College tuition is soaring in response to federal policies on student aid and university research funding, argues Arthur M. Hauptman, a higher education financing analyst, in an essay in Inside Higher Ed. Jawboning won’t help, he writes. Neither will top-down regulation.
Pell Grants aren’t a major push factor for college prices, Hauptman believes. But rising spending for Pell may be the reason colleges are shifting their own aid away from the poor and toward middle-class students.
The rise in student loans correlates strongly with the rise in tuition.
Currently, colleges can just maintain or raise their prices and shift the cost-sharing to loans for a broad range of their students. This needs to change. One way to accomplish this would be to require that needy students not receive all their aid in the form of loans. In effect, this would mean that institutions must offer discounts to their needy students who borrow, thereby reducing their debts.
In addition, students shouldn’t be allowed to borrow excessively for living expenses.
Now, community college students who face $2,000 or $3,000 in tuition and fees are eligible to borrow $10,000 or more to cover their total expenses. This applies at all institutions for students who live at home or off campus. This provision should be changed so that reasonable limits are placed on how much these students can borrow. Ditto for students living in dorms or on meal plans – they should not be allowed to borrow excessively large sums for this form of consumption. Such a change would likely have the beneficial effect of reducing how much institutions charge for these non-education services.
Students can’t use federal grants to pay for remedial courses, pushing them to borrow, Hauptman writes. He suggests students be able to take tuition-free remedial courses offered by providers who’d be paid by the government based on their success at raising student competencies. Colleges would have to compete with private companies for the remedial ed business.
Federal student loan subsidies should be eliminated or limited to Pell Grant recipients, he recommends. “This may seem harsh medicine, but the benefit is very expensive, not well-targeted to those most in need, and serves as an incentive for students to borrow more than they otherwise would.”
Linking loan repayments to post-college income makes sense, Hauptman writes, but it will serve “as a further encouragement to institutions to keep their prices high and let the loan system deal with the consequences.”
