The New American Foundation released a report today outlining the current state of federal financial aid in higher education. Rebalancing Resources and Incentives in Federal Student Aid argues that the existing federal financial aid system has had a

haphazard evolution over the decades [that] has made it inefficient, poorly targeted, and overly complicated.

Despite dramatic growth in federal higher education funding it is still not adequate to help middle class families that have been hit hard by the economic downturn and declining property values. The report states

the federal government has become the funder of last resort in American higher education. As recently as 2002, federal student aid totaled $72 billion per year. By 2012, it had grown to $174 billion—a $102 billion increase in annual aid in just a decade’s time. Most of that money came in the form of federally-backed loans that students are increasingly struggling to repay. Yet despite this wave of new funding, federal lawmakers are struggling to keep vital aid programs afloat.

At the same time, federal policy makers are increasingly focused on getting value from their higher education spending.

Given these circumstances the report states that

More incremental change will not suffice. With the need to support higher learning never greater and fiscal pressures acute, the time has come for a top-to-bottom overhaul of how the federal government manages financial aid. Everything should be on the table: grant aid, loan programs, tax credits, and long-standing subsidies to institutions. Taxpayers and students need an aid system that is simpler, more understandable, more effective, and fairer.

The report offers 30 policy proposals that fit the current era of fiscal austerity because they can be accomplished at

no additional cost to taxpayers — by rebalancing existing resources and better aligning incentives for students and institutions of higher education. Ultimately, those reforms will increase access to high-quality credentials and boost student success in higher education and the workforce.

The report concludes that

decades of accumulated policy offer many opportunities for such reform. Tucked away in the system are inefficiencies and obsolete subsidies that can be used for better purposes. Overlapping programs can be consolidated in ways that make them more generous and understandable. Overly expensive programs that have strayed from their original purposes can be made more affordable for the federal government and more effective at helping students earn degrees.

In fact, there is enough waste and inefficiency in the existing system to substantially increase funding for Claiborne Pell’s foundational grant program, put federal aid on a firm budgetary footing, solve the student loan repayment problem, and provide new incentives to spur college graduation—all for no additional cost to the taxpayer above what is already being spent today.