As states seek to maximize the return on their investment for higher education and continue to seek a more educated and skilled workforce, they likely will turn increasingly to outcome-based funding formulas as a mechanism to accomplish these goals.

Engineering students at Florida’s public universities may soon pay less for tuition than, say, English majors. Physics majors could get a tuition break over psychology students. A task force appointed by Governor Rick Scott has released a report recommending students in so-called STEM fields (science, technology, engineering and mathematics) should receive a break when writing checks or taking out loans to cover their tuition.

Every five years, the Tennessee Higher Education Commission completes a master plan that provides guidance on what universities and colleges should be doing for the state. There was just one problem with it. “It wasn’t paid much attention to by the institutions, I think, because there wasn’t much linkage between the state goals and the funding,” said David Wright, chief policy officer for the higher education commission. “The funding was based on (student) enrollment. The formula itself, even for all of its faults, had not been fully funded since the mid ’90s. Nothing was driving institutional behavior other than their own institutional goals or institutional statistics.

Many states have introduced performance measures into their higher education funding formulas to create institutional incentives to improve productivity. To date, however, only Tennessee has completely rewritten its college funding system to place outcomes at the center of the formula.  In doing so, the state has crafted a program that allows state funding and state policy to be closely aligned across the diversity of publically funded post-secondary institutions in the state.

As students head to college campuses around the nation, many have taken out loans to pay for their education. The Consumer Financial Protection Bureau estimates that the student loan debt load nationwide reached more than $1 trillion earlier this year.

We’re all aware the cost of a college education has skyrocketed in recent years. So a preliminary report just released by the National Center for Education Statistics (NCES) on college tuition and enrollment data might be somewhat anticlimactic. Yet the report, Postsecondary Education and the Price of Attendance 2011-12, Degrees and Other Awards Conferred: 2010-11, and 12-Month Enrollment: 2010-11, does provide data on precisely how steep the tuition escalation has been. It concludes, perhaps to the surprise of no one, that the economic downturn has had the greatest impact on public colleges.

Last-minute Congressional action seems poised to stop interest rates on subsidized federal Stafford loans from doubling from 3.4 percent to 6.8 percent on July 1.

To some extent, access to postsecondary education and the ability to pay have always been inseparably linked.  We often call education the great equalizer, yet individuals from more affluent families have always been better able to afford tuition to attend more elite private colleges or to earn a degree from a public university without relying on financial aid and student loans as those from middle-class and low-income households.

Now, one community college in California is about to attach some new financial strings to the cost of higher education. One expert says it might be a first. Santa Monica College, with 34,000 students, will implement a new two-tier approach to pricing its classes. Beginning this summer, Santa Monica College will begin increasing tuition for about 200 courses it offers. Students needing to enroll in these classes will have to pay $180 per credit hour, compared to just $36 per credit hour for most classes offered at the college.