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A Conceptual Analysis of State Support for Higher Education: Appropriations versus Need-Based Financial Aid

44 Pages Posted: 4 Feb 2009 Last revised: 23 Jun 2009

Robert K. Toutkoushian

School of Education, Indiana University

M. Najeeb Shafiq

University of Pittsburgh

Multiple version iconThere are 2 versions of this paper

Date Written: February 4, 2009

Abstract

In this paper, we use economic concepts to examine the choice that states make between giving appropriations to public colleges or need-based financial aid to students. We begin by reviewing the economic justification for state support for higher education. Next, we introduce a simple economic model for comparing and contrasting appropriations and need-based aid for supporting higher education. We then provide a graphical depiction of the model and simulate the effects of each policy on access to higher education. We show that it is in the best interest of states to provide need-based aid and not appropriations. Finally, we conclude with a discussion of the factors that complicate the reallocation of state funding away from appropriations and towards need-based aid.

Keywords: Appropriations, education finance, higher education, economics of education, need-based financial aid

JEL Classification: D78, H23, H39, H40, H52, H70, I2, I3, J18

Suggested Citation

Toutkoushian, Robert K. and Shafiq, M. Najeeb, A Conceptual Analysis of State Support for Higher Education: Appropriations versus Need-Based Financial Aid (February 4, 2009). Available at SSRN: https://ssrn.com/abstract=1337470 or http://dx.doi.org/10.2139/ssrn.1337470

Robert K. Toutkoushian (Contact Author)

School of Education, Indiana University ( email )

IN
United States

M. Najeeb Shafiq

University of Pittsburgh ( email )

Pittsburgh, PA 15260
United States

HOME PAGE: http://www.pitt.edu/~mnshafiq

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