How will you pay for college? That’s the question several higher education experts spent most of Monday asking this question during the American Enterprise Institute’s “The trillion-dollar question: Reinventing student financial aid for the 21st century” event.
Some of the scholars in attendance argued that students and institutions would benefit from restructuring student loans. Nicholas Hillman of the University of Wisconsin-Madison suggested that income-based repayments, where students’ post-graduate income determines rates of paying back loans rather than paying a fixed amount every month.
“The current model of repayment is just not working,” Hillman said.
But Debbie Cochrane of the Institute for College Access and Success took issue with this approach, and recommended more transparency instead.
“The income-based repayment model is not promising for anything other than reducing default,” Cochrane said. “We need more accountability for institutions.”
Vanderbilt University’s Miguel Palacios agreed.
“We need to put higher education institutions on the hook for how well students do after they graduate,” Palacios said. “If pricing is left to people without skin in the game, then in 45 years we’ll still be discussing the same problem.”
Panelists also discussed how they would rebuild the current student loan system if they had the chance to start from scratch. New America Foundation’s Amy Laitinen supported increasing Pell Grant funding, a prominent federal source of student loans.
“If we want to pay for Pell, we should pay for it as an entitlement and take it out of the annual appropriations process,” Laitinen said.
She also said that any reforms made should focus on institutions and not students, despite their political power making students an easier target.
“We haven’t seen higher education as an industry, but as a benign thing—‘I get warm fuzzies thinking about it.’ But it’s a real political problem tying political accountability to institutions,” she added. “It’s much easier to go after students than institutions.”
Terry Hartle, vice president of the American Council on Education, recommended improving the student loan market.
“Let’s get our arms around student borrowing with counseling and making it dischargeable in bankruptcy,” Hartle said. “We’re not doing students a favor if we give them a loan they default on.”
But Richard Vedder, a professor at Ohio University and director of the Center for College Affordability and Productivity, thought the conference got it wrong.
“I think the Higher Education of 1965 and its various amendments have been a failure…by and large, this has been an informative conference, but we’ve been looking at the wrong problems and the wrong solutions,” Vedder said. “In our zeal to maximize the number of students who go to college, we’re subsidizing people who’d be better off going on alternative paths.”
Vedder also said some of those paths were more promising than college.
“I think we need to put more attention on non-degree-granting institutions, and on high school vocational training…we do have a labor market for that,” he said. “Go into welding, folks! There’s money in welding!”