Story at a glance
- College tuition and fees in the U.S. increased 63 percent from 2006 to 2016.
- Rising college costs have led to declining purchasing power of federal aid programs like the Pell Grant.
- Controlling college tuition is a complicated task, requiring a strategic partnership between the federal government and higher education institutions.
College costs have far outpaced inflation for at least a decade, fueling the student debt crisis and pushing the Biden administration to pursue drastic overhauls — beginning with debt forgiveness.
Critics of debt forgiveness point to myriad issues with the plan, as it fails to address directly the needs of future borrowers by leaving college tuition and fees unaddressed. It’s been a glaring issue facing higher education for decades, with college costs increasing 63 percent from 2006 to 2016.
That’s led to declining purchasing power of federal aid programs, like the Pell Grant, pushing more students to take out more loans in order to finance an education.
Reining in college tuition is a complicated task and would require a strategic partnership between the federal government and higher education institutions.
The Biden administration appears open to reforming higher education and has multiple levers at its disposal to impose regulations and increase accountability of the institutions that leave their graduates with burdensome debt.
Revive campus-based aid programs
A first step could be having those same institutions contribute to the tuition they are charging thousands of students, known as campus-based aid.
Work-study programs and the federal Perkins loan program are more widely known campus-based aid, establishing a cost-sharing dynamic where colleges must contribute to a portion of the aid in order to access federal funds. They are among the oldest of the federal financial aid programs but have come to play a relatively smaller role in the federal student aid effort.
And in 2017, the federal government moved to end the Perkins loan program.
Returning to campus-based aid programs could limit institutions’ tuition increases, as they know that the higher their prices, the more money they will have to contribute to such programs, according to Jared Bass, senior director of higher education at the Center for American Progress.
Bass told Changing American campus-based aid programs are an underutilized model that has a history of success that can be tapped into for future reforms. It would require a shift in not just policy but culture in how higher education is funded.
Institutions that do not want to participate in such a model should be called into question, explained Bass, who believes it comes down to institutions having faith in their quality of education and dedication to helping students succeed and contributing toward their educational wellbeing.
“If the majority of funding is coming from this federal government program it would be great if we had more institutions buy into that system, have skin in the game and pay into it to contribute to it because they believe enough in their education model, their academic services and the economic opportunity that they provide,” Bass said.
Urge Congress to act
Another way to establish oversight over the higher education system could be through a presidential commission. Here, a group of higher education experts, policy makers and university presidents would come together to create a dialogue around college costs. This could include a report with specific recommendations on ways the federal government can go about decreasing college costs and ensure future generations of students don’t end up with crippling student loan debt.
But ultimately, Bass said, it will be up to Congress to pursue regulatory action around college costs and make crucial changes.
“It’s really going to be up to Congress to step up to the plate here, and also address the student debt crisis,” Bass continued. “It’s going to be up to Congress to control college costs. And again, not on the backs of students, but on massive institutions.”
There have been attempts from members of Congress to address the issue, like Utah Sen. Mike Lee (R) who introduced the Higher Education Opportunity and Reform Act in 2019. It called for a $30,000 cap on undergraduate loans with a 15-year repayment period beginning one year after the conclusion of a four-year program.
Lee’s legislation also pushed to increase an institution’s “skin-in-the-game” concerning student loan default rates, where a school pays 10 percent of the student’s default amount.
Leverage cost of attendance mechanism
What college actually costs, including tuition, housing, books, fees and transportation, is at the heart of the affordability crisis. Recent research shows living expenses alone make up close to 80 percent of the budget for a student attending a public two-year school.
Congress updated its Cost of Attendance (COA) in 2020 to offer more guidance around how an institution determines their students’ living expenses. Should a school fail to provide accurate cost assessments, the Education Department can act. This will give the department greater authority to combat calculations that potentially harm students.
The administration proposed in a fact sheet outlining its debt forgiveness plan a method to help future students “steer clear of programs with poor outcomes.” Under this initiative, the Education Department will post an annual watchlist of academic programs with the worst debt levels in the nation. It will also request improvement plans from schools with the worst debt outcomes from their programs.
“We can’t just have a system that allows students to go to low quality institutions to rack up huge amounts of debt and then work on forgiving that debt in the end,” Bass continued. “We have to hold colleges accountable for the education they provide, but also the experiences that students have endured.”
Accountability is “going to be a key to the conversation” around how to fix the system and how to prevent a crisis in the future, Bass said.
What’s next?
The Biden administration has indicated it’s planning to address rising college tuition, saying in August the department would be “taking steps to reduce the cost of college for students and their families and hold colleges accountable for raising costs.”
It’s not clear if any regulatory reforms are being considered, with the department only committing to an annual watch list of college programs that have contributed to the student debt crisis and proposing to reinstate a rule that would hold career programs accountable for leaving graduates with unaffordable debt.
Changing America has reached out to the Education Department for comments on next steps in its higher education reform agenda.
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