Michael L. Hays, Ph.D., sent this interesting suggestion to address the problem of student debt. I was reminded when I read it that this issue came to a head in 1972, when Congresswoman Edith Green from Oregon fought for the idea below, that is, sending federal money to colleges to use for need-based scholarships. On the other side from Green was Senator Claiborne Pell, who advocated direct federal loans to students, not to institutions of higher education. Pell won and created the Pell Grant program, which some have likened to a voucher for higher education. Now these issues are being reconsidered as Presidential candidates debate what to do about the soaring cost of higher education and the crushing burden of debt that so many students carry.
Hays writes:
Recent campaign proposals to address the problems of student debt called my attention to the context of those loans and the mechanisms for making and collecting them. What struck me was that these proposals do not address the problems but oblige the federal government to spend hundreds of billions of dollars without any suitable means to evaluate the merits of its expenditures or to control them.
At present, students borrow money from a variety of sources, mainly the federal government. Colleges receive this money, apply it toward their students’ expenses, and let their graduates repay their loans to the government. Colleges have no reason to limit the number of students whom they admit, to maintain their admission and academic standards, to ensure the quality of education provided, or to moderate their tuition or fees. Students assume all the risks of those loans, even as, in too many cases, colleges engage in essentially predatory practices, especially for-profit schools which would otherwise not exist. In short, colleges have no stake in the entire process except for latent incentives to exploit easy government loans to students.
We need to put college funding on a sensible basis. The government should not lend money indiscriminately to anyone who wants it for college: serious students, students unsure of their purposes, students for whom college is a substitute for unemployment, students who want a two- or four-year vacation, etc. Instead, it should lend to colleges on their demand for funds; in turn, the colleges would make loans to students whom they believe, on the basis of their already existing application processes, likely to benefit from college and to repay their loans; in turn, the colleges would use their repayments to repay the government. Schools would assume the costs of their mistakes—perhaps some small allowance (ten percent?) for the inevitable mistakes—; otherwise, states would be guarantors of the loans of public colleges and universities. Private, especially, for-profit schools, would also assume the costs of their mistakes and require private-equity guarantors of their loans. For-profit schools, usually living off the federal dole and providing a poor education, would be forced to up-grade themselves or would drive themselves, or be driven, out of business.
The benefits of this approach to college funding are many. Colleges would face the risks of real consequences of excessive borrowing and reckless lending. To minimize or avoid these risks, they would focus on and improve the standards and quality of the education which they provide (not least by putting a brake on lowering academic standards and inflating grades), select students better matched to and suited for those standards and not admit others to swell enrollments for purposes of institutional and budgetary growth, and restrain increases in tuition and fees. As a result, their graduates would be more likely to get jobs and repay loans not inflated by unrestrained costs.
By requiring colleges to decide on these “small business loans” for students, the government could attend to ensuring that colleges do not “red line” certain populations.
The disadvantages of this approach are few and easily offset. Initially, a small downward shift of some students with weak backgrounds, admittedly, disproportionately minorities, to lower-ranked colleges would be compensated by the greater chance of their academic success, their increased graduation rates, and their better chances of employment and loan repayment.
The important points are that the government, after a one-time start-up fund for loans and some modest annual appropriations to maintain funding to serve demand (and supplement some loan defaults), would not incur large and uncontrolled expenses; students would have more assurance of getting the education for which they pay; and colleges would have incentives to do a better and more economical job of educating their students.
Dr. Michael L. Hays
Las Cruces, New Mexico
Diane Ravitch's blog 
Better to join the First World, and make college free.
There is no such thing as free college. The best you can do is to get someone else to pay for it. Given the demographics of the country and the demographics of college students, using tax revenues to eliminate tuition would be a transfer from the relatively poor to the relatively rich.
Hello teachingeconomist. There is a book that may interest you, titled: “Why Public Higher Education Should Be Free” (Robert Samuels)
Ed,
I will certainly take a look at the arguments there. My concern is that making post secondary education “free” amounts to a huge transfer of wealth from the relatively poor to the relatively wealthy. In 2011, the median income for a family in California was $61,094. In 2011 UC Berkley reported that 20% of their students had family income of over $150,000 a year and 27% of their students had a family income between $80,000 and $150,000. Why would you want the average California tax payer to pay to educate the children of the wealthy?
You know what,TE? When we talk about education being a common good, that doesn’t just mean those with meager resources. It means everybody. Our taxes pay for roads that the wealthy use. Police, fire, libraries, parks, K-12 education… So if we as a society decide that some post secondary education should be covered by taxes then I would assume that means everybody. I don’t pretend to know how the program would be structured, but I do know that the perpetual rise in the cost of college is not sustainable.
2old,
The majority of the students at the University of Michigan come from families that have household incomes greater than $150,000 a year. How much should a person making the minimum wage pay to educate those students? I am looking for an actual number as a response.
Perhaps you might remember that after WWII when the GI bill was incorporated that for something like every dollar invested in education, it was multiplied several times in societal benefit.Also, if you check Germany now, or was the last time I looked, providing free education for AMERICAN students as well as their own. When in Portugal a few years ago, one of the poorest countries in Europe I was told that the students there could get a FREE college education and the last time there that now it cost them 100 dollars.
Some countries value education, some don’t.
Here we can learn about the students at the University of Michigan:
“In 2013, just 13 percent of incoming U-M freshmen hailing from Michigan came from families with incomes under $50,000, when three times that percentage of Michigan families earn under that figure. Nearly half (49 percent) of Michigan-resident freshmen came from families earning more than $150,000; three out of four freshmen from outside Michigan were from families above that income figure”
How much should the median income household in Michigan ( A little less than $50,000 in Michigan in 2013) pay to educate children from families that earn three tea as much?
teachingeconomist, if your statistics are correct, then look at the flipside — 53% of those students are lower or middle class at best. And them paying the same amount of taxes, or slightly more, for free higher education would be much better than the case now, where this 53% of non-wealthy students are taking on tens of thousands in debt to pay their admissions.
People would be surprised if they had a good look at our current amount of wasteful spending. Higher education doesn’t cost nearly as much as people are paying. If the cost is subsidized, actual operating cost goes way down. Much like a single-payer medical system as compared to our current wasteful system where patients are charged $10,000 for a pill or procedure that costs $10 elsewhere. This translates into the fact that it will not cost us a whole lot more in tax revenue to make college free for all. And, if the “robin hood tax” is implemented, the wealthy on wall street will be paying directly for these improvements — not the lower classes.
The book I referenced is an in-depth look at UC in particular — of who benefits from the status quo, and who would benefit from making tuition free.
Times, not tea.
Ed Detective,
Rather than spending two dollars in order to give needy students one dollar of financial aid by making all education free, why not spend one dollar to give needy students one dollar of financial aid by using need based scholarships?
The state colleges and universities in my state do not control their admission criteria. Would transferring admission decisions to the campus be part of the package?
Good question. There are a lot of things about this article that seem to be omitted or not clear. It does not appear to be a very comprehensive solution.
I do not understand your comment: That in your state, the state colleges and univesities do not control their admission criteria. Does this mean there are no criteria?
Laura,
The state legislature has always set the admission requirements for state schools in my state. When I started teaching the admission requirement was a high school diploma. Now it is a 2.0 GPA for a set of academic high school classes.
Who sets the criteria then, TE? Is it by law? Administrative decree? Inquiring minds (or at least mine) would like to know as those criteria also affect Show Me State students as Kansas and Missouri have a reciprocal tuition arrangement for certain programs/degree areas.
How about just changing how the interest is calculated. Instead of using a mortgage based formula (like is used now), where you continually pay interest on interest, use the formula for car loans (fixed amount of interest charged up front). It could save students thousands of dollars and not put them in debt up to their eyeballs at 22.
Excellent idea. It is not a 30k loan now, it can be a 60k.
I love that the two schools that were brought up are my alma mater and my mom and dad’s. My parents both got their undergrads in science/math and their MAs in Education at Michigan. For years they both taught. It was, at the time, a profession that could lift people into the middle class ( my dad is in his 80s now, we were adopted when he was already in his 40s). He did not save for college for my brother and me. He assumed that it would be affordable like when he went.
TE does not mention that those people in the 50k range have faces. They are just a number when you look at income level. I was earning 38k when I got into Cal and although I got a scholarship for tuition after first semester deans list, I still had to borrow money for board. There is nowhere that is that affordable in NO CA to live. Graduated with 30 k and still paying off the debt. Missed the ability to write off some by working at a Title 1 school for 5 years by a one month disbursement date.
Recently I moved from TX. I was not hitting 50k after 12 years of teaching. Moved to MA and my pay increased tremendously. It is much easier to pay off the loans here.
Title one,
I did not think I needed to mention that students from relatively poor households had faces, but for the record all students have faces.
Need based scholarships are an excellent idea and should be expanded at public universities. Making schools “free”, on the other hand, is an inefficient way to help students from relatively poor households.
Tonetextchr, congrats on making the move you desired. Think you’ll find stimulating colleagues in your Mass school.
Hays has buried what arguably should be the lede. He says there are “few” downsides to his proposal and that they are all “easily offset.” He only mentions one downside specifically, and it’s an issue that probably deserves less of a brush-off analysis.
“The disadvantages of this approach are few and easily offset. Initially, a small downward shift of some students with weak backgrounds, admittedly, disproportionately minorities, to lower-ranked colleges would be compensated by the greater chance of their academic success, their increased graduation rates, and their better chances of employment and loan repayment.”
An excellent idea, and the first that I’ve heard with a balanced and practical approach. Everyone talks about the high cost of college and that we need to make it more affordable, but nobody addresses the fact that 40% of students drop out. I think we need to tend to the drop-out problem first before we begin herding more students to a university. Let colleges decide how best to allocate their tuition dollars and we might have better results.
If the colleges had some skin in the game they might be more concerned about admissions, instruction, and graduation rates.
The larger problem is like this —
Everyone knows that the health and smarts of any country rests on the health and smarts of its people, but there is in this country a small but powerful sector that prefers to benefit from the general health and smarts of the masses without actually paying to support it. So they are relentless in pushing policies that socialize the costs and privatize the benefits to themselves.
It’s time to put a stop to that … while we still have the strength and wits left to do it …
” So they are relentless in pushing policies that socialize the costs and privatize the benefits to themselves.”
You mean like charter schools?
Or “free college”?
Rubio had a proposal to make college affordable. Students can contract with a potential employer who will pay for the cost of college if the student agrees to work for X number of years at a reduced salary. I think we had something like this before, and it was called indentured servant. That’s how the poor paid for their passage here. Leave it to the GOP to go backwards…to go “forward.” I can see all types of potential for abuse, sort of like the nebulous category of unpaid intern.
Reblogged this on Navigating Your Kids and commented:
Everybody needs to have skin in the game. Colleges included
What do you mean by “everybody needs to have skin in the game”?
It’s an interesting idea but he’ll probably have to get past the House education chair, who happens to take a ton of money from for-profit colleges:
http://www.citypages.com/news/john-kline-keeps-raking-in-for-profit-college-cash-7485382
Just business as usual. Maybe the students can hire a lobbyist.
State colleges and universities do not want to function as bankers and collection agencies. Grants and scholarships are not loans but they can have strings attached such as keeping enrolled and GPA.
The new form of loan sharking is for students to get a loan on condition that the lender can garnish a percentage of their income for x number of years after they are employed. This means loans depend on some exotic estimates of annual income if you pursue this major over that one, with all of the arts and humanities “risky” for the lender as well as the student.
Unless I am mistaken the GI Bill operated much like a voucher for entering a vocational training program or pursuing a college degree.
My dad paid for grad school with his GI bill and he still sports his MI baseball hat in his wheelchair at nursing home outings.
I see a lot of people with crushing student debt, and it’s really sad how young they are and how bitter and cynical they are. They feel everyone involved made out on the deal except for them and I generally agree with them. It;s just crazy to put people that young and inexperienced into that kind of debt position, particularly because many of them didn’t have a parent who went to college so do not understand what they’re taking on.
Their “advocates” in government really didn’t serve them well.
On the plus side, in the absence of any help from the people who are supposed to be helping them, I think they talk to one another and are getting better at protecting themselves.
Also, and I know this is a touchy subject, but since I hear it over and over from college debtors, has there ever been any kind of objective evaluation on remedial courses?
I ask because many, many students feel they were pushed into remedial courses as a revenue generator. They could all be wrong and obviously it’s anecdotal, but since so much of K-12 ed reform relies upon the huge remedial rates we’re always hearing about and we’re all such data lovers, has anyone ever examined that and checked for some other reason remedial rates exploded besides the “public schools suck!” explanation we all accepted without question? There could even be a combination of factors, although I know the “public schools suck!” explanation serves a particular political agenda.
Just asking.
My institution would like nothing more than to close down the remedial mathematics program. Even if tuition managed to cover the costs, students who take remedial math are much less likely to be successful at the university.
Chiara, See Jersey Jazzman “Are college remediation rates Solely K-12 schools’ responsibility?” Feb 19, 2015 blog post. What stands out to me is his stat from American Assn Community Colleges that 63% of comm coll students …are age 22 or older–so they haven’t had a HS math course for a few years. He links to some Carol Burris items & a commenter cites a Columbia prof who researches remediation.
What about offering remedial courses only at affordable community colleges and having them partner with a university? I went back to school in my late 20s. I really struggled in statistics and could have easily been advised to take remedial math if my advisors had been trying to steer me in that direction, ten years after my last high school math class.
There are older students who need access to these courses.
This certainly is not a solution to student loan debt, just an alternate loan type.
Sounds like more accountability to me for no gain!
And the most bothersome part of this is the idea that there would be “a downward shift of some students from weak backgrounds, disproportionately minotities, to lower-ranked colleges”. And what does that mean ? That upon graduation that those from a “lower-ranked” school would have less chance of higher paying jobs? Or that they would have a more difficult time pursuing a advanced degree? Does this sound discriminatory?!!!!
I think that just about everyone who writes on this issue ignores the history of public higher education in the US, especially in California. UC Berkeley used to be free. It did not charge tuition. California community colleges only started charging fees around 1984. They were able to do this because the state of California subsidized the students.
After Prop. 13 passed and other tax revolt measures were passed, the state of California began to cut its subsidies. That state also began to put many more people in prison. Prison costs started to eat into the higher ed budget.
In North Carolina, the tuition costs are still quite low at public colleges. Community colleges are about $75 per credit hour, and even UNC Chapel Hill is still less than $7000 for tuition. Of course, these costs to students were much lower about 12 years ago. North Carolina could be subsidizing students more that it is, but it decided that tax cuts for the corporations and the wealthy were more important.
Basically, many of the people in our society, including a lot of people who benefited from very low tuition at public universities, have decided that today’s young people don’t deserve what they enjoyed. Hypocrites.
Here are some ideas. Let’s end the drug war and stop putting so many people in prison. That would free up money at the state level for higher education. Also, raise taxes a bit in places like North Carolina. We could cut tuition quite a bit, and much of the student loan problem, at least for new students, would disappear.
This is a terrible idea for many, many reasons, but here is the most obvious: colleges would engage in massive discrimination against poor students because they are the least likely to pay back loans. All except a few for-profit colleges, who would actively recruit poor students for their loan money, extract all the profits, and then declare bankruptcy when students fail to pay them back.
I agree.
And for those who do get the loans, the suggested change amounts to little more than an attempt to make colleges the loan shark thugs who break student arms and legs when they don’t pay.
If the Department of Education were not (legally) raking in tens of billions every year in profits from the student loan (shark) program, student debt would certainly not be as high as it is.
So, for starters, changing that would seem to be a no-brainer, but then again, these things are not decided by common sense but by dollars.
The USDOE and US Congress are intent on making indentured servantsslaves out of America’s college graduates (and have been for a long time)
Thank you for the comments responding to my blog. I want to elaborate a few points.
One, the problem of downward drift would affect those with poor backgrounds, but disproportionately black and Hispanic minorities–not an appeal outcome, especially if permanent. However, I know that in the late 60s and in the 70s, well intentioned efforts to diversify student bodies led the more selective colleges to accept those whose record was often marginal or deficient by comparison with other students–and so on down the rankings. I saw many struggle, suffer, fail, quit. I know that many would have succeeded, personally as well as academically, at less selective colleges, and still have gone on to graduates schools or satisfactory careers.
Two, colleges will not be able and will not want to discriminate against the poor. (1) The federal government will have a modest loan forgiveness program (c. 10%) on the one hand and will prevent “red-lining” on demographic and economic grounds on the other. (2) Colleges will improve the quality of education and of placement services to enhance the competence of their graduates, match it to future study or careers, and thereby improve the repayment rate. (3) Colleges will want to maintain enrollments to maintain their departments and programs. They have a balancing act of (2) and (3). Because they will not want to rely on remedial programs, higher admission standards will “trickle down” to secondary schools to ensure that the quality of education reflected in a diploma means more than it does in many cases today. They know that the more remedial courses a student has to take, the less likely he or she is to graduate. (Where I live, although the local CC offers remedial courses, less than 10% of every class has graduated or received certification, for decades.)
Three, as a Shakespeare scholar, I have some concern about the effect of the distribution of college admissions on the shrinking, merging, or disappearing of departments in the humanities. However, such departments are already suffering the effects of reduced enrollments. Most will not disappear; too many students major in the humanities and go on to medical, law, and business schools; and those who pursue less remunerative careers would presumably know how they would manage their loans. The “poor scholar” is a trope, is it not?
Finally, this proposal does not address the ballyhooed issue of a free college education. If only because I am skeptical of anything described as “free,” I have doubts about its wisdom. America is not a notably intellectual or even an education-respecting country, and seems less so over time (or as I age); if, we want an education for our children more than they want it for themselves after K-12 schooling, then “free” college will fail. For colleges will have to accommodate those who will constitute a drag because they will want what so many students want today: few demands, easy work, and high grades. Such a “free” college education merely defers payment in other terms.
The rationale for Universal Free Public Education is that a certain level of education is necessary for a person to function as a full-fledged citizen in a well-tempered and thriving democratic society, lacking which any form of democracy is bound to fail, just as many democratic experiments lacking UFPE have in the past.
That is the sense in which in which it makes sense to use the word “free” in this context.
In that sense the reason for UFPE is much the same reason for prohibiting poll taxes. If being educated is part and parcel to being a citizen then there must be no obstruction to it.
UFPE becomes the right of each individual in a democratic society precisely because the society in question has come to see UFPE as necessary to its own survival.
The only question that remains has to do with the “certain level of education” that is needed for optimal functioning.
That level has shifted, mostly upward, through history. In the late 60s when I left home for college, there was a general recognition that the future of our nation would depend on upping the notch a bit. California, being as forward thinking as they used to be back then, leapt ahead of the pack and inaugurated a First Year Free program for qualified high school graduates. Well, stuff happens. And Reagan happened. And that was the end of that. And the country has been going backward, education-wise, well, not so wise, ever since.
Thank you for this comment. In my longer comment above yours, I meant to address “free” education. Please forgive me for being skeptical about such an education in modern America, however it works or fails elsewhere. I do not believe that anything is free.
As of yore, this country is not intellectual or even respectful of the educated (the older pejorative term was “eggheads”). I worry that, as we regiment education with curriculum and instructional requirements, we destroy interest in education. One result is that too many students have parents or prospective employers who want them to have a college education more than they want it for themselves. Such is a prescription for what is already occurring on many college campuses: the need to accommodate those not highly motivated by assigning little work and giving high grades. The problem will worsen if, under such conditions, students face no financial hurdle. That free education will prove very costly years after graduation.
The complicating factor about post secondary education is that attendance is far from universal. Even if students did not need to pay tuition, the median college student’s household would have a higher income than the median taxpaying household.
I understand the argument for UFPE as you presented it and agree with the thinking in principle. The only problem I see is the elitism that it suggests because it implies that those who don’t pursue a college education are really not capable of fully participating in a democratic society. It takes some hutzpah to convince people that they should be taxed for something that will allow a select group to obtain an advanced education for free that will gain them entrance to an even more select group. How do we avoid implying that my auto mechanic is not capable of fully participating in our democracy and making him pay to give someone else that privilege that he is denied? I hear echoes of the founding fathers’ debates over who should be allowed to vote. My gut reaction is that education is good, but is college the only acceptable route to participating more fully in a democratic society? I don’t have any answers. Just questions.
2old2teach — this is why K-12 education must be improved. In educating the national population, we cannot assume everyone will go on to college/university. It simply won’t happen, nor should it.
Those who leave high school must be fully capable of intelligent and responsible participation in society. We cannot count on higher education for that.
Again I agree.
to 2old2teach (me, too, BTW!): I am not aware of a divide between those who go to college and those who do not in terms of citizenship. Citizenship rights are not, and presumably will not be, based on the acquisition of diplomas or certificates. But many Americans have a desperate need to feel superior to others, the college educated no less than anyone else. But their snobbishness is no reason to question the importance of a college education for some and a good technical education for others and, depending, on no education beyond a good K-12 education for still others.
Yup. What you said too.
Re: 2old2teach
Once we are clear about the principles, the role of education in a democratic society, then we can begin to reason out optimal ways of providing for its realization.
Elementary and secondary education became compulsory when our society decided that they were the minimal educational requirement of a competent citizen, But there is a gap between minimal and optimal, and if the public recognizes a public interest to make something of some kind universally and freely available, then it is in the public’s interest to do so. What exactly we make available can be diverse and is always subject to discussion, but I think it’s clear that something more for those whose elect it would probably pay dividends to the public good.
We started down several such roads many, many years ago, And then some forces pulled us back and down. I think it’s long past time to question whether those forces are really acting in our best interest.
I agree completely. I just think it is important that we recognize that firefighters, carpenters, policeman, artists, musicians,…anyone for whom college may not be the optimal decision are contributing to the common good in ways that may impact lives as much as if not far more than the average college graduate whether it be through their work or community commitments.
Then again, it is also important to realize that there are many people who have not had the opportunity to pursue a post secondary degree because of cost. Balancing the rights with the responsibilities becomes more important. This is a poor example but I will throw it out there anyway. My own children all went to college. They were lucky to have access to excellent K-12 education that came at quite a cost to us. They all have significant loans they are paying off as do we as parents. They all were much more serious than their father and I about that education; both of us went through at a time when the cost was much lower. Both of us came from families who were able to afford to give us that education. My children understood that attending college was a privilege and a responsibility. We took it for granted; they did not, but hey still started from a wealth of opportunity. Perhaps a better example comes watching young men and women who are the first in their families to get a college degree. Their hunger is palpable and the pride their families have in them is justified. This hunger for something better and the willingness to work for it is part of the reason I hope we remain a nation of immigrants. Immigrants remind us so well of the opportunities we may take for granted for which they are grateful.
The topic at the top of the page had to do with the problem of college debt, and so I suggested one of the more obvious solutions. It’s a policy that many advanced nations have already implemented, and even one that our own nation began to try out many years ago but then abandoned as we entered the new dark age of voodoo economics.
There is nothing in that solution to the college debt problem which says that college is the only way to go for everybody, only that it would probably do us all good as a society if the opportunities for post-secondary education were opened up.
I’m sorry, Jon. You are right. I get carried away. No attack on the idea was intended. I believe you are correct, and I did not intend to raise doubts about the idea. I am interested in how we frame the argument so that support for the idea would be overwhelming.
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