Summary
We support aggressive use of technology at publicly supported colleges and universities to lower the cost of an undergraduate degree. We also support separating the certification and educational role of these universities. This would allow students to prepare on their own, or with the help of private sector firms, for certification in their field of choice. We support having institutions of higher education sharing the cost of student debt forgiveness through either government loan programs or student bankruptcy.
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Background
The Pricing of a College Education
Higher education is rivaled only by medical care for the rate of real cost increases over the last few decades. While it can be argued that the quality of medical care has risen dramatically along with its costs, the same cannot be said for the quality of a modern college education.
Most colleges have adopted a form of price discrimination, in which they charge extremely high list prices and then discount those prices either based on ability to pay or merit or both. This price discrimination, like that practiced by the airlines, allows colleges to extract the maximum possible amount for their services.
This pricing method has also had the effect of pricing private colleges beyond the reach of many middle and upper middle income families.
The public colleges have also followed a similar path, but remain a relative bargain because of the subsidies provided by state governments.
Bringing Colleges into the 21st Century
State legislatures need to pressure their educational institutions to find ways of lowering the cost to taxpayers of providing this service. Higher education is one of the few areas of economic activity where quality is judged by a low level of productivity (student/faculty ratio). We believe that, as in most other areas, state universities could improve their efficiency by better use of technology. Some state legislatures are putting pressure on their university systems to develop cheaper and more efficient ways to provide the equivalent of a college degree by more aggressive use of online courses. The recent experiments with online education, during the pandemic, at the elementary school levels have not been encouraging. Online education at the college level seems to be fairly effective and, in some cases, popular with both students and faculty. We support expanding these efforts.
We believe that all colleges and universities should adopt 21st century technology to lower the cost and improve the quality of post-secondary education. Our focus is on public universities because that is where political action can have the greatest impact. We believe that once state universities use these technologies to significantly lower the price of a college education, private universities will have to follow suit.
Separation of Certification from Education
Colleges and universities serve two distinctly different functions: education and the certification of competence through granting degrees. In the long run, the best way of introducing competition into higher education and driving down prices is to separate the certification function from the education function. We would support state legislatures directing their universities to establish separate certification programs. Colleges and universities can then focus their educational attention on preparing students to apply for that certification. If others, including for-profit institutions, also want to offer that preparation, for a price, it will force the introduction of cost saving technologies into higher education.
The Role of the Federal Government In Inflating the Cost of a College Education
As far as private education is concerned, we believe that federally subsidized student loans tend to sustain the continued increase in tuition, so we favor raising the interest rates on these loans to market rates.
The 2017 Tax Cut and Jobs Act imposed a 1.4% tax on the earnings of college endowments that exceeded $500,000 per student. This affected about 40 universities. We believe this threshold should be lowered and tax rate should be increased. This lower threshold and higher rate should apply to any university endowment that does not distribute at least 5% of its endowment annually. This should force the wealthiest universities to meet more of their costs from their endowments and less from student tuition.
We believe that students, who are taking on loans, should be provided with estimates, based on data from prior graduates at their institutions, of the likely incomes they will be able to expect, by major, and the life time cost of repaying their student loans.
Recognizing that increasing interest rates on student loans to market rates will pose a hardship for the very poor, we favor expanding the Pell Grant program to compensate for the impact of the higher interest rates.
Colleges and Universities Should Share the Cost of Student Debt Forgiveness
Colleges need to have some “skin in the game” on the value of the product they are marketing. An easy way to accomplish this is to require that these institutions agree to be on the hook for 50% of any loan forgiveness that is granted by the government through student loan programs or through bankruptcy on the part of the student. If the college or university was not willing to do this, students going to that institution should not be eligible for federally provided student loan programs or Pell Grants.
College Admission and Social Mobility
One form of self sustaining privilege in our society is the “legacy” advantage in college admissions to highly selective colleges and universities. We believe that all institutions of higher learning that accept federal funds (which includes virtually all of them) should be required to abandon this practice. This seems especially important, from an ethical point of view, if we are to ban race-based affirmative action admissions policies. The following colleges and universities have abandoned legacy admission policies: MIT, Cal Tech, UC Berkeley, University of Washington, and Amherst.
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