《KEEPING COLLEGE AFFORDABLE GOVERNMENT AND EDUCATIONAL OPPORTUNITY》

1. Introduction1

An Overview of College Financing3

The Effectiveness of the Student Finance System8

Considerations in Assessing Federal Policy11

Dimensions of Policy Choice16

2. Changing Patterns of College Finance and Enrollment20

A Long-Run Perspective on College Finance20

College Financing Trends since 196525

A Detailed Look at Financing Trends since 197430

Enrollment Patterns over Time37

3. Financial Aid, College Costs, and Enrollment44

A Summary of the Literature44

Is There Really an Inconsistency between Empirical Results and History?50

Pushing the Analysis Forward: Where Do We Go from Here?55

4. The Supply-Side Effects of Student Aid57

Findings of Previous Research58

The Data59

Analysis of Trends in College and University Finance60

An Econometric Model of College and University Finance65

Conclusion73

5. Incomes, Prices, and College Choice75

Changes in the College Destinations of Middle-Income Students78

Enrollment Destinations of High-Achieving Students89

Conclusion102

6. The Future Affordability of College106

The Simulation Model107

Projections of Overall Affordability109

Future Affordability for Aided and Nonaided Students122

Conclusion132

7. The Targeting of Student Aid133

Needs Testing and Income Testing134

Student Aid in a Mixed Public-Private Higher Education System136

Vocational Education139

Adult and Nontraditional Students144

Merit Aid149

Conclusion152

8. Higher Education as an Investment153

Returns to Higher Education154

Capital Market Imperfections156

Market Incentives and Federal Loan Guarantees: An Economic Appraisal159

College Finance as an Intergenerational Compact174

Student Aid and the Labor Market180

Conclusion185

9. Toward Improved Public Policy for Higher-Education Finance187

Strengths and Weaknesses of the Existing Student Finance System188

Four Goals for Reform in the Finance of Undergraduate Education194

Federalizing Student Aid for Lower-Income Students194

Incremental Reforms212

Conclusion214

Appendix A. An Empirical Analysis of Financial Aid, College Costs, and Enrollment: Technical Report217

Appendix B. Description of Variables Used in Analysis of Institutional Behavior229

Appendix C. Notes on the Modeling Strategy: The Question of Fungibility235

Appendix D. An Empirical Analysis of Government Support and Institutional Behavior239

References249

Index257