Washington Monthly - September/October 2016 - 79
to graduate on time, and that student loan defaults have
reached record highs. And while Clinton's campaign language includes vague promises to hold colleges accountable
for "improving completion rates and learning outcomes," it
offers no details about how this will be done.
Sticking a poorly designed free college guarantee on top
of the existing dysfunctional voucher system is a bad idea.
Instead, we should replace the entire existing system with
something that will actually work.
better way would be to take the money currently being spent on federal vouchers, loan subsidies, and tax
credits, and use it to create a new, formula-driven federal grant program for states to subsidize higher education.
Under this plan (recently proposed by New America, where I
work), states would receive money based on the number and
income level of low-income college students enrolled in their
states. State agencies would then be responsible for giving
that money to eligible colleges-but only if colleges agreed
to charge students no more than their official Expected Family Contribution, or EFC. Millions of students receive this
estimate every year when they fill out the Free Application
for Federal Student Aid (FAFSA). The EFC is a kind of official
judgment of shared responsibility, a statement of how much
families can afford to contribute toward the education their
children need.
The plan would make college affordable for every student at public, private, and for-profit colleges that opt in,
which would mean a large net increase in federal funds to
higher education. After replacing Pell Grants, loans, and tax
credits with the new block grant, it would cost an additional $38.6 billion a year (because more students would receive
aid)-in the neighborhood of the Clinton plan.
To be eligible for these funds, states would have to maintain their current funding and match 25 percent of the new
federal money, which would add an additional $17.9 billion
a year to higher education. States would also be expected to
hold colleges accountable for student outcomes related to
learning, graduation, and employment, and they would be
responsible for deciding which colleges could participate in
the program. This would weed out the bad actors who currently profit from the voucher system.
The plan would lower college costs for most students.
Currently, almost 90 percent of families earning less than
$30,000 per year are charged more for college than their EFC,
compared with only 37 percent of families making more than
$110,000. Colleges would also be required to enroll at least
25 percent low-income students, a bar 89 percent of colleges currently meet. Those that don't are mostly elite, wealthy
schools that least need government support.
States could, as with Clinton's plan, choose to opt
out by not taking the new federal money. But they'd be
less likely to do so because, unlike the Clinton plan, this
plan eliminates Pell Grants and federal student loans.
States that opt out would leave their students and colleges
a
without vital funding. The plan would empower states to
customize their higher education systems. It would give
governors more control over the millions of federal dollars that flow to higher education. And, unlike the Clinton plan, it wouldn't discriminate against private not-forprofit and for-profit colleges. These elements should appeal to conservatives worried about leaving room in the
market for innovation and maintaining the federal-state
balance of power.
The plan also simplifies the federal investment in higher education. Instead of a multitude of federal programs to
help pay for college-a system the Clinton plan would make
even more complex-it would create a single program flow-
Hillary Clinton was right
to resist, for most of the
campaign, the urge to jump
on Sanders's free college
bandwagon. Let's hope
she can find a way to jump
off, and get on board a plan
that can actually deliver
results for students.
ing through states. The plan would communicate a simple
message that should please progressives: no student will be
expected to pay more for college than he or she can afford. At
the same time, it will bring more accountability to the federal
investment in higher education, ensuring that taxpayer dollars are spent responsibly.
The plan is also progressive because it focuses the
greatest resources on low-income students. In fact, nearly
80 percent of the funding would go to families earning under $48,000.
The current financial aid system is complex and broken. Students are sold on a future they can't afford. The
country deserves a complete rethinking to make colleges more affordable and accountable. What it doesn't deserve is for Washington to spend the next few years fruitlessly fighting over pragmatically challenged "free college"
proposals. Hillary Clinton was right to resist, for most of
the campaign, the urge to jump on Sanders's free college
bandwagon. Let's hope she can find a way to jump off, and
get on board a plan that can actually deliver results for
students.
Iris Palmer is a senior policy analyst with the Education Policy Program
at New America.
Washington Monthly
79
Table of Contents for the Digital Edition of Washington Monthly - September/October 2016
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