President Obama has signed an executive order outlining a new Student Aid Bill of Rights. Its four points are: (1) Have access to a high-quality, affordable higher education, (2) Be able to easily find the resources to pay for college, (3) Be able to choose an affordable repayment plan for student loans, and (4) Receive quality customer service, reliable information, and fair treatment when repaying loans. The problem with this supposed bill of rights is that nothing in it will have any impact on the true cost of a college education. Rather, it is mostly about shifting the costs onto others.
If one reads the first three points, they suggest that somebody unnamed should subsidize college so that it is affordable for all, that resources should be available from some unnamed source to pay for college, and that the priority for any student loan payments be affordability not actually paying back what is owed. All of these points focus the issue of affordability onto making somebody else pay.
A better strategy would be to help students find a more affordable way to go to college without moving the costs onto somebody else. Ideas that many people have recommended include: attending an in-state public college rather than a (likely much more expensive) private one, to work part-time while attending college, even to live at home while doing your first two years at a community college or other less expensive local option and then transferring to a better college for your final two years. With the last strategy, students get a higher quality diploma at a much lower cost.
Research has shown that working part-time does not hurt academic results unless students work lots of hours. The earnings boost from a public college degree is not much smaller than the boost from many prestigious private colleges, so on a return on investment basis public colleges generally provide the best deals.
A student who worked earning $10 per hour for 30 hours per week for twelve weeks in the summer and 15 hours per week during thirty weeks of the school year would earn $9,100 per year and owe very little in taxes. That amount would cover all or nearly all of the cost of most two-year public colleges and roughly half of the average four-year public college if the student is paying in-state tuition (for college cost and financial aid data, see here). With non-loan financial aid averaging over $5,000, the net cost of a high-quality public college to a student above what could be earned working part-time would be only around $5,000. Especially if the student spent the first two years at a less-expensive school, that means a student could easily graduate with $10,000 or less of student loan debt even if his parents paid nothing toward his college education.
This hardly seems like the economics that would lead to a student debt crisis or the need for a student aid bill of rights. Yes, private colleges are far more expensive, but they are also very generous with financial aid for less wealthy students. The net cost at private colleges can easily drop to $20,000 per year rather than the headline numbers you read in the $50,000 or $60,000 range. At the most elite schools, it can be even lower for students who are smart enough and poor enough.
There is a legitimate problem with some for-profit private colleges, many of which provide very poor-quality educations, build their budgets almost exclusively on federal financial aid and student loans, and leave many of their students with no degree or one that is worth very little. A role exists for the federal government in solving this problem.
The federal government finally pushed one of these colleges out of business. However, they should be much quicker to ban such colleges from access to the federal student loan program, to refuse Pell Grants to such institutions, and to provide students with information on the poor performance of such schools.
President Obama serves as the chief executive officer of the federal government. Thus, the last point in his Student Aid Bill of Rights is exactly what he should be doing as president: making the executive branch run better and work for the citizens. As for the others, more income redistribution is the last thing we need in this country. Plenty of high-quality affordable colleges exist. As someone who teaches at one of those public colleges, I can assure the President that we are proud of our mission to provide an affordable education to all our state’s citizens and we work hard every day to ensure that will remain true.
Students need options and information, after that they are capable of making choices on their own and of financing their own educations. More federal interference in higher education will not make things better, and it certainly won’t make college cheaper. In fact, the federal government should focus on providing students with accurate information to make good choices about colleges and funding mechanisms, rather than trying to transfer the cost of college from those getting the education to the taxpayers. His Student Aid Bill of Rights is on the wrong track.
Follow me on Twitter @DorfmanJeffrey
