The College Education Reform I Would Run A Presidential Campaign On

by Repayable | Oct 3, 2016 | Money Matters

Free college education skyrocketed Senator Bernie Sanders to popularity with millennials. It brings to mind this question; if you could reform college education how would you do it?

Unfortunately, I don’t meet the age requirements for presidential election just yet (Burckart for president 2024). But if I was running for president, you can bet college education reform would be at the top of my list of issues.

So what do I think needs to be reformed? You mean, besides everything related to how much college costs and how we fund it?
Here’s my simple reform plan sure to please both sides and not break the budget.

Please both sides, yea right.

All Colleges Would be Required to Provide Cost Data

Any college that receives federal or state money, or any tax incentives would be required to provide certain cost data.

This cost data would include historical and current charts of annual tuition, annual tuition increases, annual graduation rates, annual job placement rates, average total student loan debt of graduates, and average starting salary of graduates.

I would also require colleges to report this specific information for each and every major and degree they offered.

Why so much data reporting?

Without objective information about the actual costs to attend college it is nearly impossible for a high-school student to pick a degree and major that suits their interests and won’t bury them in un-repayable student loan debt.

These statistics would allow students to compare the different financial pictures of majors they’re considering. Should they major in family studies or counseling psychology? Both could enable them to work with the specific population they’re interested in. Does one cost more than the other? Does one pay more than the other? Do graduates from this program have higher job placement rates at one college vs another? Is tuition cheaper at one college vs another?

Right now there’s no single source to find out.

Without that source colleges can let costs swell and be lazy about tightening their belts. They can pass cost increases along to students because it’s very difficult to tell where the best value lies.

Transparency would promote competition, cost-savings, and potentially change job placement rates. Colleges would want to look as good as possible to potential candidates. Thus students would get more out of the tuition they paid.

One potential problem with this is that the very best colleges would become incredibly competitive. That means that students who are weaker candidates may end up paying more for a lower-quality education. I will argue that this already occurs in certain fields (pharmacy I’m looking at you) between public and private schools.

Tuition Increases Would Be Capped

Regulating tuition increases would likely need to be done in conjunction with preserving state funding for these institutions. It seems like cutting funding for higher education is like finding money in the couch to policy makers.

Oooh I found a few million dollars… and some lint!

A tuition cap would look something like a rent cap or rent stabilization. Similar to how rent controlled properties work in NYC. The idea is that you don’t squeeze folks less able to afford renting, or in this case tuition, out of the market.

So for example if there was a tuition cap, the government would say, if you start a 4-year degree program in 2016 at an annual tuition of $8000 you will continue to pay only $8000 annually until you graduate. I would want to apply an appropriate time limit and at least a half-time enrollment status requirement to encourage graduation in a timely manner.

A possible problem I could see with this is that essentially for each incoming class, colleges would charge more and more tuition because they would know they couldn’t increase it for those students for 4-6 years (or whatever the length of the cap).

Federal Student Loan Interest Rates Would Be a Bargain

Student loan interest rates aren’t always reflective of current market interest rates.

This lack of response to market interest rates can be seen as an advantage. If there’s high inflation it means student loan interest rates will take longer to respond and hopefully don’t incur the same sharp increases as say a mortgage interest rate would.

The downside to this though is that when interest rates are low (like right now) you’re paying well above standard amounts, and that’s a difference of thousands of dollars.

The government could make student loan interest rates more reflective of the financial market.

I think the better option is simply to standardize the interest rates at 1-2%.

This could provide the government some incentive to minimize the risks of defaulting by controlling costs of college attendance so they wouldn’t lose money due to inflation.

The major problem with this is that in years of inflation the government could lose money. If there are a lot of students who default on their loan repayment then the government could lose money. Again I think this would just give the government a little bit of skin in the game.

What would you put in your presidential campaign?

These are just a few of the ideas I have for making the student loan debt burden repayable. For an entire chapter full of possibility check out my book Repayable out in December of 2016. Please share your best ideas for change in the comments below or in the Millennial Maxims Facebook group.