The imperative of higher-education reform: More debt, fewer jobs

62 percent of all U.S. jobs now require postsecondary education; that number is expected to increase to 75 percent by 2020.

America’s colleges and universities are an extraordinary asset for our nation, and the envy of the world. Our universities can claim a substantial amount of credit for the fact that we have more Nobel laureates than any other country and that we lead the world in innovation, in fields from communications to medicine.

Unfortunately, our system is quietly slipping into a crisis brought on by inattention to costs and lack of discipline around federal programs and spending, and exacerbated by the growing competition from other countries determined to prepare their students for success in a global economy.

While our institutions may be leaders in many disciplines, students are not accessing postsecondary education at the rate they should, and those who do find themselves confronted with significant challenges, including the rapidly rising cost of higher education. At the other end of the process, too many students who pursue higher education fail to successfully complete their degrees, and even those who do finish often find themselves with skills mismatched to today’s job market.

“This country is putting more money into higher education than at any point in history, yet a postsecondary education continues to become more expensive for students and their families.”

Increasingly, a postsecondary education is becoming a basic requirement for economic success. According to the U.S. Department of Labor, 62 percent of all U.S. jobs now require postsecondary education; that number is expected to increase to 75 percent by 2020. But the current emphasis on the standard four-year degree may be misplaced.

For instance, the Department of Labor found that less than half of the fastest growing professions will require such a degree, while two-year degrees, occupational certificates, and apprenticeships are likely to be the most appropriate preparation for a wide variety of fields.

For years we have focused on increasing access to college—an important goal, to be sure. But somehow success in college has been lost in the shuffle of priorities. Despite spending more than twice as much per student as other developed countries, our degree attainment rate lags behind.

Currently, only 27 percent of community college students and 57 percent of those pursuing bachelor’s degrees will finish within three or six years, respectively. Completion rates are even lower for minority students.

Meanwhile, students and their families face skyrocketing prices for higher education and, partly as a result, ever heavier debt burdens. Since 1982, the cost of college has increased by 439 percent—dramatically higher than the growth even in the cost of health care. These costs represent a growing burden on not just families, but taxpayers who foot the bill for a patchwork of federal financial aid programs.

The federal government has attempted to step in with even more funding—for instance, during the period that the cost of tuition increased 439 percent, federal spending on Pell Grants increased 475 percent—yet this has only fed the growth in costs. In just the last decade, federal funding for higher education has risen from $64 billion to $169 billion after adjusting for inflation. Forty-six billion dollars of the increase occurred in only the last two years. And now that Washington has taken over the federal loan system, the Department of Education operates as one of the largest banks in the country, with taxpayers left on the hook. America is fast becoming a society where education is unaffordable, a government loan is an entitlement, default is the norm, and loan forgiveness is the expectation. America needs a new normal, where college is affordable and paying off debt is achievable.

President Obama’s approach: Doubling down on the problem

When President Obama speaks to young people about his vision for their future, he invariably forgets to mention that, during his four years as president, their debt has risen and their chances of finding a job have declined. President Obama’s attempts to address the skyrocketing cost of college have backfired. While he may understand the problem, he has no idea how to fix it. Instead, he returns over and over again to the old liberal playbook that has driven up tuition rates for decades. He demands from Congress more federal spending, regulation, and control.

In 2010, President Obama decided that the best way to address the growing cost of college was for the federal government to take over the student loan business. Moreover, he decided that the best way to go about it would be to include the provision in his health care reform bill.

The decision was not about education reform; rather, it was an accounting gimmick that allowed him to claim that his new multi-trillion dollar entitlement program would somehow reduce the federal deficit. Next, he doubled funding for Pell Grants and created a new tax credit for students worth $10,000 over four years. And with costs and student debts continuing to increase, President Obama simply capped monthly student loan repayments at 10 percent of monthly income. In spite of these changes, students attending postsecondary programs are more likely to borrow today than they were three years ago, and the average amount borrowed today is increasing.

While Americans will hear President Obama tout these policies as accomplishments, they will hear less from him about the way that flooding colleges with federal dollars only serves to drive tuition higher. And they will hear nothing at all about the way his budget-busting health care reform will drive prices higher still. The Obama Administration likes to blame states for the tuition increases caused by their own reduction of funding for higher education, but those budget cuts are closely linked to the rising cost of health care and the new costs imposed on states by Obamacare as they are forced to cut their education budgets in order to pay for the new entitlement.

A new vision of affordable and applicable learning

The shared effort of states and the federal government to provide more support for higher education and reduce the cost for students is being overwhelmed by the constant inflation in tuition rates. This country is putting more money into higher education than at any point in history, yet a postsecondary education continues to become more expensive for students and their families. A Romney Administration will tackle this challenge by making clear that the federal government will no longer write a blank check to universities to reward their tuition increases, and by supporting institutions that are pursuing innovative operating models to drive down costs.

To achieve these goals, the federal financial aid system must be simplified. Today it is unnecessarily complex, made up of multiple need-based grant programs, competing loan programs, and duplicative tax benefits, all of which include significant administrative costs. A Romney Administration will eliminate programs that are duplicative, inefficient, or ineffective and concentrate available funds directly on helping students.

For instance, as a result of the expanding entitlement mentality, the Pell Grant program—the foundation of the federal investment in student financial aid—is on unsure financial footing. To keep up with the program’s massive increases, the government has been forced to take steps such as eliminating subsidized loans for graduate students. A Romney Administration will refocus Pell Grant dollars on the students that need them most and place the program on a responsible long-term path that avoids future funding cliffs and last-minute funding patches.

Students and their families must also be given the information they need to intelligently weigh the costs and benefits of the many options available to them. Better information about products and services helps consumers make more informed choices, and nowhere is this as important as when students consider a postsecondary education. Despite requirements that colleges and universities report volumes of data to the U.S. Department of Education, there is no simple way for students to access that data and interpret its implications.

A Romney Administration will eliminate unnecessary data collection requirements and partner with existing private-sector entities to create consumer-friendly data on the success of specific institutions of higher education. Students should make decisions with full understanding of data points such as completion and persistence, loan repayment rates, and future earnings. In turn, these ratings can be used by private lenders to evaluate the risks of lending to students at these institutions, creating incentives for schools to focus on factors related to student success.

Less regulation, more innovation

When the Obama Administration and the Democratic Congress nationalized the student loan market, they drove away private lenders and moved a trillion-dollar obligation to the federal balance sheet. A Romney Administration will embrace a private-sector role in providing information, financing, and education itself, working with effective businesses to support the goals of students and their families.

The hallmark of the U.S. economy is its constant ability to innovate, to develop and deliver new products and services, and to offer ever-increasing quality to consumers at an ever-lower cost. Our colleges and universities have been a significant part of the innovation driving our economic growth for the past century, helping to develop the basic research and related patents behind everything from communications technologies to medical treatments to energy sources.

Unfortunately, the innovative spirit of university laboratories has not always spilled over into the operation of these same institutions. Our higher-education system must be built around a dynamic and innovative core that relentlessly pursues new ideas, progress, and success. Online enrollment has opened doors to millions of new students, helping to increase not only access to education but also the number of students completing a degree. New forms of instructional delivery promise to provide access to new generations of students, which will be crucial to our future economic success. Government policies, however, have not embraced differentiated modes of delivery. Ill-advised regulation imposed by the Obama Administration, such as the so-called “Gainful Employment” rule, has made it even harder for some providers to operate while distorting their incentives.

Rather than adding complicated and unnecessary regulations, the federal government should allow consumers in the market to make their own choices while providing the information to make those choices well. This will encourage institutions to seek quality improvements, rather than to create risk mitigation strategies to avoid federal penalties.

For example, competence and skills drive our economy, yet our higher-education system awards degrees based on the amount of time spent in the classroom regardless of how quickly or slowly an individual masters the material.

The current emphasis on time to degree, rather than measured competency, discourages more innovative learning solutions and continues the frustration of employers who are unable to fill high-skilled positions. Forcing students to complete a fixed term of study also drives up the costs for those who might need less time, while graduating those who have not yet obtained market-ready skills. Federal regulations and aid rules must change to facilitate instead of obstruct models that recognize and address this reality.

(Excerpted from “A Chance for Every Child: Mitt Romney’s Plan for Restoring the Promise of American Education.”)