- The standard federal solution—upping student aid to temporarily bring prices down—is failing
- What’s important about Ryan’s blueprint is that it targets the programs most likely to inflate tuition
- It’s never easy to take away access to federal cash. Ryan’s proposal could finally embolden others to join in
Paul Ryan’s 73-page blueprint for expanding opportunity is chock full of ideas for higher education and job training reform. And rightfully so: opportunities for high school grads have shriveled up, but the cost of postsecondary education is crushing American families. The standard federal solution—upping student aid to temporarily bring prices down—is failing.
It’s time for new ideas, and Ryan’s blueprint provides a few. Most of the topics are familiar; they reflect a broader shift in thinking on higher education policy among a handful of reform-minded conservatives. This nascent agenda (if you can even call it that yet) moves beyond the confused Romney platform, which oscillated between “me-tooism” with Democrats and promises to bring us back to the cronyism of federally-guaranteed private lending. It also pushes past knee-jerk, indiscriminate cuts to student aid. Ryan’s last budget, for one, was criticized for cutting Pell Grants.
Now, a subset of Republicans is speaking a different language: federal reforms should create more options, simplify access to those options, and change the incentives for borrowers and colleges. To be sure, some of these ideas have bipartisan support. But Republicans are now leading on many of them. Three areas stand out:
1. Create more options by reforming accreditation.
Of the seven different reform ideas in Ryan’s proposal, this was the one he chose to highlight in his brief remarks last Thursday. He told the crowd at AEI, “We need to give students more options—in other words, we need accreditation reform. . . Let other schools in on the action.” Ryan went on to endorse Mike Lee’s proposal to devolve accreditation power to select states (Rep. Ron DeSantis (R-FL) introduced a companion bill in the House). Marco Rubio has also spoken repeatedly about the need for new accreditors that are better-suited to today’s demands.
In other words, in the space of a year or so, accreditation reform has gone from wonky fodder for think tank panels to a central piece of Republicans’ mobility agenda. It makes sense ideologically; at heart, accreditation reform is about deregulation, choice, and competition, making it a more natural fit for Republicans than for Democrats. President Obama made some noise about accreditation reform in 2013, but the idea hasn’t really been heard from again. And Tom Harkin, the Senate’s top education Democrat, seems to have stopped short of proposing substantial changes, calling instead for smaller tweaks like forcing accreditors to release their reviews to the public. (See section 497 here). Not a single Democrat has lined up to cosponsor Lee’s bill, either.
With the playing field open, Republicans like Lee, Rubio, and now Ryan have an opportunity to move this ball forward, especially if January brings a Senate majority. Whether Republican leaders on the education committees will help lead the charge is another question, but the idea is solidly on the “Reformocon” agenda.
2. Simplify financial aid and make it more flexible
Ryan’s proposal also calls for simplification of federal financial aid programs, a perennially popular reform target on left and right. Specifically, the Ryan report argues for notifying students about their financial aid eligibility earlier on, allowing families to use income information from a previous year on aid applications, and the creation of a more flexible Pell Grant.
The Free Application for Federal Student Aid (FAFSA) is loathed by almost everyone; the form is long (well over 100 questions) and complicated. It is also poorly timed, requiring income information from tax returns that may not be filed until April. Back in June, Senators Lamar Alexander and Michael Bennet proposed replacing the FAFSA with a two-question postcard, and called for allowing families to report their “prior-prior year” income to apply. The House education committee has proposed similar reforms. Ryan’s proposal doesn’t go as far as to endorse the postcard, but it does call for early notification and the use of prior-prior year income, both of which enjoy bipartisan support.
Ryan also called for making Pell Grants more flexible, building on a proposal from House Republicans for a Pell “flex fund.” Under the House plan, instead of receiving a fixed amount of Pell every time they sign up for classes, students would have access to a fund containing all the Pell Grant money they’d be entitled to over the course of their career. They could then spend grant money as they wished, when they wished, providing incentive to spend wisely. Flex grants would also help nontraditional students who may take a less linear path than traditional students.
3. Reform PLUS loans and loan forgiveness.
Finally, Ryan’s proposal calls for capping PLUS loans for parents and graduate students and for reforming student loan forgiveness plans.
That a Republican is calling for loan reform shouldn’t be surprising. Since at least the 1980s, Republicans have harped on the so-called “Bennett hypothesis:” that federal student loan programs inflate tuition. But they’ve made few credible attempts to do away with loan programs, and have often been complicit in their expansion.
What’s important about Ryan’s blueprint is that it targets the programs most likely to inflate tuition. Dependent undergraduates can only borrow $31,000 from the federal government over the course of their undergrad career. But under the Parent PLUS program, their parents can borrow up to the cost of attendance with no annual or lifetime limit so long as they pass a basic credit check. Graduate PLUS loans work the same way.
Likewise, existing income-based repayment plans feature generous loan forgiveness: eligible borrowers can pay 10 percent of their income for 20 years and have all remaining debt forgiven. Those working for public organizations or nonprofits get forgiveness after 10 years. As Jason DeLisle and Alex Holt have pointed out, freshly minted lawyers, MBA’s, and doctors can qualify for these plans provided their debt is large enough relative to their income.
Both of these programs send a clear signal to colleges: don’t worry about raising your tuition, the federal government will pick up the tab. Despite these obvious flaws, though, few policymakers have been brave enough to take on PLUS loans. It’s never easy to take away access to federal cash. Ryan’s proposal is unique in this regard, and it could finally embolden others to join in. (It’s worth noting that the House education committee recently called for “one grant, one loan, and one work-study.” Presumably this would do away with Parent PLUS loans, but that is not clearly stated.)
Wild Cards: Skin in the Game and Data
There’s less consensus on two of Ryan’s other ideas: that colleges should have some “skin in the game,” and that the feds should create a Clearinghouse for Survey and Program Data to inform policymaking.
On the first, it’s entirely unclear what Ryan has in mind when it comes to providing colleges with “skin in the game,” but most plans call for colleges to pay some portion of defaulted dollars back to the federal government. Three Senate Democrats put forth such a plan earlier this year, but it went nowhere. To my knowledge, no other Republican has introduced a skin in the game proposal, and the idea is bound to be controversial with those who’ve tended to take a “hands-off” approach to colleges. Over at Vox, Libby Nelson argued that support for such a proposal is “incongruous” for a Republican like Ryan who “decries big government.” I’m not so sure that’s entirely correct, but other R’s may agree with her. Stay tuned.
On the second, Ryan’s Clearinghouse would call for merging of data across multiple sources to better measure the impact of social programs. On the higher ed side, that might be a no-no given the current prohibition on the collection of student-level data, proposed and defended by other House Republicans on privacy grounds. Here, Ryan may have joined the likes of Rubio and outgoing majority leader Eric Cantor, both of whom bucked the party line to endorse this kind of data-merging at the federal level. Again, stay tuned.
Whatever happens with these specific ideas, expect party competition for “ownership” over the higher education issue to heat up (as it did in K-12 around 2000). Republicans are officially in the hunt.