June 14 straw dog proposal
Kathleen, Muna pulled some information in response to your question. She found the following data:
The Minnesota Office of Higher Education's costs to administer and audit the MN State Grant in 2006 was 0.32% of overall program expenditures. The OHE's Minnesota State Grant Review 2006 reports that “state grant awards for students are calculated based on a policy framework called the Design for Shared Responsibility. While modified over the years, the framework has served students and their families effectively by recognizing changes in post-secondary education prices, in student and family income, and in federal grant aid availability.”
The question of the manageability of the institution subsidy system versus the student grant system depends on varied factors; determining how these factors would work together is one of the challenges.
Some argue that financing students becomes more difficult than a single payment to a higher education system when the funds are distributed on a need-basis because standards for eligibility and implementation must be determined on a student-by-student basis. As suggested by a publication by the Center for College Affordability and Productivity, “The easiest allocation scheme would probably be to continue to rely on colleges’ admissions offices, and only make grants available to those that have been accepted to a college.” (From the study, "25 ways to reduce the cost of college".)
There is also an argument that funding students based on need increases equality and access, which also has positive returns for both society and the individual.
In terms of costs, some individuals believe that it would be more costly to distribute funds to students and also provide funding for marketing of the program. On the other hand, advocates argue funding the students would be cheaper in the long run because institutions have an incentive to reduce costs and improve quality in order to be competitive in the higher education marketplace.