Congress Offers Promising Start To Make Higher Education Progress

Yes, Congress remains dysfunctional. But at least some good ideas are percolating in the House when it comes to higher education.

House Republicans recently released “The College Cost Reduction Act.” It would make college costs more transparent, phase out Graduate PLUS and Parent PLUS loans, expand the Pell Grant for students likely to graduate on time, and make sure all colleges have skin in the game when their graduates fail to earn enough to repay their federal student loans.

The legislation mirrors some of the key recommendations I made to the House Subcommittee on Higher Education and Workforce Investment. I called for up-front price transparency and that colleges share in the risk with taxpayers when student borrowers don’t repay their loans.

I also recommended that the federal government stop thinking that existing accreditors are a quality assurance answer. And that they should stop regulating inputs—how a college does its work. Instead, they should free schools up and reward them for delivering value for students and taxpayers.

Toward that end, the legislation proposes accreditation reforms to allow for new “quality assurance entities.” These entities would make it easier to start new colleges that could innovate and drive the price of higher education down. The legislation’s focus on student outcomes also restricts the Department of Education from micromanaging the contracts that colleges enter or how they do their work—regulations that restrict sorely-needed innovation.

Bipartisan agreement on these principles should be possible. Democrats have decried the price gouging by some institutions with little to show for students. Risk sharing would cause colleges to focus on outcomes and value for students and more carefully consider the contracts they enter.

For those who think that higher education is more than an economic return—count me on that list—this legislation doesn’t say that higher education is just about preparing students for work and return on investment.

Instead, it effectively sets a minimum return on these items. If students can’t pay back their loans, colleges should have some skin in the game. If that means that current programs focused on preparing teachers or social workers, for example, are too expensive, the answer is to figure out how to deliver them at lower cost. Not subsidize something that’s unaffordable.

The strategy of micromanaging inputs and offering subsidies with no skin in the game for colleges is one we’ve largely followed for the last several decades. It hasn’t worked.

Since 1970, spending by public colleges and universities rose from nearly $104 billion in today’s dollars to $420 billion by 2020. Altogether, post-secondary institutions now spend more than $670 billion per year.

And for what? Completion rates remain stagnant with nearly 40% of students failing to graduate from 4-year institutions within 6 years. Significant outcomes gaps persist. And nearly 1/3 of all institutions leave their students with zero economic return after accounting for the cost of attendance, according to the Postsecondary Value Commission.

The proposed legislation is a step in the right direction for remedying that. For those institutions that promise benefits beyond the workplace—which many do and should—then it just shouldn’t send students and taxpayers into debts that won’t be repaid.

In a mark of normalcy, the Democrats responded with their own bill. That is to the good. As I’ve written, while the recent instinct in the Department of Education has been to reform higher education through regulation, what we need is Congressional action.

More imagination from the Democrats would still be useful. For example, the bill doubles down on free community college, which would merely crowd out more affordable options; support a subpar system that doesn’t scale through subsidies; and help those who need it the least.

But the Democrats are showing that there is room for compromise as well, with measures on price transparency, boosting Pell, and a focus on outcomes—even if limited to the for-profit and career college sector.

That’s a start around which it’s worth negotiating—even if given the shenanigans around immigration legislation suggest that the earliest we’d expect a bill to pass would be after the presidential election. At least we are beginning to have a framework focused on student outcomes, not failed subsidies that hurt everyone but the colleges.