Democrats' College Plans Omit Key Reforms
This column originally appeared at the Washington Examiner.
To say taxpayers subsidize higher education is the definition of an understatement. During the 2014-15 school year, Uncle Sam disbursed nearly $100 billion in student loans and spent another $50 billion on Pell Grants and other student aid programs.
Not to be outdone, Democratic presidential candidates Hillary Clinton and Bernie Sanders have each proposed additional higher education spending to the tune of $35 billion a year on average in Clinton's case and $75 billion in Sanders'. With the candidates asking so much more of taxpayers, it is worth examining what their plans intend to accomplish.
Sanders has famously proposed abolishing tuition at public colleges and universities for rich and poor students alike. Clinton has taken a less dramatic approach. Her plan aims to make public institutions "debt-free." It includes federal subsidies to lower tuition, but also requires contributions from students and their families.
The Clinton and Sanders proposals center around the problem of high tuition, but both fail to recognize that the trouble is exacerbated by government involvement as much as it is tempered. For example, in addition to their efforts to reduce or eliminate tuition at public institutions, both candidates call for cutting the interest rate on student loans. But such a policy might just make things worse — as it becomes easier to borrow, it also becomes easier for colleges to hike tuition.
Affordability matters, but accountability matters too. The American higher education system, while sometimes called the envy of the world, is still rife with problems. Among them are low graduation rates and the inability of many graduates to find relevant jobs. Currently, if colleges fail their students, there are few ways to hold the institutions accountable.
Yet Sanders offers few proposals for how to make sure colleges are, in fact, held to account for student outcomes. Clinton, to her credit, does have some proposals, but they focus mainly on for-profit colleges and mostly ignore similarly poor outcomes at some nonprofits and public institutions.
One accountability proposal of Clinton's, which has found additional champions in everyone from Jeb Bush to Elizabeth Warren, is to require "skin in the game" from colleges — essentially, penalizing institutions for student loan defaults. This is overall a good idea — would encourage colleges to raise graduation rates, since students who start college but do not finish are much more likely to default. However, it might also lead to a reduction in enrollment of higher-risk students. Clinton's plan would benefit from additional provisions to improve college preparation for these students, and expand other options for them (such as apprenticeships) if they are rejected.
Overall, the Democrats' proposals mostly miss the problems. Federal student aid is a mess. The government offers several different aid programs, some of them technically unlimited, which cause headaches for students and expose taxpayers to tremendous risk. Simplification of the system, combined with hard caps on how much may be disbursed, would be welcome.
The difference between the Clinton and Sanders plans highlights a deep philosophical divide among progressives — whether government programs should be truly universal, or targeted towards people who might need them more. "I am not in favor of making college free for Donald Trump's kids," Clinton said in October.
Clinton, perhaps unintentionally, highlights an important point about higher education. Its aim is specifically to raise the career prospects (and future earnings) of young people. Making college free shifts costs to taxpayers, many of whom lack a college degree themselves, while the benefits still go to students, even if they come from upper-income backgrounds and have bright futures. Heavy taxpayer subsidies for higher education redistribute wealth upwards. That is hardly progressive.
Preston Cooper is a policy analyst at the Manhattan Institute. You can follow him on Twitter here.
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