In his book The Way to Wealth (perhaps America’s very first book of financial advice), Benjamin Franklin said, “An investment in knowledge pays the best interest.”
Franklin might amend that today, in light of the skyrocketing cost of a university education, the crushing burden of student debt, and the mismatch between graduates and available jobs. Indeed, later in the book, he counsels, “If you would know the value of money, go and try to borrow some; for, he that goes a borrowing goes a sorrowing.”
That’s why the White House’s proposed higher education reforms make sense; each of these problems (cost, debt and job prospects) is addressed in a set of proposals put forth by the Trump administration on Monday.
The first issue is cost. There’s no mystery here. We know what drives up higher education prices: easy access to federal funds. As former Education Secretary Bill Bennett explains so convincingly that it has been dubbed the Bennett Hypothesis, “The higher amount you put into higher education, at the federal level particularly, the more the price of higher education rises. … It’s the dog that never catches its tail.”
The first step is to put limits on how much students (and their parents) can borrow. Student debt has risen to $1.5 trillion, up more than 350 percent since 2003.
“The current system provides institutions of higher education with few incentives to control costs and saddles parents and graduate students with debt with little attention to borrowers’ likely ability to repay,” the White House notes.
There are other ways to ensure that costs come down. The White House says colleges and universities should have a bigger stake in the success of their students, noting that now, “some institutions consistently fail to deliver the type of quality education that enables students successfully to repay Federal student loans, leaving borrowers and taxpayers to foot the bill.”
Instead, institutions that accept federal funds should bear some of the risk associated with charging students tens of thousands of dollars (sometimes hundreds of thousands) for degrees that will never lead to jobs that can repay those loans. The White House offers few specifics, but the principle is sound. The administration can work with Congress toward solid policy proposals.
The White House’s proposals also include expanding access and opportunity for some non-traditional students.
Financial aid should be available for inmates who are eligible for early release, and who will need new skills when they’re out. This aligns with the goals in the bipartisan First Step Act, signed into law in December of last year. The new law aims to reduce recidivism by, among other things, ensuring that former prisoners have the skills they need to secure good jobs and reconnect with their communities.
Students who are pursuing non-traditional, high-demand careers should also be eligible for Pell grants. They could use these funds for high-quality, shorter-term programs that result in students earning credentials, certifications or licenses in skilled trades and technical fields.
On the jobs front, it’s time to reform the federal work-study program, which too often parks low-income students behind the information desk at the library or assigns them clerical work that gives them little real job experience. FWS should be expanded to include workforce and career-oriented opportunities, which will have positive impacts on their future job prospects.
There are other ideas contained in the White House’s proposals. For instance, we should reform and streamline the accreditation process, so that it’s focused on student outcomes, not academic prestige.
We should encourage innovations that result in accelerated degree completion and lower-cost degrees. President Trump should come to Texas to take a look at our “Affordable Baccalaureate” programs (our “$10,000 degrees”), which are making a real difference for many Texas students.
What’s encouraging about these proposals is that they’re practical and workable.
The alternative being offered by so many Democratic candidates for president can be summed up simply — “free college.” Of the three problems listed above (cost, student loan debt, and jobs) this solution addresses only one.
A massive influx of federal funds certainly won’t do anything to contain costs at colleges and universities, and students will still graduate with degrees that have little application outside academia.
The White House’s reforms make sense. Congress should work with the Trump administration to reform our nation’s system of higher education, to ensure that every American has the opportunity to succeed.