College football is back, to the delight of students and alumni across the country. But between the touchdowns and the tailgating, student debt continues to grow, saddling graduates with loan burdens before they even have a chance to begin their careers.
Various proposals, such as Sen. Elizabeth Warren’s (D-Mass.) bill to allow students to refinance their federal student loans at lower interest rates, Sen. Tom Harkin’s (D-Iowa) proposal to allow private student loans to be dischargeable in bankruptcy, and President Obama’s ongoing efforts to cap loan repayments and make federal student loan forgiveness more generous, do nothing to actually drive down college costs. In fact, these types of federal subsidies likely contribute to ever-increasing tuition and fees at universities.
If policymakers truly want to make college more affordable, they must start paring down federal intervention in higher education, beginning by making substantive reforms to the largest federal law governing student loans and grants – the Higher Education Act.
Federal student aid authorized under Title IV of the HEA topped $169 billion in the 2013–2014 academic year – an increase of 105 percent over the past decade. In 2014, the $33 billion Pell Grant program provided grants to 9 million college students, making it the largest share of the federal education budget. In 2007, Congress expanded eligibility and funding for the Pell Grant program, which resulted in a doubling of the number of Pell recipients since 2008.
There is a strong correlation between increases in student aid and growth in prices over the past several decades. This suggests increases in federal student aid not only have not eased the college cost burden but may have made it worse. Since 1980, tuition and fees at public and private universities have grown at least twice as fast as the rate of inflation. The result has been that 60 percent of bachelor’s degree holders leave school with more than $26,000 in student loan debt, with cumulative student loan debt now exceeding $1 trillion.
In addition to authorizing federal student loans and grants, the 432-page HEA touches nearly every aspect of federal higher education policy. Yet some of the law’s titles and programs have outlived their purpose, and others make it difficult to reform higher education financing to increase access for students and lower costs.
As Congress considers a reauthorization of the Higher Education Act, a guiding principle should be to streamline the HEA in a way that more closely mirrors its primary purpose of allocating federal student loans and grants to ease the cost of college. That goal requires broad reforms to federal student aid and accreditation, the elimination of duplicative, unnecessary or ineffective programs and titles, and streamlining and reducing burdensome regulations and requirements.In a recent paper published by Heritage, we outline reforms for each of the 11 titles comprising the HEA. Some key recommendations include:
1, Reform the Pell Grant program to better serve low-income students (Title IV). To better serve the low-income students the Pell program was designed to help, an income cap should be set on Pell Grant eligibility, and Pell funding should be shifted from mandatory funding to discretionary funding, enabling Congress to have more oversight of program funding from year to year.
2. Create a more flexible higher education experience and reduce costs by decoupling federal financing from accreditation (Title IV). Currently, accreditation is a de facto federal enterprise, with federally sanctioned regional and national accrediting agencies being the sole purveyors of accreditation. The result has been a system that has created barriers to entry for innovative start-ups by insulating traditional brick-and-mortar schools from market forces that could reduce costs. The existing accreditation regime also has made it difficult for students to customize their higher education experience to fully reach their earnings and career potential.
3. Eliminate Title VI. Title VI of the HEA authorizes 10 international-education programs, including area-studies centers, which are designed to develop an understanding of “specific geographic regions of critical scholarly and policy importance.” Although it is critical for American national security to develop expertise in specific regions and languages, Congress should pursue this goal by eliminating Title VI, repealing its authorization and redirecting Title VI funding to the National Security Education Program. Read more about the problems with Area Studies Centers in a recent Heritage report by senior fellow Mike Gonzalez.
4. Enable private for-profit and vocational colleges to continue to serve students who have been historically underserved by traditional universities, by blocking publication of forthcoming gainful-employment regulations.
These are just a sampling of reforms that need to be taken during HEA reauthorization to reduce bureaucracy, improve access for students and make the college experience more affordable and meaningful.
Join us next week for a panel at the Heritage Foundation featuring higher education experts Hank Brown (former U.S. Senator and University of Colorado President), Ann Neal (president of the American Council of Trustees and Alumni), and Neal McCluskey (assistant director of the Cato Institute’s Center for Educational Freedom) will discuss these issues and their impact on students and taxpayers. [Register for the Sept. 22 Higher Education Reform panel]
