America’s diverse higher education landscape includes more than 700 four-year nonprofit colleges and universities that focus on baccalaureate education. These private nondoctoral (PND) institutions are located in almost every state and collectively enroll about 1.6 million students and award nearly 150,000 degrees annually, with the majority of these being bachelor’s degrees. As this report will show, these independent colleges and universities are effective and efficient academic enterprises and, as such, are a valuable resource to the states in which they are located, as well as to the nation.
In the first section of this report, we document just how effective and efficient these colleges and universities are, drawing on research we conducted for an earlier published report, The Cost-Effectiveness of Undergraduate Education at Private Nondoctoral Colleges and Universities: Implications for Students and Public Policy (Zumeta and Huntington-Klein 2015). In particular, we show that PND colleges and universities graduate students at higher rates and significantly earlier than public institutions with similar foci that enroll similar types of students. These advantages apply to students of all demographic groups available in sufficient numbers for analysis in data from the U.S. Department of Education’s Integrated Postsecondary Data System (IPEDS). Also, PND colleges and universities are significantly more successful in retaining students who indicate in their first year that they are interested in a STEM or health major and progress to completion of a bachelor’s degree in one of those fields. Finally, we show that PND colleges and universities provide these benefits at a far lower per-degree cost to states (mainly costs for state grant aid provided to their students) than the cost of supporting students and institutions in the public sector.
Once the superior performance of PND institutions is established, we consider whether states could make better use of the capacity of these colleges and universities in their quest to increase bachelor’s degree production during an era of constrained taxpayer funding. Most states already have in place state grant programs for resident students attending both public and private colleges and universities in the state. We suggest that states could modestly increase the magnitude of such support they provide to some students choosing private over public institutions in an effort to reduce overall state costs, especially those from per-student appropriations to public colleges and universities.
The primary focus of this report, then, is to describe the results of state-specific simulations that we conducted of hypothetical policy changes for 24 of the 50 states. We explored the effects of increases in average state grants of, respectively, $1,000, $2,000, and $3,000 per year for aid-eligible students choosing private over comparable public colleges. Specifically, using values for the responsiveness of students to net price changes (“price elasticities”) derived from the empirical literature on higher education economics, we simulated how many students at the margin of choice between a public and private college would likely shift their enrollment plans to a private college because of the hypothetical enhanced grant. Then, we calculated how much this shift would add to (or, in a few state-specific cases, subtract from) subsequent bachelor’s degree production in the state, and how it would affect state higher education spending overall.