A national scholarship policy based on a cost-benefit analysis of the social value of education is proposed as one method for improving current patterns of allocating US college scholarships and tuition funds. A central college subsidy agency, operating on a limited budget, would be required to allocate funds according to the maximum overall…

Subsidies to education are often justified by arguing that society derives political benefits from education in terms of individuals who perform better as citizens. Since these benefits are external to the student and therefore do not provide him with incentive to invest further in his education, society must devise a means of subsidy that will…