In his testimony today before the Joint Economic Committee, Director of the Center on Higher Education Reform Andrew Kelly identifies the major design flaws in the federal student aid system and explains the four most promising reforms that would encourage colleges to compete on price and value:
- Cap Loan Programs that Allow Unlimited Borrowing and Reform Loan Forgiveness: Thanks to generous loan forgiveness, some graduate student borrowers face no marginal cost on dollars borrowed above a particular threshold, sending a green light to institutions to raise tuition. Reforming forgiveness is critical.
- Improve Transparency: Providing prospective students (or their parents) with additional information about costs and student outcomes can empower them as consumers.
- Implement a Performance Floor and Risk-Sharing for Federal Loans: Policymakers should replace the primary federal higher education regulation—the CDR—with two simple accountability mechanisms: a performance floor that would kick the worst-performing institutions out of federal aid programs and a risk-sharing policy that would give institutions skin in the game.
- Create Space for Private Financing: Unlike the federal government, private lenders and investors would, in theory, have incentive to underwrite loans on the basis of the expected value of particular postsecondary options. Under such a system, students would be unable to secure financing for programs with no return on investment, and loan terms would reflect the value of different options, thereby sending a signal to students about where to invest.
Read the full testimony, “Reforming Higher Education Finance to Align the Incentives of Colleges, Students, and Taxpayers.”
To request an interview with Andrew Kelly, or another AEI scholar, please contact AEI Media Services at mediaservices@aei.org or 202.862.5829.
Quick Links:
5 questions that every presidential candidate should answer on higher education
It’s time to demand more of American colleges. Here’s how
REPORT: Inputs, outcomes, quality assurance: A closer look at state oversight of higher education
from AEI » Latest Content http://ift.tt/1WytMZ7
0 التعليقات:
Post a Comment