What We Really Need to Do to Make College Affordable

Tuition fees continue to rise, with tuition fees increasing 238% between 1980 and 2016 and far exceeding the inflation rate of 191.3% over the same period.

Most students now pay between $ 6,000 and $ 15,000 annually for public and private colleges in the United States. And while state student aid has more than kept pace with inflation for the past few decades, it has not kept pace with excessive increases in college costs, causing Americans to amass a staggering $ 1.7 trillion in outstanding student loan debt .

Colleges and universities are the beneficiaries of these massive student loans, in addition to other government grants they receive. In 2019, higher education institutions received $ 91 billion in federal student loans and $ 30 billion in federal student grants.

The increase in state subsidies for the status quo merely privileges a traditional university path over all other forms of learning. It also stifles innovation in the marketplace by protecting colleges and universities from competing fairly with college alternatives or taking a reasonable financial risk for the results achieved by the students.

Policy makers have focused the college debate on three proposed areas for federal spending increase: free community college, doubling the Pell Grant award, and student loan making. Everyone deserves a scrutiny because everyone is missing out on an opportunity to address the root cause of soaring college costs.

Free adult education center

Community colleges already offer the cheapest college options with an average annual tuition fee of $ 3,340. But the proposals from the free universities contain perverse incentives that could lead states to raise the price in order to secure a larger share of the federal matching funds. They can only serve to stimulate additional price inflation.

In addition, a federal-state partnership based on student replacement will be problematic, as the prices for community colleges vary widely. States that let study costs soar would be rewarded with a higher-quality federal rescue package. In contrast, states that invested in college affordability would be penalized.

Doubling of the Pell Grant Award

Pell Grants already cover up to $ 6,495 per year in college expenses for students with proven financial needs, currently up to 12 semesters, of nearly $ 39,000 in unpaid federal aid. In mid-June, lawmakers introduced the Pell Grant Preservation and Expansion Act of 2021 to double the maximum Pell Grant grant amount within five years, extend lifetime eligibility from 12 to 18 semesters, and make the Pell Grant mandatory, non-arbitrary federal spending close. If passed, a student who receives a maximum Pell grant of about $ 13,000 per year for nine years would receive $ 117,000 over the course of his life. Research into tuition fees and federal tuition grants suggests that tuition and in-kind fees should increase as state Pell Grant grants grow exponentially.

Other proposals to expand the possibilities for students to use Pell funds for short-term programs limit them to programs that are only offered by universities, so that an entire sector of innovative non-university training programs is left off the table. Any increases from Pell that still restrict it to colleges and universities reward an already costly higher education system with more federal subsidies, leaving taxpayers, even those with no post-secondary education, to pay the bill.

Student loan waiver

The extensive granting of student loans does little to compensate for the rising costs of education. It penalizes those who work hard to save for their education or who compromise consciously to pay for their education rather than taking out student loans. In addition, it helps the affluent much more than the less affluent as most of the economic benefits go to high-income individuals.

In addition, there are already public service loan programs and earnings-based repayment options in place, where the repayment amounts are determined based on the individual’s income and family size. Forgiveness programs, while having limitations, including burdensome bureaucratic requirements, serve as an alternative to full forgiveness. Policy reforms should ensure that students do not incur more debt than necessary and encourage universities to be more transparent about student return on investment based on participation costs versus expected revenues.

The status quo financing model has to change

Efforts to make college free or double the maximum Pell Grant Award and make the federal government the primary or single payer will do little to control or mitigate rising tuition costs. Also, there is no point in continuing to put billions of taxpayers into a system that has seen marginal gains in graduation rates from six and eight years of college.

The Title IV system should be improved, but the answer is no longer federal spending, but better use of existing resources. And a better system allows for more options that meet the needs of learners in the 21st century economy. For many learners, this may still be a traditional associate or bachelor’s degree. For others, it could be a university alternative.

Learners should have the freedom to use their needs-based funding to pursue high quality, individual paths that are tailored to their goals and desires, and not be limited to programs that are only offered by colleges and universities.

The proposed changes to the Title IV system do not help them. Instead, changes reward an already costly higher education system with more government subsidies, leaving taxpayers, even those with no post-secondary education, to pay the bill.