States can fight degree inflation (and they should)
Plus: Making outcomes-based funding work in higher ed; how school choice fared at the ballot box; and ways that DOGE can improve the U.S. welfare system
How state governments can fight degree inflation: Degree inflation—requiring a college degree to do a job that historically didn’t need one—creates unnecessary labor shortages, restricts access to work, and reduces the benefit from getting a degree for many students. State and local governments are among the worst drivers of degree inflation, thanks to their hiring practices and the licensing requirements they impose on many occupations. Fortunately, in a new paper for FREOPP, former Resident Fellow Preston Cooper observes that this also means states have outsized power to address the problem. He recommends dismantling credentialism in state government jobs, removing degree requirements from occupational licenses when they are higher than those in other states, and reducing degree requirements for jobs that pay well-below the norm for that education level.
→ For more higher ed reform ideas, check out Preston’s plan to re-energize higher education markets by reforming state authorization of colleges and ways the new administration can make education beyond high school work for all.
Aligning state higher education funding with student outcomes: Texas State Technical College (TSTC) is the only public higher education institution in the U.S. to receive 100 percent of its state administration and instruction funding through outcomes-based funding (OBF). In the years since TSTC moved to an OBF model, students have entered higher-paying jobs, more students have graduated on time, more low-income students attend, and state appropriations for the college have increased. FREOPP Visiting Fellow Annie Bowers examined the TSTC success story to draw out recommendations for other states and institutions exploring OBF. Her takeaways? States should choose metrics that are aligned with institutional mission and not prone to unintended consequences; support higher education accessibility; keep funding consistent and incentives strong; and plan for a transition period to make necessary changes to improve outcomes.
School choice initiatives are losing support among Republicans: Three states—Kentucky, Nevada, and Colorado—had measures expanding school choice on the ballot in 2024. All three failed to pass. The loss in Republican strongholds Kentucky and Nevada was especially surprising because red states led the nation in implementing school choice programs for 25 years. Meanwhile, staunchly democratic Colorado came closest to passing educational choice. FREOPP Research Fellow Gavin Schiffres attributes the electoral outcomes to education’s declining priority among voters and the contrast between the practical concerns of state-level policymaking and national culture war issues. Going forward, he argues that school choice advocates should avoid over-indexing their strategy on party affiliation and build broader, locally focused coalitions to overcome these political setbacks.
DOGE should tackle our welfare system: January is National Poverty in America Awareness month, making this an opportune time to consider reforms to improve our ability to efficiently and effectively get poor Americans the help they need. FREOPP Senior Fellow Michael Tanner considered ways that President Trump’s new Department of Government Efficiency (DOGE) can cut waste and red tape to improve our $1.1 trillion federal social welfare system. His top recommendations? Consolidate redundant programs, break up provider cartels, and facilitate secure and simple access to benefits through digital ID technologies.
For more on DOGE, hear FREOPP President Avik Roy’s take on the legal and practical challenges the department will face in the months to come on Capitol Report for NTD News.
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