Higher education in the United States has a curious combination of characteristics. It has among the highest participation rates in the world, but lack of access remains the primary concern expressed by many policy makers. Degree completion rates in the United States rank in the middle to below average among industrialized nations, yet education attainment is among the highest in the world. The United States has many of the best universities and students in the world, but the quality of the average American university and student may be mediocre when compared to universities in many other countries.

Some of these seeming contradictions are not that hard to explain. As countries move to a massified system of higher education in which half or more of the age cohort continues their education beyond high school, they will see a decline in both the overall persistence and the quality of the average student as more students enroll than in more elite systems. In this regard, it would be surprising to see both participation and quality to be sustained at very high levels. Basic arithmetic dictates that high attainment and modest persistence are possible only if participation rates are high.

But this curious combination of access and quality is also a function of some particular aspects of the American approach, including: the tremendous diversity of the American higher education system, the amount of resources devoted to it, and the lack of an overall national strategy for dealing with issues facing the system.

Diversity of the System
America has a remarkably diverse set of higher education institutions, ranging from more than 1,000 community colleges that provide basic access at relatively low cost, to hundreds of private liberal arts colleges, to a growing range of regional comprehensive universities and a hundred or so research universities, many of them world-class. This diversity is generally regarded as a great strength of the American system as it allows for institutional flexibility in responding to changing conditions as well as providing student consumers with a dazzling range of choices.

Level of Resources
American higher education also enjoys tremendous financial support from both the public and the private sector. Higher education in The United States accounts for nearly 3 percent of Gross Domestic Product (GDP). This is among the highest levels of support for higher education of any country. Even when hospitals and research are removed to make figures comparable to systems in other countries, U.S. higher education resources per student rank among the highest in the world. The irony is that many American higher education officials feel starved for funds.

Lack of an Overall Higher Education Strategy
The very high levels of participation and quality in American higher education are especially remarkable when one considers that the United States lacks a national strategy for dealing with issues facing the sector. This lack of an overall strategy is partly a function of the division of responsibilities for higher education financing between the federal and state governments in the United States The states bear the primary responsibility for funding public higher education while the federal government for the past several decades has taken the lead in funding student financial aid.

Many in the United States and around the world view this lack of an overall national strategy as a great strength of American higher education, contributing directly to the high level of competition among institutions for students and innovation when compared to most other countries that rely so much more on central planning. However, there is reason to believe that the mixed record of American higher education with regard to quality and access may also be tied to the lack of a strategic approach because of the mixed signals that are produced by many of the policies that are in place. These mixed policy signals often lead to an inefficient allocation of resources and to actions by institutional officials and students that are contrary to the expressed goals of the policies.

Mixed Policy Signals
Four of the more prominent of these mixed policy signals in the United States are the following:

While the stated goal of public policies is to provide more access for the poor, most government support for higher education goes to the middle class. This is true of both federal and state policies. State funding for public institutions disproportionately benefits middle-class students whom constitute most enrollments in these institutions. In recent years, many states have become even more biased toward helping the middle class through the creation of merit-based aid programs and prepaid tuition and college savings plans. Federal aid programs targeted for the poor do not assist the number of students many people think they do. This is particularly true of the federal student loan programs in which eligibility stretches far beyond $100,000 in family income for students who attend high-priced institutions. The new federal tuition tax credits are also slanted toward the middle class.

Despite much hand-wringing about exploding college costs, federal and state policies tend to encourage tuition and cost escalation rather than moderation. Most states now fund their public institutions through formulas based on some combination of the number of students and the cost per student. While cost-based formulas tend to produce more equitable allocations than the more traditional political negotiations between university officials and state policymakers, they also usually reward institutions with higher cost structures and thus may be contributing to cost increases rather than achieving efficiencies. Some federal policies also may be inadvertently contributing to tuition increases in the United States. Eligibility for student loan interest subsidies is now rightly tied to the financial need of the student. But an unintended consequence of this policy is that when students attend institutions with higher costs of attendance, they qualify for more loans and subsidies. This has led to a debate over whether federal student aid, particularly loan availability, has been a factor in university pricing decisions in the United States.

While policymakers obviously would like to see students succeed, very few public policies are designed to produce success in the form of degree completion. Although the goal is that students receive degrees within a reasonable amount of time, the policies may lead to a much different result. One reason for this dichotomy between goals and policies already has been noted: the shift to a system of massification almost inevitably entails some movement away from an emphasis on degree completion. But it also may be the case that low completion rates in the United States are a consequence of federal and state policies that emphasize access and minimize the goal of success. Under federal student aid policies, students only need demonstrate "satisfactory progress" to maintain their eligibility for student aid, and the length of aid eligibility often far exceeds the usual time to complete most programs. States are more vocal than the federal government in espousing the importance of success as well as access, but state funding formulas typically are based on the number of students enrolled, not whether they complete their term and receive a degree.

Despite oft-repeated concerns about the growing imbalance between grants and loans, public policies continue to encourage increasing amounts of borrowing. For the past two decades, the growing reliance on loans as a source of financing higher education has been a persistent concern in U.S. policy debates. While student debt burdens continue to mount, the policies in place allow or even encourage more borrowing. Congress has been unwilling to raise loan limits much for subsidized borrowing because of the cost to the government, but it created an unsubsidized loan program in 1992 that now accounts for nearly half of all federal student loans, adding greatly to overall student debt burdens. State policymakers have had less to do with this issue because states play a small role in student loans. But to the extent students at public institutions are the most frequent users of unsubsidized loans, it is doubtful whether public tuition and other charges could have grown as fast as they did in the 1990s without the ready availability of this new form of loans.

The diversity of American higher education and the level of resources devoted to it have enabled the United States to have high levels of participation and generally high quality despite having a relatively inefficient and non strategic approach to financing. American colleges and universities have come to depend on enough money being available to meet the many demands placed upon them and to make up for inefficiencies in the system. But the resources available to higher education in the future are unlikely to be sufficient to meet the constantly growing demands on the system. The lesson here is that if American higher education is to meet the real financial challenges that lie ahead, we should consider the experience of other countries that have been more strategic in their approach to funding higher education rather than simply relying on the brute strength of having enough resources to do the job.