Taxpayers shouldn’t have to shoulder financial aid for graduate students

Undergraduate students, parents and concerned taxpayers have long suffered from the consequences of poor higher education policy and regulations. These failed policies fuel tuition inflation, credential inflation, non-completion, student debt, loan defaults. The federal financial aid system is so Byzantine in its structure, that even those in higher education have trouble navigating the six types of loans, nine repayment plans, eight forgiveness programs, and 32 deferment and forbearance options.

The National Association of Student Financial Aid Administrators president’s recent op-ed in opposition to the PROSPER Act cuts tackling federal spending on student aid is a shining example of unwarranted criticism of a bill that has the possibility of clearly and responsibly asserting the jig is up.

{mosads}Students, parents and taxpayers want bold change and they want it now. One such change would be to significantly curtail the availability of federal student loans for graduate and professional education and transferring the savings to increase grants for undergraduate education.

However, organizations including the American Association of State Colleges and Universities, Association of American Colleges and Universities, National Association of Independent Colleges and Universities, and the Council of Graduate Schools are complaining that the PROSPER Act limits graduate and professional student loans and forces borrowers to repay more of their federal loans.

Although the new limits on graduate and professional student lending defined in the PROSPER Act represent a small quantitative change in this direction, they do not provide the bold qualitative leap to restore greater private sector participation in student financing and foster innovative private lending options promised by the 2016 Republican Party Platform.

Graduate and professional students represent only 14 percent of all postsecondary students and currently hold 40 percent of the nearly $1.5 trillion in federal student loan debt. When this amount of federal student loans are flowing with only the most basic of safeguards and oversight can we really expect educational institutions to not finance their facilities, faculties and recruiting programs as lavishly as possible or to responsibly design programs and pricing models that have recognized market value?

What justifies continuing gross federal intervention in the graduate and professional student loan market? The imperfections in the graduate and professional student loan market that would constitute the only legitimate reason why government should intervene in this market simply do not exist. There are no imperfections, just distortions.

Federal student loans certainly help facilitate access to undergraduate education, but they should not guarantee access to any graduate and professional institution at any price. As long as graduate students can borrow to attend any accredited institution at any price, no matter what the quality of the degree or certificate program is, student debt and college costs will increase and student success rates will decrease.

Vigorously promoting the axiom that people value what they pay for and will pay for what they value will broaden educational opportunity, raise the quality of graduate and professional education, and simultaneously lower governmental expenditures.

The irony of the current federal student loan program is that has led to graduate and professional students being charged significantly more relative to the risk they pose, and taxpayers having much greater exposure due to the projected costs of loan forgiveness, repayment plan options, and other policies originally intended to serve needy undergraduate students. Graduate and professional students should not be asking taxpayers to shoulder their self-created student loan burdens.

The federal government can always act as the lender of last resort for a small percentage of economically disadvantaged graduate and professional students who cannot be served in the private loan market.

It’s time to end the increasingly hefty federal subsidies graduate and professional students are receiving and provide access to more equitable and responsible financing options. It time for bold policy that can incentivize schools to price their programs according to their market value. And it’s high time to promote accountability for poorly-performing graduate and professional schools and enable students to better assess the market value of their chosen programs before they attend school.

Voter desire to end the status quo of things gone afoul, amuck and awry in government was evident in the 2016 presidential election. This sentiment may be stronger in the upcoming midterms.

Ronald Bearse is a former education finance executive and studied education as an element of national power at the National Defense University.