Policymakers in Texas or other states who are looking for ways to make the postsecondary system as a whole more responsive to the local economy’s needs could restructure community colleges into two separate divisions: one that encompasses career-focused programs, with funding based on labor market outcomes, and another that focuses on academic preparation, with funding based on transfers to four-year institutions that result in credentials of value or low student loan debt relative to earnings.

Key Points

  • Despite higher education’s emphasis on diversity, the structure and function of postsecondary institutions feature remarkably little meaningful diversity.
  • One exception to this rule is Texas State Technical College (TSTC), which focuses exclusively on economic advancement and is funded based on the economic benefits it provides to its graduates.
  • Policymakers in other states who are looking to build more responsive and effective postsecondary institutions ought to take a close look at the financial structure that has enabled TSTC’s unique success.