Challenges for higher education in the United States: The cost problem and a comparison of remedies

Abstract

AbstractThe costs of attending four‐year colleges and universities in the United States have steadily increased over four decades leading to high levels of student debt and many obstacles for low‐income students. The analysis presented appraises the extent of the cost and affordability problems, debunking the sensationalistic claims that are common in mass media. It considers the sources of cost increases such as the growth of administration and the decline of state subsidies and their consequences for low‐income students, including growing income gaps in completion rates and declining enrolment in more expensive institutions. By reviewing and synthesizing the existing literature, possible remedies for the cost problem are examined. These possible remedies include cost containment strategies, the possibility that universities can pursue alternative revenue sources, performance funding policies to improve productivity, increased state investment in institutional support, and financial aid reforms. Financial aid reforms provide the most feasible solution to the cost problem. These reforms should include doubling the size of grants to low‐income students and the expansion of income‐contingent loan repayment plans.