Less Federal Involvement is the Way to Improve Higher Education

With the Higher Education of 1965 up for reauthorization soon, Sen. Lamar Alexander (R-Tenn.), the Chairman of the Senate Health, Education, Labor, and Pension Committee, has put forward his ideas to reform the higher education landscape. Richard Vedder, director for the Center for College Affordability and Productivity, breaks down Alexander’s proposals at National Review:

First, he seems to embrace the idea that colleges should have “skin in the game”: They should face financial consequences for admitting, and then failing to graduate, students who default on loans and have marginal educational backgrounds indicating that they were clearly ill prepared for truly higher education.

Second, he views the accreditation system as broken and seems to agree that the current binary approach — you either are accredited or are not — needs reform.

Third, he wants to change the federal data system, potentially providing consumers with some useful information, such as what the graduates of XYZ University earn, say, two years after graduation. …

There are some useful things that Senator Alexander can propose that might mitigate some weaknesses in higher-education policy. Still, it is important to recognize that Washington is far more the problem than the solution to the current afflictions of American higher education. Alexander’s reforms do not even touch the largest single policy mishap — the totally dysfunctional federal student financial-aid programs. …

Originally, the primary goal of the federal student-aid programs was to improve access to college for lower-income persons. Here, the record is one of total failure: A smaller percentage of recent college graduates come from the bottom quartile of the income distribution today than was the case in 1970, when federal student-assistance programs were in their infancy.

Real, effective reform, then, requires us to rethink financial aid. Long-term, the feds should exit the business. New private approaches to financing higher education (e.g., income-share agreements) need to be legally protected and encouraged. In the short term, tuition tax credits and the PLUS loan programs should be axed, and eligibility criteria for student loans tightened — shorter periods of loan eligibility and (gasp) even some penalties for poor academic performance and carrots for doing well. We could reduce the program costs substantially (perhaps 50 percent) without reducing assistance to truly low-income students.

Read Vedder’s full column at National Review.