Liberal Education

The Higher Education Act: Opportunities for Bipartisan Reform

Higher education is a critical tool for social mobility, but today, students and their families face significant challenges. Since 1999, the average price paid for tuition, fees, room, and board has increased by 70 percent at public four-year colleges and universities, 21 percent at private nonprofits, and 10 percent at public two-year institutions.1 The Pell Grant Program, the federal government’s largest source of need-based grant aid, has failed to keep pace with rising prices, placing strains on low- and middle-income families. At the same time, declining state funding for higher education has led public institutions to rely more heavily on tuition revenue.

Meanwhile, too few students make it to graduation day, and too many are saddled with debt that they cannot afford to repay. Currently, just two-fifths of first-time, full-time students graduate with a bachelor’s degree within four years,2 and 39 percent of the federally managed student loan portfolio expected to be in repayment is either delinquent or in default.3 These problems are exacerbated by a loan repayment system that is complex and difficult to navigate.

Students and families also lack clear information to inform their decisions. Similarly, federal higher education data obscures student outcomes by key demographic characteristics, making it difficult to gauge institutional performance and the potential return on investment for degrees and credentials. Even though higher education remains a worthwhile investment for most who complete a degree, this lack of clear information leads many students to enroll in schools that may serve them poorly.

It is against this backdrop that the Bipartisan Policy Center (BPC) convened the Task Force on Higher Education Financing and Student Outcomes. This group has identified several areas of federal policy ripe for reform that could drastically improve the US higher education system for students and their families. With a focus on access, affordability, and accountability, the task force analyzed a wide range of relevant data. After more than a year and a half of deliberations, the task force reached a consensus on a package of recommendations for lawmakers. Importantly, the package of recommendations is roughly budget neutral, providing a blueprint for a comprehensive and bipartisan Higher Education Act reauthorization. The task force members’ ability to reach an agreement on this package suggests that pragmatic and data-driven reforms are possible.

These reforms aim to promote college affordability and reduce equity gaps, encourage efficiency and improve the targeting of federal aid programs, boost quality assurance and institutional accountability, and enhance federal data systems while providing better information to policymakers, researchers, and—most importantly—students and families. Ultimately, this package of reforms would work to ensure that every student shares in the benefits of America’s higher education system.

The task force was cochaired by former US representatives Howard P. “Buck” McKeon (R-CA) and George Miller (D-CA). Both served as chairs of the House Committee on Education and Labor during their time in Congress. In the following Q&A with Liberal Education, they further elaborate on the bipartisan recommendations to make college more affordable for and more accessible to a greater number of Americans. Key report recommendations are highlighted throughout the article. To read the entire report, visit https://bipartisanpolicy.org/report/new-higher-ed.

—Jinann Bitar, senior policy analyst at the Bipartisan Policy Center


 

Let’s start with establishing the task force. What went into forming it and ensuring that it was a truly bipartisan effort?

George Miller: The Higher Education Act was last reauthorized in 2008, when I was serving as chair of the House Education and Labor Committee, and Buck was my counterpart. We worked together in a truly bipartisan way on that bill. With a reauthorization of that act long overdue and college costs and student debt in the news almost every day, I think we felt the time was right to make this renewed push for change.

BPC launched the task force with a goal of producing pragmatic policy recommendations that would dramatically improve the higher education system for students and their families. To achieve a goal that ambitious, you need every perspective in the room. We assembled a terrific group that included former lawmakers, college presidents, and higher education leaders from all points on the political compass, whose varied expertise and commitment to evidence-based reform allowed for both lively debate and the development of serious policy solutions.

Low-income students are more than 2X as likely as their high-income peers to drop out within two years of matriculation.

Recommendation: Provide additional Pell dollars to students who choose to attend institutions that successfully serve large numbers of low-income students.

In 2019–20, the maximum Pell Grant award accounted for only 28% of the cost of attending a public four-year institution.

Recommendation: Increase mandatory Pell funding by $90 billion over 10 years, raise the maximum Pell award, and expand eligibility for middle-income households. 

Can you talk about the work of the task force on addressing the issue of college affordability and how policymakers on both sides of the aisle came together to make recommendations?

Howard P. “Buck” McKeon: From the start, our group was unified in the belief that too many low- and even middle-income students and their families are struggling to afford a college degree. Consequently, the task force’s recommendations focus on reducing unmet need among low- and middle-income students primarily by reallocating federal resources towards front-end grant aid and improving the federal student loan program. These improvements would make a high-quality postsecondary education more affordable and help to ensure higher education is an engine of opportunity to drive economic growth.

What were the biggest points of agreement among task force members?

Miller: As Buck said, there was an overwhelming sense of purpose to strengthen access and affordability. There was also broad agreement that federal student aid should be better targeted and less complex, that the federal government should improve oversight over poorly performing schools, and that students and families need better information when making college enrollment and financing decisions. Most important, however, we shared a sense of urgency. We’ve seen the consequences of ignoring a dynamic higher education system for ten years.

What were the biggest points of contention?

McKeon: The task force was philosophically divided on one key question: What level of federal resources should be allocated to postsecondary education? Some members, for example, wanted to see an increase in overall higher education spending, while others favored reducing the federal footprint, believing that loans without limits were driving up college prices, particularly for graduate and professional degrees. This dynamic led us to conclude that in order to reach an agreement, we would pursue a budget-neutral package that focused on retargeting the federal resources spent on higher education.

It’s important to note that not every task member supports each of the forty-five recommendations in insolation. There are several proposals I would have preferred to leave out, such as the federal-state partnership. But each of us agreed that this full package of reforms would be an improvement on the status quo and meaningfully improve the higher education system for students and families.

Only about 50% of borrowers are able to reduce their principal balance within 5 years of beginning repayment.

Recommendation: Require institutions participating in the federal loan program to pay a small premium tied to student loan outcomes.

Can you talk a little about the federalization of higher education and the responsibility of states in supporting higher education? The task force recommends establishing a $5 billion matching-grant program to help states improve student outcomes and make higher education more affordable. Why do federal incentives matter so much? Are there downsides to making state participation in the program optional?

Miller: States were historically the primary funders of public higher education, with the federal government playing a complementary role. More recently, however, declining state support for higher education has really shifted the playing field. Since the mid-1970s, state and local support for higher education as a share of personal income has dropped from 1 percent to 0.5 percent today. And, as state support has declined, public colleges and universities have increased their reliance on tuition revenues, resulting in higher costs for students and greater dependence on federal student aid.

Federal incentives matter because these trends are likely to continue. States face a number of challenges to investing in their higher education systems, including balanced budget requirements, and these challenges are exacerbated during a recession. Recognizing that every state higher education system is unique, the task force agreed that participation in the new federal-state grant program should be optional. With a $4-to-$1 match for every additional dollar invested, the program offers states a significant incentive to participate, which we believe will result in multistate participation.

Since the mid-1970s, state and local support for higher education as a share of personal income has been cut in half.

Recommendation: Reimagine the federal-state financing relationship through a $5 billion annual matching grant to help states reduce unmet need and improve student outcomes.

Describe how, if implemented, the recommendations would achieve relative budget neutrality. Would the changes to stop benefits from disproportionally aiding high-income families have support among policymakers?

McKeon: I learned early in my career in Congress that budget estimates on student loans change often and sometimes by wide margins. Nonetheless, within the framework of rough budget neutrality, our focus was to reallocate existing resources to policies that could better target low-and middle-income students. To offset the new cost of the proposed federal-state partnership and a Pell Grant expansion, the task force calls for eliminating certain higher education tax benefits under which higher-income earners receive larger benefits than lower-income earners. We also proposed eliminating the in-school interest subsidy on federal student loans because the research shows this funding has limited impact on access and retention. One of the most controversial changes is likely to be the elimination of the standard repayment cap, a feature of some income-driven repayment plans, that could result in higher earners paying back more than they would have otherwise.

It’s fair to say that these recommendations would represent a significant change to the ways the federal government supports higher education. I predict they will generate a lot of discussion in Congress, with some people wanting to spend more money without offsets and others wanting to save money without spending more someplace else. But the bottom line is that there are opportunities here for the federal government to get better results for the money that is currently spent on higher education.

Complex requirements of the Public Service Loan Forgiveness (PSLF) Program have led to a staggering 99% rejection rate among borrowers expecting their remaining balances to be forgiven.

Recommendation: Restructure the PSLF to provide an up-front, flat monthly benefit of $300 for 5 years for any eligible borrowers working in public service or at nonprofit organizations.

What’s the biggest takeaway about college affordability you would want Liberal Education readers to get from the task force’s report and recommendations?

Miller: This isn’t a problem that is going to solve itself. If we continue to do nothing, we’ll continue to see prices and student debt rise. We need to act to ensure that America’s higher education system is transformative for those who seek it and that every student shares in its benefits.

In a 2017 Pew Research Center poll, 58 percent of Republicans said that college had a negative effect on the United States, while only 19 percent of Democrats said the same.4 What can be done at both the policy and campus levels to address the negative narrative about the value of higher education? What effects might the narrative have on implementing changes like those the task force recommends? Why do you think that this view is disproportionately Republican, and what might be done about it?

McKeon: The US higher education system has long been held up as the best in the world, but more people are questioning the payoff to graduates and society as a whole. However, despite the statistics you mention, our nation’s long-term prosperity depends on a highly skilled and innovative workforce. While the threats to free speech and inquiry on college campuses are a real concern, America cannot just turn its back on higher education. We must come together to ensure the system meets the needs of today’s and tomorrow’s economy for everyone. This report is a start, but there’s more work to be done to restore confidence in the American higher education system, and some of that is going to need to come from higher education leaders themselves. They need to redefine their value proposition in terms of meeting workforce demands, which is something that we cannot do from Washington.

Students who file the FAFSA are 72% more likely to persist in higher education than those who do not file.

Recommendation: Simplify the FAFSA through automatic data sharing and lay the groundwork for a one-time FAFSA.

How can we move to a space with more constructive policymaking, and how do we prioritize educational policy?

Miller: It begins with members of Congress getting to know each other and developing relationships beyond policymaking. In the case of higher education, we have a luxury. There are institutions of higher education in virtually every congressional district, and these institutions are integral to state economies. This is a critical issue for policymakers to come together on to ensure our higher education system meets the needs of today’s students and the modern workforce. Without action, I do not believe that Congress or American families can have full confidence in our public system of higher education. That is going to require action to address both affordability and accountability.

Where do the policy proposals for free college fit in the conversation?

McKeon: So-called “free” college was not a policy we considered. Our focus was on providing everyone access to an affordable postsecondary education, particularly for low-income students, but there are also important issues of quality to consider. The task force took on both issues, redirecting existing spending toward increasing affordability and boosting capacity at under-resourced schools that serve low-income students, while also providing accountability mechanisms to ensure quality programs that provide students a positive return on their investment of time and money.

Colleges and universities currently receive roughly $150 billion annually in grants and loans from the federal government. That’s a lot of money even in Washington. But when you look at the results of spending all that money each year—with too few students graduating on time and too many taking out loans for studies that don’t pay off—you can’t help but conclude that we can’t just spend our way out of these problems. Improving access will not provide the dramatic improvements the higher education system needs unless we also have quality standards and incentives to improve student outcomes.

Outstanding federal student loans total nearly $1.5 trillion.
Recommendation: Automatically enroll all borrowers in an income-driven repayment plan, implement evidence-based reforms to federal loan counseling, develop personalized, easy-to-understand disclosure forms for student borrowers, and provide an annual notification of students’ remaining eligibility for federal financial aid.

What do educational leaders need to be doing at their own institutions to be ready for reforms that address college affordability?

Miller: Institutions don’t have to wait for policy reform to address college affordability. Improving the information available to students and families is an important aspect of ensuring an affordable and accessible higher education system. Institutions should act to provide students and families easy-to-understand financial aid offers, ensure borrowers receive personalized loan counseling, and increase student awareness of tools that inform student decision making.

What advice do you have for college and university presidents for working with policymakers?

McKeon: College and university presidents need to work on becoming a trusted resource for policymakers. They can’t just be asking for money or complaining about the red tape connected to the money they get. They need to show the impact that their institutions are having on the community. They need to be willing to innovate and leverage the talent of their faculty and students to help offer solutions to solve problems, and, most important, they need to focus more on the world outside of their institutions. We have a dynamic and diverse higher education system, and policymakers face many complex issues. They could use some trusted leaders to help in navigating through all the complexity.

Keeping Institutions Accountable
Six principles guide the recommendations concerning federal accountability policies:

1. Protect student and taxpayer resources by disallowing the worst-performing institutions from accepting federal student aid dollars and by incentivizing continuous improvement among institutions that accept these dollars.

2. Preserve access and affordability for students of color, low-income students, adult learners, first-generation students, and veterans.

3. Support institutional capacity building and prevent downward spirals in which well-intended but under-resourced institutions are unable to meet performance metrics, and, as a result, are further deprived of financial resources.

4. Provide students with improved opportunities for employment and increase the likelihood that students will realize a positive return on their investment.

5. Be sector-neutral, meaning punitive measures should not be targeted at specific types of institutions.

6. Set clear and transparent goals and metrics that are simple to understand but difficult to game.

What is the outlook for the Higher Education Act? When might an update be passed?

McKeon: It is hard to predict. I think there have been many missed opportunities because people aren’t focused enough on the 80 percent of things that they can agree on. Since the 2008 reauthorization that George and I worked on, we have found that a number of policies enacted by both parties haven’t worked as they were intended. We also have a system—and students the system serves—that has dramatically changed over the past decade. We cannot afford to wait much longer.

Anything else you’d like to add?

Miller: The task force’s work signals that bipartisanship is indeed possible, even in this era of political polarization. Buck and I had our disagreements over the years, but we were usually able to put aside our differences and bring our committee together to make real progress. That’s what we’ve done again here, and we look forward to the work ahead.

This Q&A has been edited for clarity. 

Notes

1. College Board, Trends in College Pricing, Figures 8–10, 2019, https://trends.collegeboard.org/college-pricing/figures-tables/average-n....

2. “Digest of Education Statistics,” National Center for Education Statistics, Table 326.10, 2018, https://nces.ed.gov/programs/digest/d18/tables/dt18_326.10.asp.

3. BPC staff calculation of “Federal Student Loan Portfolio,” Portfolio by Delinquency Status, U.S. Department of Education, 2019, https://studentaid.ed.gov/sa/about/data-center/student/portfolio.

4. “Sharp Partisan Divisions in Views of National Institutions,” Pew Research Center, July 10, 2017, https://www.people-press.org/2017/07/10/sharp-partisan-divisions-in-view....

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