The Policy of Choice: Expanding Student Options in Higher Education

Federal Policies Impacting Choice Require Careful Reexamination, Study Says: College Choice Eroding for Low-Income and Non-Traditional Students

• Report Serves as a Primer on Complex College Choice Process
• K-12 Vouchers Debate May Impact Federal College Aid Policy Review in 2003
• Findings Reveal Options Shrinking for Low-Income Groups

Washington, D.C., Aug. 5, 2002—A new national study, a timely primer for understanding college choice in a public policy context, advocates reexamining federal aid policies at a time when “choice” at the K-12 level is being hotly debated as a result of the recent Supreme Court decision upholding the constitutionality of the Cleveland school choice program. The new report, “The Policy of Choice: Expanding Student Options in Higher Education” from the Institute for Higher Education Policy, explores the extent to which federal policy has influenced choice at the college level, and suggests that this up-to-date information will be critical as Congress prepares to reauthorize the Higher Education Act in 2003.

“The Policy of Choice,” the first major study of its kind in more than a decade, urges policymakers to reexamine federal, need-based financial aid policies, sharpen the definition of college choice, and clarify how federal policies should be used to enable choice in higher education.

The report notes that choice is critical to students and parents, representing one of the most important life decisions. The report shows a clear movement over the last 10 years towards lower- priced institutions, especially community colleges, for many groups of students. Moreover, with growing gaps between two-year and four-year tuitions, and public and private tuitions, federal policies may be consistently missing the mark for disadvantaged students, non-traditional students, and other groups, whether policy goals intended to promote choice or not.

Altogether, the findings suggest that existing public policies enhance, but do not equalize, college choice for certain groups of students. A high proportion of students appear to enroll at their first or second choice institutions, but enrollment patterns also suggest that a student’s options may be constrained earlier in the process by a combination of monetary and other factors. Given today’s increases in institutional alternatives and the availability of information, some well-informed groups of students may have experienced an increase in college choice at the same time that other groups faced a decline.

• The report also reveals important trends in the status of choice in higher education, including the following.
• Students frequently are being defined (in the federal aid formula) as “needy” based on the price of the institution they choose rather than the actual level of their disadvantaged economic circumstances.
• The past choice dilemma of public vs. private institution is increasingly being replaced by current choice between 4-year and 2-year institutions.
• Loans clearly promote choice more than grants, however the data also suggest that institutional aid is promoting choice more than federal aid, state aid, or grants.
• In ‘99-2000, while a substantial proportion of federal, need-based financial aid went to promote choice for all students, an increasing percentage of aid effectively promoted choice primarily for higher income families.

New approaches to college financing, such as the federal HOPE tax credits or the state merit-based financial aid programs, appear to have more influence on where students go to college than on whether they go at all.

Alisa Cunningham, Director of Research at the Institute and author of “The Policy of Choice,” noted, “Policymakers need to determine whether financial aid is indeed designed to promote choice for everyone. If so, we clearly have work to do to ensure that our policies are consistent with our goals.” Institute President Jamie Merisotis remarked, “Given the nation’s shifting demographics, now is a perfect time to explore whether choice should be a major higher education policy goal. This study brings us up-to-date by pinpointing the status of choice and illustrating how existing policies are directly and sometimes indirectly impacting educational opportunity.”

“The Policy of Choice” is one in a series reports for The New Millennium Project on Higher Education Costs, Pricing and Productivity, sponsored by the Institute, The Education Resources Institute (TERI), and the Ford Foundation.