President Obama’s speech today in Buffalo marked the formal introduction of a new higher education initiative. Wonkblog has a more complete rundown here, but I’ll use their template to briefly summarize what’s included:
- The College Scorecard: consolidate comprehensive information and statistics on colleges to allow for easy comparison shopping between institutions.
- College rankings: use the information above for a new ranking system.
- The college ‘Stick:’ reducing federal payments to colleges that score low on that ranking system.
- Expanding loan relief: some of the current avenues for modifying loan repayments would be expanded.
- The first ‘Carrot:’ applying a similar incentive structure found in K-12’s Race to the Top program to higher education.
- The second ‘Carrot:’ implementing bonuses for high-achieving schools who graduate more students that receive Pell Grants.
- The student ‘Stick:’ making federal subsidies to students accountable by requiring certain academic conditions be met before further funding.
- The MOOC Kitchen Sink: further fund experiments in new instruction models with a particular emphasis towards online instruction.
Jonathan Chait thinks these measures have a real chance of earning conservative support. Josh Barro is likewise optimistic. Skeptics, however, will be quick to point out that it wouldn’t be the first moderate-to-conservative reform idea embraced by the president that Republicans suddenly decided was anathema to basic American liberty. I don’t have a comprehensive response to everything in the administration’s plan, but I do have a quick comment on one aspect.
It looks as though most of the push behind expanding student loan relief will be along the lines of the current Pay As You Earn program (PAYE), which, among other limitations, is limited to those claiming partial financial hardship. The proposed expansion would include increasing eligibility for PAYE and capping loan repayment to 10 percent of your monthly income. On it’s own I think this is an admirable goal for a debt that is singularly unique insofar as it can never be discharged (even in bankruptcy).
That being said, I think there is a far better deal to be had in Oregon’s proposed pilot program Pay It Forward (PIF). The proposal was well-covered in this Sarah L. Jaffe piece, and well-advocated from a progressive perspective by Matt Bruenig. Basically it eliminates the upfront costs of college tuition altogether. Rather than paying a school per semester, or on a fixed loan, after leaving college students would be required to pay a certain percentage of their income based on years attended to a public fund for future higher ed students. In the legislative version passed by the Oregon Senate, that percentage amounts to .75 per school year, or three percent for a four-year degree.
Oregon’s novel approach is essentially an income-based repayment scheme; a subject for which one can easily devote many hours towards. I won’t suss that broader dialogue here (again, refer to Bruenig). One of the reasons I consider PIF a superior approach to PAYE is that aspect that ties repayment to income. Which is to say, pursuing a policy like PIF removes the burdensome nature of today’s non-dischargeable student debt. Moreover, at least in the Oregon Senate variant, PIF allows for payment forbearance during periods of unemployment — a clear advantage for graduates looking for work in a weak economy.
Of course there are ideological reasons to support or oppose PIF, but the policy should, in theory if not practice, appeal to some conservatives. Such a system could eventually remove higher education funding away from the general revenues of states solely onto those who attend college, for the benefit of those who plan on attending college. It is also this feature that should appeal, as Bruenig writes in that first link, to left-leaning egalitarians interested in making education more “internally redistributive.” So something like PIF, on paper, embraces some of the (truthfully) game-changing approaches in PAYE without assuming that basic market approaches alone will win it bipartisan support in an intractably polarized political age.