Experts suggest ways to lower college costs

“If you leave the cost curve alone, you’re not going to make a lot of progress,” he said.

Hauptman noted that flagship institutions tend to attract more in state funding, and he said that practice needs to change. He recommended that states reallocate funding toward public colleges that keep costs low, as an incentive for schools to do just that.

He also stressed the importance of reducing students’ reliance on loans. He suggested lower borrowing limits for student living expenses, and not charging students for access to remedial courses.

He pointed to Franklin & Marshall College in Lancaster, Pa., which recently capped federal loans of an eligible student’s financial aid package to $10,000 over four years.

The Obama administration recently extended the 3.4-percent interest rate on subsidized student loans through mid-2013 in an effort to alleviate post-graduates’ debt burden. Hauptman said this could prove more harmful than helpful.

“Keeping interest rates low is commendable in some respect, but [it only leads to] more borrowing,” he said.

Hauptman also recommended that colleges be required to share in the risk for each student loan default as a way to incentivize institutions to improve their practices and achieve higher retention and graduation rates.

“Schools should have to pay a small fee for every student who defaults,” he said. Because the federal government often sets student loan limits at irresponsibly high levels, “it’s too much of an invitation for institutions to pass [costs] off to students. There are no limits to how [many] private loans you can borrow.”

Terry Hartle, senior vice president of government and public affairs for the American Council on Education, said the price of college has increased faster than almost anything other than health insurance premiums in the past few years. Also, higher-education costs have increased much faster than family income.

“Only the top 1 to 2 percent has seen an increase in family income in the last decade,” he said. “Interestingly enough, enrollment continues to grow.”

He said higher education has many built-in inefficiencies, and the demand for efficiency has only begun to intensify in the last 25 years. For perhaps the first time, colleges are beginning to turn to technology as a source of improving inefficiencies.

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