Education Archives - Page 34 of 40 - Progressive Policy Institute

Washington Examiner: Think Tanks: College graduates struggle in current economy

Posted on October 10, 2014 by The Progressive Policy Institute

In a collection of think tank reports on employment for recent college graduates, the Washington Examiner extensively quoted PPI Economist Diana G. Carew’s blog post “Surprising New Data on Young College Graduates.”

Diana Carew for the Progressive Policy Institute: Despite falling unemployment and a recovering labor market, young college graduates continue to struggle in today’s economy.

Analysis of new data reveals the real wages of young college graduates surprisingly fell in 2013, by 1.3 percent. The decline reverses a slight uptick in 2012, and continues along a 10-year trend in which real average earnings for young college graduates have fallen by a sizeable 12 percent since 2003.

Read the rest of the piece on Washington Examiner.

ABC Action News: To cut college costs – cut college

Posted on October 2, 2014 by The Progressive Policy Institute

ABC Action News interviewed PPI Senior Fellow Paul Weisntein regarding his recent policy report, Give Our Kids a Break: How Three-Year Degrees Can Cut the Cost of College. By promoting the three-year degree and consolidating all higher ed tax breaks into a single grant, Weinstein argues, policymakers can go a long way in making the college affordability dream a reality all while improving graduation rates and making sure our universities remain the most competitive in the world.

While the a year of college is irreplaceable in terms of frat parties and tailgates, Weinstein said most students are continuing their education in graduate school. Taken alongside a masters or doctorate, a lost year of undergraduate study may be a drop in the bucket.

“We need to acknowledge that when more people feel the need to get a masters or more, this is not the end of school,” Weinstein said.

College costs have soared in large part because states cut funding to their public colleges, which are attended by about half of university students.

Surprising New Data on Young College Graduates

Posted on September 29, 2014September 18, 2024 by The Progressive Policy Institute

Despite falling unemployment and a recovering labor market, young college graduates continue to struggle in today’s economy.

Analysis of new data reveals the real wages of young college graduates surprisingly fell in 2013, by 1.3 percent. The decline reverses a slight uptick in 2012, and continues along a ten-year trend in which real average earnings for young college graduates has fallen by a sizeable 12 percent since 2003. The chart below shows real average annual earnings for college graduates aged 25-34 working full-time with a Bachelor’s degree only.

This troubling trend presents significant political and economic challenges that policymakers can no longer afford to ignore. As consumers and taxpayers in their prime earning years, young college graduates represent one of the most important segments of the working population.

Politically, the continued struggle of well-educated Millennials sends a clear warning to progressives to support a more convincing growth agenda. A pro-growth agenda must be based on investment and innovation, instead of redistribution and more of the same debt-driven consumption of the last decade. Otherwise, young Americans, the vast majority of which voted overwhelmingly for Obama in 2008 and 2012, may change parties or stay home on Election Day.

Economically, falling real wages for young college graduates is resulting from what I call The Great Squeeze. That is, more young college graduates are finding themselves underemployed – taking lower skill jobs for less pay at the expense of their less educated peers. The continuation of this trend, five years after the Great Recession, suggests this problem is more than just temporary. (While this is for BA only, the trend is the same for those with a BA or higher.)

The Great Squeeze is rooted in demand-side and supply-side factors. On the demand-side, the high underemployment plaguing young college graduates is connected back to the slow-growth economy. Our education, tax, and regulatory policies have failed to adapt to the realities of a data-driven world, keeping investment and high-wage job creation on the sidelines. Here simply having a college degree is not enough to guarantee success. In fact, a recent study from the Federal Reserve found that one-quarter of college graduates earned the same amount as those with a high school diploma or GED.

And on the supply-side, colleges are failing to adequately prepare college graduates for the high-skill, high-wage jobs that are being created in fields like data analytics and tech. For example, although far more women were awarded degrees in 2013 than men, most majored in business, health-related disciplines, education, and psychology.* It is hardly surprising that more data and tech employers are turning to alternative training models to meet their workforce needs. Yet in spite of the mismatch, if anything, our federal student aid system is exacerbating the imbalance.

In short, there are two main takeaways here for policymakers: (1) we need better policies in place to encourage employers to invest and create jobs domestically, and (2) young Americans need a postsecondary education system that is better aligned with the shifting nature of the labor force.

*Author’s tabulation of 2013 IPEDS data.

Daily Record: The three-year bachelor’s degree?

Posted on September 25, 2014 by The Progressive Policy Institute

In an article on education reform, The Daily Record discussed PPI Senior Fellow Paul Weinstein’s paper on three-year college degrees:

What if the traditional four-year undergraduate degree went away?

What if getting a bachelor’s degree in just three years became the norm?

That’s the proposal put forth by Paul Weinstein, director of the public management program at Johns Hopkins University.

Weinstein suggests that moving to three-year degree programs would solve many of higher education’s ills, namely the soaring cost of a college education and the staggering levels of student loan debt.

The Progressive Policy Institute in Washington recently published Weinstein’s proposal in a paper titled “Give Our Kids a Break: How Three-Year Degrees Can Cut the Cost of College.”

“For generations of Americans, earning a college degree was considered the surest way to achieve the American Dream,” he writes. “But the rising cost of college and the tremendous debt burden it will place on our children is now threatening to derail that track to prosperity. While many policymakers have focused on ways to augment financial aid, the question of how to cut the actual cost of getting a degree has been largely ignored. We can no longer afford to discount that crucial second question.”

Continue reading at The Daily Record.

Houston Chronicle: Could student debt crisis cure be a 3-year degree?

Posted on September 25, 2014 by The Progressive Policy Institute

PPI Senior Fellow Paul Weinstein’s new paper supporting three-year degree models was the subject of a Houston Chronicle article. Weinstein argues that “the four-year model is based on tradition and little else”:

A researcher at Johns Hopkins University says he has the cure for America’s growing student debt crisis: cut a year off college.

Paul Weinstein, director of the university’s graduate program in public management, is the latest to push for a three-year degree model. He argues in a new paper for the Progressive Policy Institute that American universities should shift their standards away from the arguably arbitrary four years it takes to graduate.

Students could save 25 percent by attending college for three-quarters of the time, Weinstein argues. They could also save on interest on student loans, and existing grants could be streamlined to save them even more, he writes.

“People are realizing we’re reaching a point where the system is no longer going to be viable.
People understand we’ve got to do something,” Weinstein said in an interview with the Houston Chronicle. “A number of ideas are being put out there, so there’s a real acknowledgment.”

Read the entire story on The Houston Chronicle.

Baltimore Fishbowl: What If College Lasted Three Years Instead of Four?

Posted on September 25, 2014 by The Progressive Policy Institute

PPI Senior Fellow and Johns Hopkins University director Paul Weinstein was quoted by the Baltimore Fishbowl, discussing his new proposal for three-year bachelor degrees:

“The three-year degree is the only higher education reform plan that would cut the cost of a college degree while ensuring our higher education system remains the best in the world,” Weinstein told the Hopkins Hub. “Students at public institutions would save on average almost $9,000 over the course of their studies while students at private schools could save as much as $30,000.”

MarketWatch: Is three-year college an idea whose time has come?

Posted on September 24, 2014 by The Progressive Policy Institute

PPI Senior Fellow Paul Weinstein talks with MarketWatch’s Adrienne Mitchell on how switching to three-year programs will help solve the college-debt crisis.

Read PPI’s latest report authored Weinstein, Give Our Kids a Break: How Three-Year Degrees Can Cut the Cost of College.

Give Our Kids a Break: How Three-Year Degrees Can Cut the Cost of College

Posted on September 17, 2014 by The Progressive Policy Institute

The American higher education system is the finest in the world. Our universities and colleges are unmatched, and we have more highly rated schools than all of our competitors combined. Students from across the globe continue to flock to American universities, while the competition among U.S. students for slots at our elite schools is tougher than ever.

What’s more, since end of World War II access to college has grown substantially as more and more young people pursue the dream of earning a college degree. Enrollments at U.S. colleges and universities has more than doubled since the 1980s, and the number of bachelor degrees awarded over the same time has grown by more than 75 percent.

For most graduates, a college degree remains the key to financial success. Even after the economic collapse of 2008 and the ensuing Great Recession, income and wealth for those holding a college degree has outpaced those without. Among those currently aged 25 to 32, median annual earnings for full-time working college-degree holders are $17,500 greater than for those with only high school diplomas. The earnings premium enjoyed by college graduates has risen for each successive generation since the latter half of the 20th century. By way of illustration, in 1979 the gap for that same age cohort was far smaller at $9,690.

But there are cracks in the fiscal foundations of higher education, and they are growing wider. Like a water leak in the ceiling, the problem is getting bigger and the damage is getting more expensive to fix each year we do not act.

The problem is money—specifically the ever-growing pile of cash students need to pay for college and graduate school.

Download “2014.09-Weinstein_Give-Our-Kids-A-Break_How-Three-Year-Degrees-Can-Cut-College-Cost“

The Great Squeeze Continues to Hit Young People

Posted on September 5, 2014September 18, 2024 by The Progressive Policy Institute

The latest jobs numbers, along with new research from the Federal Reserve and Brookings, reaffirms what I’ve been writing for some time: the Great Squeeze in labor force participation is hitting the young and least educated the hardest. Further, the conclusion that this drop is a structural problem bolsters my argument that both a slow-growth economy and a workforce skill mismatch are to blame, instead of simply higher rates of school enrollment. This has big implications for what policies will – and won’t – fix the problem.

The new joint Brookings-Federal Reserve study takes a deep dive into the troubling fall in the labor force participation rate for young people aged 16-24 since the mid-1990s. The study concludes that:

“some crowding out of job opportunities for young workers [is] associated with the decline in middle-skill jobs and thus greater competition for the low-skilled jobs traditionally held by teenagers and young adults”

I’ve been writing about this for two years – calling this phenomenon the “Great Squeeze.” The premise of the Great Squeeze is simple: the slow-growth economy, coupled with a skills mismatch, is forcing more college graduates and experienced professionals to take lower-skill jobs for less pay. This is hitting those with less education and experience the hardest – young people, who are being forced down and out of the labor force.

That’s why we still see historically high numbers of young people neither enrolled in school nor in the labor force, particularly during the summer. In fact, the latest numbers for July show that more than 8.1 million people aged 16-24, 4.9 million of whom were teenagers, were neither enrolled in school nor in the labor force. This is 1.8 million more young people than in July 2000, and still 1.3 million more than in July 2007.

Importantly, the new Brookings-Fed paper makes it clear that most of this problem is structural – that is, it is a long-term problem as opposed to a temporary effect of the Great Recession. This can certainly be seen in the latest data, where the labor force participation for teenagers not enrolled in school during July has dropped from 67 percent in 2000 to 50 percent in 2014.

The structural nature of the Great Squeeze has significant implications for policy. First, it suggests that some of the problem stems from employers not creating enough middle-skill jobs. In other words, the slow-growth economy of the last decade has left a large amount of young college graduates underemployed. That calls for a pro-growth, pro-investment agenda, which we will outline in a forthcoming PPI paper.

Second, it suggests there is a workforce skill mismatch, particularly for young underemployed college graduates. This will not be solved by maintaining the current postsecondary education system, or funneling everyone into four-year college degrees. New research also out from the Fed demonstrates that a Bachelor’s degree is not the right investment for everyone, with a quarter of college graduates earning the same salary as those with a GED. Instead, we need more public-private partnerships in higher education, and viable, employer-driven alternative pathways into the workforce.

CS Monitor: Whither summer jobs? They’re coming back, but the road is long, experts say.

Posted on August 13, 2014 by The Progressive Policy Institute

Diana Carew, PPI economist and director of the Younger American Prosperity Project, was quoted on youth unemployment in The CS Monitor.

“You see overall progress,” says Carew. “It’s a slow recovery, but there have been some gains.”

Carew also points to changing priorities and perspectives, such as “higher summer camp enrollment,” and an attitude of “Do I really need to get a job?”

Read the entire article at The Christian Science Monitor.

Why progressives should hold their applause for student loan order

Posted on June 10, 2014 by The Progressive Policy Institute

President Obama issued an executive order yesterday to expand Pay As You Earn (PAYE), the administration’s flagship income-based student loan repayment program. The president’s action offers millions of workers welcome if modest relief from student debt burdens. But progressives should hold their applause, because it also has two downsides.

First, expanding PAYE boosts government public subsidies for a broken higher-education financing model. Second, it will reinforce the already strong bias in public policy toward college attendance at the expense of other post-secondary options for young Americans.

Unlike the standard student-loan repayment program, which has fixed repayment schedules, PAYE is an income-driven repayment program, meaning that how much you pay is based on how much you earn. Eligible borrowers repay up to 10 percent of their monthly income, with any remaining balance forgiven after 20 years. Its commendable goal is to make repayment easier for graduates who take important jobs that pay less — social workers, school teachers, workers in the nonprofit sector.

With the new order, PAYE eligibility will expand to an additional 5 million people who borrowed before the original October 2011 cutoff. It follows last year’s campaign to dramatically increase PAYE enrollment, during which the Department of Education contacted 3.5 million eligible borrowers with limited success. Legal questions surrounding the new order have already been raised regarding presidential authority, especially since the cost to the government remains unknown.

In expanding PAYE, Obama underscored his desire to assure affordable access to college. The idea that college is for everyone rests on the well-established fact that college graduates earn more money than high school graduates on average.

But as I’ve recently argued, while some form of post-secondary education is necessary, not everyone needs a bachelor’s degree. The point was even made recently by Secretary of Labor Thomas Perez.

The wage premium for college graduates is growing not because the degree is worth so much more, but because high school diplomas as worth so much less. In fact, real earnings for recent college graduates have been falling over the last decade, and underemployment remains at record highs. New research shows the number of college graduates taking white-collar jobs declined since 2000, and is now at 1990 levels. If wage growth for recent college graduates was in line with tuition increases, today’s conversation surrounding college affordability would look very different.

Moreover, the new tools of digital learning — such as online courses — should be driving education costs down, yet tuition continues to climb. That suggests the entire financing model for higher education needs reform. And because there are too few viable pathways into the workforce after high school, our $100 billion per year federal student aid system is channeling people into four-year colleges who may be better suited for less expensive options.

Expanding PAYE may relieve the financial strain on borrowers in the short term, but it will almost certainly exacerbate the burden on the federal student aid system in the long run. With PAYE, increased access and opportunity for students comes at the cost of accountability for educational institutions. Borrowers have less incentive to make smart borrowing decisions, or complete in a timely manner. And schools have less incentive to control costs.

When income-based repayment was first introduced in 1993, then called “pay-as-you-can,” it was to encourage “public service” jobs — those jobs earning a relatively modest income. But the idea was not for everyone to enroll in such a plan, only those who needed longer repayment terms to avoid default. Then, in a debate remarkably similar to today, President Clinton acknowledged that the longer terms under income-based repayment were not ideal for most borrowers, and in fact the standard 10-year repayment plan worked well for the majority.

Still, if PAYE expansion goes forward, there are ways to keep its costs in check. First, expand PAYE only to undergraduate loans. If the main intention is to promote college affordability, then it makes sense to focus on undergraduates. Graduate school borrowers, who tend to have higher levels of debt, could apply annually instead of being automatically eligible.

Second, schools should give borrowers the information they need to make an informed decision about which plan is the best for them, and have the Department of Education regularly report on program metrics. Finally, limit, if not eliminate, the provision for “public service” that forgives any remaining balance after 10 years. With the income-based benefits already provided by PAYE, this provision becomes a second subsidy for the same loan.

The president’s executive order could be interpreted as a way of compensating young college graduates for the slow-growth economy they graduated into. Yet while such compassion is admirable, the administration also needs to grapple with the root causes of soaring college costs, including the dearth of pathways into the workforce for young Americans who may not need a four-year bachelor’s degree.

This op-ed is originally appeared in The Hill, find their posting here.

Make college affordability about accountability

Posted on June 3, 2014 by The Progressive Policy Institute

June is fast turning into college affordability month on Capitol Hill. A fresh crop of college graduates, a final push for midterm election talking points, and the impending retirement of HELP Committee Chairman Sen. Tom Harkin (D-Iowa) have all raised the profile of student debt. But while promoting opportunity is essential, we can do more to address affordability by focusing on accountability — for schools and for students.

It is undeniable that rising student debt burdens are imposing a tremendous strain on young Americans. Though 70 percent of borrowers have outstanding loans of less than $25,000, all are struggling under the weight of a slow-growth economy.

Yet forgiving all of the student loans and interest payments in the world still doesn’t address why the postsecondary education system has become so unaffordable. Neither will blindly throwing more money into Pell Grants, a program with unknown effectiveness.

Continue reading the article at the Hill.

Course Correction

Posted on June 3, 2014 by The Progressive Policy Institute

Community colleges should be matching students to jobs, not funneling everyone into a four-year degree. A response to Richard D. Kahlenberg.

The United States is facing one of the greatest workforce challenges in recent history. Wages have been stagnant for a decade and middle-skill jobs have evaporated—and yet unfilled vacancies for high-wage computer and tech jobs are at record levels. Few have been as badly affected by the shifting landscape of the labor market as young Americans, who must adapt to the global competition for jobs with no guarantee of a secure retirement. Already a wealth gap exists relative to older generations at their age, and lower net worth, alongside rising student debt, will inevitably leave lasting economic scars.

In his recent Democracy essay [“Community of Equals?,” Issue #32], Richard Kahlenberg correctly points out that the failure of our nation’s community colleges is partly to blame. He rightly emphasizes the important role community colleges play in the well-being of our nation’s workforce, writing, “Their success or failure will help determine whether America remains globally competitive and whether American society can once again promote social mobility in an era of rapidly changing demographics.”

So ineffective have community colleges become that they are hardly considered a viable pathway into the workforce. In fact, a four-year credential seems to be the only acceptable postsecondary pathway; you either earn a bachelor’s degree or accept a fate of underemployment and low pay. It follows that since 2000, the number of two-year colleges has remained flat while the number of four-year institutions has increased by more than 400, or 17 percent. There are now about 2,900 four-year colleges in the country, or roughly one four-year institution for every U.S. county.

Kahlenberg wisely advocates reforming the entire community college system. However, his analysis and proposed solutions are flawed in three important ways. First, community colleges are failing not because of de facto segregation, as Kahlenberg insists, but because they don’t adequately prepare students for the workforce. The best way to fix this is through private-sector engagement, not heavy-handed government intervention. Second, the goal of community colleges should be to prepare students for the workforce, not just to pave a path to a bachelor’s degree, as Kahlenberg suggests. Finally, failure within the postsecondary education system is not confined to two-year colleges. Four-year colleges are also facing serious challenges.

The first flaw in Kahlenberg’s analysis is his foregrounding of socioeconomic segregation as the main problem facing community colleges. He writes, “[O]ur higher education system, like the larger society, is increasingly divided between rich and poor, an arrangement that rarely works out well for low-income people.” He suggests that the demise of community colleges stems from a vicious cycle of reinforcing racial and low-income stratification, where only poor people go to community colleges while better-off people get an automatic pass to attend a four-year institution.

Kahlenberg offers the fact that four-year colleges enjoy greater government support as proof of inherent preferential treatment toward more affluent Americans. He laments that “direct federal aid to higher education disproportionately benefits four-year over two-year colleges” and that “wealthy four-year universities receive large public subsidies in the form of tax breaks that are largely hidden from public view.” Yet this is hardly proof of income or racial bias. Four-year colleges are more expensive, and provide a longer, more comprehensive service than community colleges, so it’s not surprising that more federal aid goes to four-year institutions. Moreover, if private nonprofit schools are able to use tax-supported donor funds to defray rising costs instead of increasing tuition or relying on students to take on more debt, then that should be applauded, not assailed.

By focusing on segregation, Kahlenberg misses the fact there are other factors at play. For example, our nation’s K-12 education system bears much of the blame for perpetuating the failure of community colleges. Too many young Americans graduate from high school without rudimentary skills, forcing community colleges to retrain students in basic education. For instance, the Northern Virginia community college system—an exemplary system by Kahlenberg’s definition because it grants automatic admission to Virginia state universities upon completion—offers a course in learning “whole numbers.” But I found no courses specifically in SAS, STATA, Eviews, or other statistical analysis software that high-wage employers are looking for. By being forced to offer mainly remedial courses, such community colleges disserve the many students who do have basic skills and prohibit the integration of people from different backgrounds that Kahlenberg strives to encourage.

In reality, our community colleges are failing for a reason more obvious than a socially ingrained elitism. It’s because they aren’t providing students with a positive return on investment. They are not adequately preparing their students for the workforce with dynamic training programs that align with local employer demands.

Indeed, the best way to promote economic and social mobility is to prepare our workforce for jobs that match such demands. The key is to engage the private sector: the employers. They must be an active partner to community colleges, participating in curriculum design and engaging with prospective hires. Nowhere in his essay does Kahlenberg mention the role of the private sector, leaving a rather large hole in his analysis.

Instead, the author’s proposed reform of reallocated government spending will only preserve the status quo. Worse, it would exacerbate the skills mismatch, as community college administrators would have little incentive to work with local employers. His focus on bringing in more middle-class students to community colleges would also do little to help millions of struggling young Americans of all backgrounds.

Real reform of community colleges would also engage the education-technology revolution that is passing too many postsecondary education institutions by. Low-cost, high-speed broadband has the potential to transform workforce training, creating enormous economic and social opportunity by including people of all socioeconomic backgrounds. For example, the University of Colorado’s College of Engineering and Science recently launched a program to help its students master communications technologies to collaborate with engineers from around the world. Designed to teach students the online skills they need to succeed in business, the program saw a diverse student body—50 percent female, 30 percent Latino—in its first year. The emergence of massive open online courses and customized education is also of great promise, and could even encourage higher completion rates—an area of concern in the postsecondary education industry.

If community colleges realigned their mission to prioritize workforce preparedness, the growing socioeconomic divide Kahlenberg writes about would likely be to a certain extent reversed. Perhaps more students of varied backgrounds would want to enroll if they knew the associate degree held more clout in the workforce. The segregation that plagues today’s system would improve organically, in a virtuous cycle, without heavy-handed government mandates.

A second problem with Kahlenberg’s essay is his assumption that the end goal of the community college system is for everyone to get a four-year degree. Here Kahlenberg is not alone; it seems as if the bachelor’s degree is seen by the entire postsecondary education industry as the Holy Grail for the economic woes that afflict young Americans.

This is simply not true. Not every job requires a four-year degree and not everyone needs one. For example, according to the Bureau of Labor Statistics, over the next decade new jobs requiring either an associate degree or a postsecondary non-degree award are expected to grow faster than jobs requiring a bachelor’s degree. Many of these jobs—such as those for medical or engineering technicians, or for computer support specialists—pay well and are vocational or technical. This suggests some four-year students could probably get a better return on investment from a two-year credential or non-degree certification.

The fact is that when it comes to a bachelor’s degree, it matters where you go to school and what you study. While on average those with a bachelor’s degree earn $1 million more in their lifetime than those without, the variance in return on investment is large.

There is no question that some form of postsecondary training or education is necessary in today’s economy. Young Americans without education beyond a high-school diploma are dropping out of the labor force at an alarming rate, or working less, unable to compete for decent jobs. But the question we should be asking is: What type of postsecondary credentials do we need? We must design postsecondary education policies that reflect the reality on the ground by promoting more alternative pathways into the workforce outside of a bachelor’s degree.

This brings us to the third flaw in Kahlenberg’s analysis. By wanting to funnel everyone into four-year schools, he ignores the fact that the four-year model is already beginning to implode. It turns out that the recent building binge of four-year colleges may not have been the greatest idea, as we are now saddled with many ineffective four-year schools. A painful truth is that the failure of postsecondary education is not confined to community colleges, and many four-year institutions are also facing tough questions from students and parents.

Young college graduates know all too well that having a bachelor’s degree is not a guaranteed ticket to financial success. They have seen their real average annual earnings drop by 15 percent over the last decade, as the hollowing out of middle-skill jobs over that time has forced more graduates to take lower-paying jobs that do not require a four-year degree. In fact, my research has shown that college graduates are forcing those with less education and experience out of the labor force—what I call the “Great Squeeze.” At the same time, they face rising student debt levels, now more than $29,000 per borrower. Too many young Americans are leaving the postsecondary education system with thousands in debt and little to show for it.

In his essay, Kahlenberg argues that four-year institutions provide a better service because they spend more per student than community colleges. He notes that “stunningly, over the past decade, inflation-adjusted spending on public research universities has increased roughly $4,200 per student, compared with just a $1 per student increase for community colleges.”

But this just shows how much more expensive it is to provide everyone with a four-year degree. Further, it wrongly assumes that because four-year research universities spend more per student, the student is getting a better education. The most recent data shows in that 2011, public universities spent more on “auxiliary enterprises,” which includes bookstores, dorms, and dining, than on academic support and student services.

Moreover, public funding for postsecondary education has been decreasing across the board, with four-year colleges also feeling the pinch. In Colorado, for example, annual public funding for postsecondary institutions is expected to decrease to zero by 2022. As state spending falls and tuition rises, the federal government has shouldered the burden of ensuring equal access. This includes the expansion of federal student aid and programs like income-driven repayment. According to the College Board, Pell grants are up 118 percent over the last decade. It turns out the increased spending per student at public universities is being paid for in large part by the student and the taxpayer.

By encouraging everyone to get a four-year degree, we will add more debt on the backs of young Americans and put greater strain on the federal aid system. This is especially true if more young Americans feel obligated to pursue graduate school to stand out to employers, taking on even more debt in the process. We need to have other viable pathways into the workforce that don’t require major time and financial commitments.

What we need is a community college system that can stand on its own. It should be a standard, if not common, pathway into the workforce. Its success should depend on how many students are able to achieve a decent standard of living upon completion, with transfers into four-year colleges as one possible option. Certainly, some colleges are getting the formula right, leading the way with innovative practices and programs that integrate local employers to the benefit of their students. Yet such cases remain the exception rather than the rule.

The goal of the postsecondary education system should be to facilitate America’s workforce preparedness. Only when we realize that multiple pathways are needed to reach this goal—rather than a one-size fits all approach—will we undertake the radical reforms we truly need.

This article was originally posted by Democracy.

Missing the Mark on Federal Student Aid

Posted on May 2, 2014 by The Progressive Policy Institute

Two of today’s biggest proposals aimed at solving the student debt crisis – refinancing and expanding income-driven repayment – are well-intentioned but miss the mark. Better reforms would address the real problem of an outdated postsecondary education system, and would use the billions already spent annually on federal student aid more effectively.

The first proposal, refinancing student loans, is not new but is gaining fresh momentum. Last week, Sen. Elizabeth Warren (D-Mass.) announced plans to introduce legislation in the coming weeks that will refinance all outstanding loans to today’s subsidized Stafford loan rates, or 3.86 percent. The costs of refinancing will be paid for by the controversial “Buffet rule” tax increase on millionaires.

Taxing the wealthy to reduce interest rates may help relieve high interest rate payments, but does nothing to address the underlying debt. The Department of Education informally estimates a refinancing scheme could cost upwards of $100 billion over 10 years, a high price to pay for a plan that does not hold schools accountable. And if the ability to refinance extends into the future, it would be cheaper to just offer all federal student loans at the subsidized Stafford rate.

Moreover, refinancing all student loans will mostly benefit graduate students and those with very high debt levels. This may not be the intended target for relief, as it allocates more funding to borrowers who made poor borrowing choices as opposed to those under the most financial stress. A more effective way to deal with graduate loans would consist of capping loan limits, and using those savings to launch a financial awareness campaign complete with labor market expectations data before people borrow.

The second proposal, being explored by Sen. Tom Harkin (D-Iowa), calls for making income-driven repayment (IDR – also known as “Pay As You Earn”) the automatic repayment plan for all borrowers. Under IDR, borrowers pay up to 10 percent of discretionary income regardless of loan amount, for a maximum repayment term of 20 years after which all outstanding debt is forgiven.

The costs of IDR are only beginning to come to light. New CBO estimates for expanding IDR as proposed in the president’s budget show an estimated cost of $8.2 billion over the next 10 years, although independent estimates range as high as $14 billion annually. Because this form of IDR is so new, the true cost will likely depend on programmatic details and implementation.

Similar to refinancing, IDR stands to benefit graduate students and high debt borrowers the most. In fact, there have already been documented cases of IDR abuse. Without accountability, expanding what was designed to be a temporary solution for the neediest borrowers simply hastens the transfer of the crisis of college affordability from the borrower to the taxpayer. It does nothing to address rising tuition. This suggests a one size fits all approach for loan repayment, or at least IDR in its current form, may not be the most cost-effective.

A better approach to reforming federal student aid would help students young and old by modernizing the postsecondary education system. Right now, there are too few acceptable pathways into the workforce after high school. The mentality that everyone needs a four-year degree is not only exacerbating the strain on the federal aid system, but it is enabling poor performing postsecondary institutions to stay in business.

One possible way to target industry reform is by experimenting with Pell Grants. The scope of Pell Grants could be expanded to include more non-traditional training programs. This would encourage alternative pathways into the workforce, for example, apprenticeships or online-based credentials.

Another experiment could be to change the eligibility criteria for schools receiving Pell Grants. Grant money can be block allocated to schools by completion and post-graduate success metrics to start; later allocated by success metrics of recipients. This forces us to collect data on grant recipients over time while encouraging schools to better serve students. Such experiments can be done cost-effectively, by tightening eligibility criteria, reducing the eligibility period, and tying individual funding to progress benchmarks.

The effectiveness of Pell Grants is currently unknown, leaving room for improvement. We do know that emphasis on enrollment over completion and post-graduate success does little to help the recipient or taxpayer in the long run. Yet the program has a significant footprint: recent research shows about 9.4 million students received Pell Grants in 2012, up from 5.2 million in 2006. According to the CBO, the cost of Pell Grants simultaneously skyrocketed by 168 percent.

The interconnectedness of federal student aid programs with the postsecondary education system should be seized by policymakers as an opportunity. Focusing on effectively using existing funds to help borrowers, and modernizing the postsecondary education system, is the best way to address the student debt crisis now.

This Op-Ed was originally published in The Hill.

Senate hearing on student loans did not HELP

Posted on March 28, 2014 by The Progressive Policy Institute

Yesterday’s hearing of the Senate Health, Education, Labor and Pensions (HELP) Committee on student loans seemed to clearly answer the question of who is to blame for our $1.2 trillion and climbing student debt debacle. The only problem is, it was inaccurate. That makes the conversation unproductive regarding making federal aid policy effective.

If you believed the hearing, private lenders, loan servicers (TIVAS), and greedy state guaranty agencies (GAs) are to blame. During the hearing Sen. Patty Murray (D-Wash.) prided her role in passing recent cuts to GA-collected fees, as “providing relief to struggling borrowers.”

This is little more than politically charged rhetoric. There is no question young Americans are struggling more than any other age group, and this is exacerbated by student debt. But in reality, the finger-pointing for whom to blame is not so cut and dry, and any real improvement to the student aid system must reflect that.

Just as with the subprime mortgage crisis, everyone involved played a role in driving our student debt burden. States have decreased funding for public universities (for example, Colorado is expected to stop all funding by 2022), schools have increased tuition to fill the difference, borrowers have little incentive to make smart borrowing decisions, for-profit institutions have a less than stellar track record, and funding has been readily available regardless of credit backgrounds to enable equal access and opportunity. Of course, there is also the epidemic lack of financial literacy of student borrowers. Lenders, school counselors, parents, or the borrowers themselves could all be to blame.

Moreover, the underlying dominance of four-year college model is also partly to blame. The fact is not all four-year degrees are created equally, and not all jobs require a four-year degree. Yet the lack of other viable options for workforce success could explain why everyone is encouraged to pursue a four-year degree. It could partly explain the astonishing rise in graduate school over the last decade, as poor employment prospects force college graduates to find ways to stand out, and the rising student debt that comes along with it.

Certainly some private loan servicers are not completely innocent, and may not always put student interests above their own short-term goals. But the harsh tone taken by Sen. Elizabeth Warren (D-Mass.) yesterday does not address the larger issues at play. Her comment, “Sallie Mae has repeatedly broken the rules and violated its contracts with the government, and yet Sallie Mae continues to make millions on its federal contracts,” even prompted the Department of Education to come to Sallie Mae’s defense.

Indeed, not all private-sector participants among the accused are approaching borrowers with mal-intent. Take for example state guaranty agencies (GA), the legacy administrators of the Federal Family Education Loan Program (FFELP) for a given state. Left out of the hearing discussion seemed to be the important fact that GAs are non-profit companies designated by the Department of Education. Their fees are used for an important cause – for extensive financial literacy training programs set up across state networks. The more their fees are cut, the fewer financial literacy services they will be able to provide.

The demonization of private loan servicers might lead one to think that federalizing student loan servicing would solve the problem. However, isolating TIVAS is counter-productive. Not only are student loan servicers not the greedy profiteers they are made out to be, but there is no reason to believe the government would be more cost-effective at loan administration. Further, there is no evidence that expanding the federal role in student loan administration would do much to relieve the existing student debt burden.

Instead, Congress should work with TIVAS and GAs as partners as they work to reform the federal student aid program. Just as the issues surrounding the student debt burden are systemic, so too must be the solution. Pointing fingers at a select few accomplishes little, even if it does sound good during election season.

If there is any take-away from yesterday’s hearing, it is that student loans have become the latest issue in need of greater awareness and education concerning all of the aspects. There are over 80 million young Americans under age 20 that are counting on policymakers to get the federal aid system right for when they invest in college. Luckily, since the re-authorization of federal student aid programs is almost certain to get postponed for yet another year, it is not too late.

This article was originally posted by The Hill, read it on their website here.