and Universities: Implications for Students and Public Policy. Both studies were written by higher education researchers William Zumeta of the University of Washington in Seattle and Nick Huntington-Klein of California State University, Fullerton. The 2015 report documented how effective and efficient private nondoctoral (PND) colleges and universities are by graduating students at higher rates and significantly earlier than public institutions with similar foci and students. The report also found that PND colleges and universities provide these benefits at a far lower per-degree cost to states than public institutions provide. The authors explained that in the five states studied, $1,000 grants to students who enroll in private institutions would increase college graduation rates and at lower cost per degree to taxpayers.

The 2017 research report significantly expands the study’s scope by examining the impact of $1,000, $2,000, and $3,000 state grants in simulations for 24 states (see Box). Sixty percent of CIC member colleges and universities are located in these states.

Through statistical modeling, the authors determined that the smallest grant increase ($1,000), added to the average state grant to students choosing a PND college or university over a comparable (matched) public institution, was the best option. The $1,000 grant produces the most attractive combination of state budget savings and, in most states, it increases bachelor’s degree production. Hence, the report focuses mainly on the results of the simulations of this level of state grant increase. The report briefly covers the results of the $2,000 and $3,000 grant options and finds them to be too costly.

The statistical simulations for the $1,000 grant increase show that, in all but two of the states studied (California and South Carolina), states would save money on balance, primarily from reduced per capita appropriations to affected public institutions. Using the more conservative of the two estimates, state operating budgets could save annually between ​$1.8 million in Oregon to $159 million in New York due to the shift in students. The estimated annual net savings would amount to approximately $137 million in Ohio, $67 million in Texas, $61 million in Illinois, $52 million in Indiana, $39 million in Tennessee, $38 million in North Carolina, $33 million in Florida, and $32 million in Georgia. Annual savings of less than $30 million are predicted to occur in 13 more states.

Bachelor’s degree attainment is expected to increase in 19 of the 24 states once the shifted students have had time to complete degrees. In fact, using the conservative estimate, six of the states could see at least 300 more degrees completed per year: Ohio (886), Pennsylvania (739), Indiana (689), New York (490), Texas (368), and Minnesota (331). Degree completion increases mainly because of the comparatively higher graduation rates at private colleges and universities (see Figure)​.

Four-year graduation reates higher at private colleges  

“The new report shows that the efficiency of degree production at private colleges and universities leads to compelling taxpayer savings by millions of dollars and in some states saves capital expansion costs in the order of hundreds of millions of dollars,” stated Richard Ekman, president of CIC. Ekman is referring to the six states that are predicted to see rapid growth in high school graduation rates (Florida, Georgia, Kansas, North Carolina, South Carolina, and Texas). These states could save large sums of public funds by not having to invest in the expansion of classrooms and residence halls on public campuses by offering a modest $1,000 grant increase for students who choose to enroll at independent colleges and universities.

The report also offers the results of a statistical simulation that is more expansive in its assumptions, so that savings in state appropriations and degree counts could increase even further. This report offers independent college advocates and policy-makers additional evidence of the effectiveness and benefit of PND institutions in these states. CIC hopes that state policymakers will consider this simple policy change as one cost-effective step toward increasing a state’s bachelor’s degree production.

This report was issued as part of CIC’s Securing America’s Future initiative, which has been generously supported by the Arthur Vining Davis Foundations, Carnegie Corporation of New York, Endeavor Foundation, Gladys Krieble Delmas Foundation, Jessie Ball DuPont Fund, Lumina Foundation for Education, National Endowment for the Humanities, Teagle Foundation, and TIAA Institute. The report is available online.

Report cover and map of states included in report  

States Included in New Research Report

​New Jersey
New York
North Carolina
South Carolina
West Virginia