Yes, Congress can go big on college affordability

There is an answer, and yes, it’s something Washington could do. A redesign. By consolidating existing higher education programs into flexible state aid and targeting funds to students from middle and low-income families, the administration and Congress can slow growth in tuition, reduce student loan debt, and speed time to degree.
 
Consider the trends. Tuition growth has outstripped inflation and family income for decades. Public colleges have dramatically increased tuition and fees to cope with reduced per-student state aid, and focused their energies on attracting more “full pay” students. Private colleges have shifted their own aid dollars away from the financially needy; indeed, they now provide twice as much in aid to high-income students as they do to those from low-income families. Compounding the problem, federal higher education-related tax benefits disproportionately go to upper-income families and wealthy colleges.
 
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The result? Nationally, student loan debt totals over a trillion dollars. A typical low-income family has to pay, or finance with loans, an average of 72 percent of its annual income to pay for one year at a four-year college, and over 100,000 low-income, qualified students are shut out of college entirely each year. 
 
But what if middle-income students could work their way through college with interest-free loans and low-income students could do the same without any burdensome debt? It turns out we can pay for that without increasing the deficit by consolidating existing higher education programs outside of Pell Grants and targeting current “financial aid” that goes to wealthy families to students from middle and low-income households instead.  The current debate about interest rates?  No longer relevant.
 
There would be conditions, of course.  To accomplish something big, all the major players have to give in order to get. In return for $20 billion a year in reallocated federal dollars (read: no increase in the deficit) and flexibility in spending it, states would have to keep tuition growth down by maintaining their own funding for higher education and improve college readiness by ensuring all students complete a full sequence of college prep courses in high school. Students in states that elect not to participate would still be eligible for Pell and unsubsidized loans or could cross state lines with benefits following.
 
To qualify, colleges would have to meet minimum quality standards. Additional aid wouldn’t be allowed to go to schools with stunningly low graduation rates. And students would qualify for this low-debt guarantee only if they complete a college prep sequence in high school, attend college full time, pay out-of-pocket their “expected family contribution,” work or serve an average of 10 hours a week, and maintain steady progress toward graduation. The theme is that of shared responsibility.  
 
This type of redesign is everything a small-time interest rate fix is not. It prioritizes aid on the front-end of college costs, not the back. It intentionally aids students who need the most help. It provides rational incentives to states, colleges, and students to bring down the cost of higher education. It sends a loud, clear message: yes, you can go to college without crushing student debt, if you’re willing to work for it and pay what you can out of pocket.
 
Finally, unlike the proposals currently on the table, this one saves middle and low-income students money over the long haul. 
 
Go big on college affordability. Many of us believe Washington still can, and the budget numbers back it up.

Michael Dannenberg is director of higher education and education finance policy at The Education Trust and former senior education counsel to Sen. Edward M. Kennedy (D-Mass.).