Experts suggest ways to lower college costs


Panelists agreed that higher education must become more affordable and attainable.

Simplifying the student aid process, requiring colleges to share in the risk from student loan defaults, and using technology to keep costs down were some of the ideas discussed at a recent summit addressing college costs.

Higher education must become more affordable, accessible, and attainable if the United States hopes to increase its global competitiveness, said a group of policy specialists, government officials, and higher-education stakeholders at the College Savings Foundation’s 2012 Summit, a gathering to address the ever-increasing college cost conundrum.

“What you do in policy depends on what you think the underlying factors are,” said Art Hauptman, a public policy consultant who specializes in higher-education finances. “Is this a cost-push or a demand-pull inflation?”

According to Hauptman, logic points to a demand-pull inflation, meaning that higher-education institutions and  federal and state governments need to change their behaviors to achieve lower costs.

Although the U.S. currently reports record numbers of students enrolled in higher education, the number of students and parents borrowing money to finance that enrollment also has increased dramatically. As a result, the gap between college attendance and college costs has widened.

“Neither the Democratic nor the Republican approaches are likely to help win the race,” said Hauptman. “One reason [that] we have the greatest system in the world is because the government stays out of the academic side of higher education.”

Hauptman outlined five key cost control strategies and explained how, with cooperation across the aisle, federal and state governments can execute them.

First, Hauptman called for a simplified and streamlined student aid process. The federal government needs to improve internet-accessible information and open counseling centers so that students and parents clearly understand their loan and repayment options, he said.

Adopting policies to counteract the higher-education cost curve is equally necessary. Hauptman suggested that the federal government restrict the use of private loans by requiring colleges to limit the amount their students are permitted to borrow.

“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.

“Colleges invest in technology because they have to,” said Hartle. “[Colleges] rarely invest in technology unless they think it’s going to help their bottom line.”

Hartle recounted his recent experience taking a massive open online course (MOOC) provided by Princeton University through the Coursera platform. He suggested that everyone take a Coursera or edX course to get a better sense of how MOOCs could potentially benefit colleges and alleviate costs for students.

“How does it change the experience? Does it expand or diminish the brand?” he asked. He said his own experience “reinforced what a privilege it would be to study at Princeton, but it’s very different.”

Lee Pelton, president of Emerson College, echoed Hartle’s MOOC endorsement.

“In the past, colleges have not thought of using technology to reduce costs—that has changed,” said Pelton. “Some of the concerns are [for] a small, private, highly competitive college—will technology degrade the brand? I think the future will show that it won’t. I think it’ll become normative. Digital learning communities will cohabitate with residential learning communities, and that’s the game changer.”

Pelton also addressed the current debate regarding the free cost of MOOCs.

“How will they monetize MOOCs? MOOCs create these very large learning communities, [and] these learning communities are something else,” he said. “[Students] become customers, and when you create a [5 to 6 billion person customer base], you’ll attract business that you wouldn’t have otherwise.”

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