The cost of college places a stifling burden on America’s middle class. In a recent poll, 77 percent of respondents said they believe higher education is not affordable for those who need it. Public opinion reflects the facts: tuition at four-year public universities has almost quadrupled since the early 1980s, and 70 percent of current students need loans to pay for school.
How did higher education become so expensive, and what can conservatives do to bring costs back down? Andrew Kelly provides insightful answers to both questions. Kelly notes three reasons for higher costs. First, the breadth of federally-funded student loans mitigates incentives for colleges to keep tuition rates low. Second, data that would help students and parents make more informed choices about colleges, like employment information for a college’s graduates, are often unavailable. This lack of information makes it more difficult for parents and teachers to determine whether the investment in a particular college and program of study is worth the tuition expense and loans. Finally, the current accreditation process serves as a barrier to entry for new schools and alternative education options.
To fix the problem, Kelly proposes reforming the financing system for higher education, encouraging the development of more options, and holding colleges accountable for graduates left with unreasonable amounts of debt. Private income share agreements (ISA), where financiers pay for a student’s college education in return for a small stake of the student’s postgraduate income, can complement or even supplant the most expansive federal student loans. The federal government can promote alternative models of education by making accreditation processes hospitable to new competitors. Finally, colleges should be forced to pay a percentage of the defaulted debt of their graduates, thereby creating an incentive for schools to keep costs low and produce self-sufficient students.