tv Discussion on Student Financial Aid and Voucher Programs CSPAN April 8, 2016 10:00am-11:31am EDT
on lectures in history. >> what we see is new factors making emancipation desirable, old factors falling by the wayside. august, if not earlier of 1962, lincoln has decided when the time is right, he will announce a new aim for the war effort, that would add to union human freedom. >> wheaton college history professor, tracy mckenzie on the evolving war goals of the north in the civil war. and then at 10:00 on real america -- >> how was it possible for america to achieve such production, and same time build an army? and the amazing reports came in from our agents in the united states. 20% of american industrial manpower was womanpower. legions of american women were massing to stop my advance across the world.
forsake i forsaking for the grim tasks of war. >> this 1944 war department film documents how women if world war ii helped the war effort, alluding hat hidden army of american women working in war manufacturing are a main reason germany lost the war. sunday evening at 6:00 on american artifacts, we visit the daughters of the american revolution museum to learn about an exhibit marking the 125th anniversary of the organization, founded in 1890. >> one thing that stands out in this time period is this creation of this imagery of the apott apotthiosis. it goes back to ancient time where a warrior is made god-like by lifting him up and celebrating him. >> on the presidency at 8:00 -- >> though washington and jefferson are the two most prominent examples of slave
owning, it's worth highlighting key aspects of their successors who owned slaves. especially those who did so why they occupied the white house. james madison, who followed jefferson as the fourth president of the united states, owns over 100 slaves, holding a large percentage while he occupied the white house. he is responsible for expanding the 3/5 compromise. >> tyler perry, african-american studies professor at fullerton on the 12 american presidents who were slave owners, eight of them while in office. for the complete american history tv weekend schedule, go to c-span.org. >> a new report by new america calls for the elimination of federal student aid programs and proposes direct federal funding through the states. new america is hosting this event this morning with higher
education leaders and scholars to debate the funding structures. live coverage here on c-span3. >> we hope both publications are actually thought-provoking, and we hope that today's debate is also thought provoking. so, the proposition of today's debate is, any federal dollars for higher education should go directly to states or institutions, rather than to student aid. so arguing for the position are f. king alexander, president of the university -- of louisiana state university, and will doyle, associate professor for higher education at vanderbilt university on this side. >> arguing against the proposition are sarah flanagan, vice president for government relations and policy development, at the national association for independent colleges and universities, and andrew kelly, american enterprise institute resident scholar and director of the aie center on higher reform.
and our capable moderator today is danielle douglas gabriel, a higher education reporter for "the washington post." so, we should be able to see our proposition up on the screen, pretty quick here. i want to explain the voting process that we're going to be doing. there we go. so, as you can see, the proposition is now up on the screen. we want to take the temperature of the audience before and after the debate, to see how much our debaters have actually changed how people perceive this particular issue. so you can vote now by texting newamerica to 22333. and then putting in a or b, depending on whether you agree or disagree with the proposition. i think the debaters can not vote. so with that, i'm actually going to turn it over to danielle to
continue on with the debates. >> thank you all for joining us this morning. we're going to start with some opening statements so we can kind of firm up the proposition, in favor and against. i'll start with dr. alexander. >> thank you. and i thank new america, but this is about a serious discussion as we could ever have. we've been working on the hill to get the federal government to use any portion of its $170 billion aotc or any of it to shore up what states are doing, because states have figured it out. states are disinvesting in our public universities and within the next seven years, louisiana has just surpassed as being the first state being out of the higher education affordability business. and our legislators have told me, they've told me that i can get re-elected. if this was in another state, i could get re-elected by not raising taxes, i'll give you the tuition and authority to raise it on your own, and you go to
the federal government and get the rest. or get that money through loan money or however you can get it. in 1965 and 1972, the great debate went on and it was about constitutional aid versus student aid. let the market decide versus incentivize institutions and/or states to enroll the right populations, the immediaty populations. we took the market route. we took the market route and went to direct student aid. the assumption was made in '72 that states would always take care of the public universities. well, states have vanished from taking care of their public colleges and universities. and now we have a federal market-based, fwigs and fee-based system that has allowed a whole new sector to emerge because it's so lucrative. the for-period of time sector. which enrolls 11% of the students, gets 30% of the pell grants, and has 47% of all student loan defaults. now, would you want your k-12 system to have the same structure, where we let
for-profit universities educate middle schoolers, elementary schoolers with, and high scho schoolers? and right now we had no idea that the federal government would become the main supplier of revenues to higher education. the objective in 1972 was to save private higher education. and the university of chicago said with public funds, we'll be more like the university of illinois and we will increase our lower income access, and we will keep our cost control better. none of that has happened. the university of chicago is just as the university of chicago as it is then. the only difference is the university of illinois, for survival purposes, is trying to become the university of chicago. so low-income access has only been increased in the lowest cost institutions in this country. the entire ivy league combined, the richest institutions on this earth, with federal direct student aid, more and more of it, the wealthiest institutions on this earth have less pell grant students than lsu. have less, substantially less
pell grant students than i had when i was at cal state long beach. when we had 15,000, they had combined at 9,800. has this 140 to 170 billion worked? well, our 55 to 64-year-old population in this country ranks number one in the world in college degrees. our 25 to 34-year-old population ranks 13th in college degrees and it's dropping. it's time to do something different. it's time to incentivize our states to do the right thing. when our medical center chancellor told our legislators, in a special session a couple weeks ago, that for every dollar they cut from him, in medical education, he'll lose three federal dollars. that changed the entire dialogue of our legislature. in louisiana, we actually raised taxes to make sure that we didn't lose the federal money. now it's time, we know it works,
ssig was a federal matching program, to encourage states to do the right things. the stimulus package, the reason it worked for education was, we put a maintenance of effort provision from the federal government that said, you can't collect educational resources, if you cut your budgets below the 2006 funding level. esca did it, we did it in esca. it's time we use new federal dollars. any new federal dollars to encourage and incentivize states to get back in the public college affordable game. otherwise, we won't have public colleges and universities. starting in the next eight years, when states drop off the map. >> great, thank you. in 2013, the new america policy education program made an impassioned case for the program. they said they wrote, the program is the cornerstone of student federal aid. it aims to reduce cost barriers that all time often keep low-income students from attending college. but over the years, as college prices have soared, the system
has become less and less effective. today the program is in drastic need of restructuring. they argue that we should stop handing out vouchers and instead give the money directly to states or institutions. on the contrary, they argued for increasing the maximum grant, making it a permanent program and providing bunss to high-performing campuses. i agree. i see four arguments for giving need-based aid to students. the first is providing vouchers to students on the basis of their income allows us to target scare public dollars to those who need them most. those who would benefit from college, but would not otherwise be able to afford it. this is the real reason the federal government got involved in this business in the first place, to solve an under provisioning problem. in contrast, state direct funding is quite progressive. for one thing, subsidizing benefits upper and middle income families and could pay more to
attend than they do. what's more, state funding formulas shortchange the colleges that enroll the most low-income students. the delta cost program estimates that public universities received $12,000 compared to $5,700. in maryland, it provides with 25%. that's in the law. affluent students, who are more more likely to attend four-year college are the big winners here. states have their own reasons to fund their colleges this way and they have every right to. but let's not pretend it aligns with the fed's primary concern, targeting aid to low-income students. the second point, need-based grants empower students to choose the option where they're most likely to succeed, be it public, private, in state, or out of state. in contrast, a system of direct aid lowers tuition at only a subset of institutions. but are those institutions always the best fit for
students? evidence suggests this may be a costly trade-off. a recent analysis from the chicago consortium found that 28 states and the district of columbia have to public colleges with four-year graduation rates over 50%. in one study, in the teacher's college of columbia found that the adams college in massachusetts, actually let scholarship recipients to graduate at lower rates than their peers who didn't get the scholarship. why? because the in-kind subsidy was only good at a subset of schools, and those schools happen to have lower graduation rates than the school their peers went to. even though they paid more, they were more likely to graduate. third, giving students aid has also helped to drive innovation and a diverse array of offerings. my friends at new america has laid out a compelling case for education, blended learning and other things. from where did most of those innovations emerging, many,
though certainly not all came from outside the public sector. in private, non-profit, and for-profit organizations. a voucher system with reasonable state, federal performance standards, places in power to decide which innovations are worthwhile in the hands of the market, not bureaucrats in washington or state capital. fourth, and last, i believe portable aid is critical to accountable, not detrimental to it. i agree with my colleagues. this is an area where my partner and i may disagree. advocates of institutional aid -- advocates of institutional aid believe by giving the money directly to states and schools instead of students, the feds will have better ability to. on the current system. and they've chosen not to. it's not clear why direct funding should change that. the problem is, leaving the decision to sanction colleges in the hands of a few regulators
has head a to a scenario where colleges are hardly ever held accountable. the gao found 1% of colleges lost their accreditation over a 4 1/2-year period. regulators answer to members of congress and institutions they approve. in the interest of students and taxpayers are one of many. in contrast, a voucher-driven market, a voucher-driven system relies on the decisions of hundreds of thousands of independent individuals to punish. advocates of the direct aid are right to say that this market does not work as nearly as well as it should. students need better information, should should be held to higher performance, and regulatory policies, but these reforms are possible, without sacrificing what an aid system focused on students, not institutions, brings to the table. >> thank you for having me. so our essential argument is that the set of assumptions that
underlie our national system no longer hold. so what were those assumptions origin fally, about 40 years ago? first was that the federal government would provide need-based financial aid directly to students. and then -- but they weren't the only stake holders. next, the institutions and the states, public institutions and the states working together, would keep tuition low. and state governments would do that by providing appropriations. state-based financial aid would be mostly need-based, and would be there primarily for choice. and then, for institutions, their commitment was, if they were charging prices that were well above what the financial aid system covered, well, then they had an obligation to make sure any student that was admitted could enroll. so they need blind financial aid, essentially. so what's happened over time to each of those? our argument is that besides the federal government, the other stakeholders have drifted away from their commitments.
so if you think of the states and institutions, public institutions, the states have -- they're spending much less than they have in the past, and public tuition between 2000 and 2015 increased by 80%. if you look at the state financial aid, if you take a low-income student attending a public constitution and compare the amount of aid they got from the state financial aid program, that didn't change in inflation-adjusted dollars between 1996 and 2012. same amount of money for that student. if you look at a high-income student, the amount of financial aid they got from the state. that increased by 450% during the same time period. the state drifted towards funding more high -- if you look at institutional aid, and steven burns has done work on this at new america, to funding students, well, if you look at private institutions. so private institutions have increased both tuition and financial aid substantially, between 1996 and 2012. an impressive 150% increase for
low-income students at these institutions. they deserve credit for that. but it doesn't compare to the 260% increase that high-income students saw at those same institutions during that same time period. so if you're a family making over $125,000, the amount of financial aid you got from the institution increased by 230%. so, it's a massive increase. you can see states and institutions drifting away from their commitments. so, the solution, it seems, to me, is to give states and institutions every incentive to go back to their original commitments. kind of asking them to do so, or kind of pointing out that they're not doing so does not seem to be effective. so we need to find a way to use additional federal funding to give states every incentive to do so. and the way to do that, effectively, is to make sure that federal funding, some of it can go to the states, and the states have to both change how much they're spending and how institutions are behaving, if the states are going to continue
to benefit from federal funding. so those are the main points i wanted to make. i look forward to the conversation. >> i'll take a little different direction. i'll ask you to assume some form of what's in the atmosphere right now, of giving more federal aid to public institutions, villa the states, actually comes to pass. so let's look 10 to 20 years from now and let's look at the landscape and make some basic assumptions about what it might look like. i think you will see disparity among states, because some states will buy into this and some states won't. and we have seen that certainly, recently with the recent medicaid debate. we will see a variety among institutions. we will have less access for private nonprofits, less access for out-of-state publics. the affordability on those will primarily be between
upper-income and for wealthy institutions. whether they be public wealthy institutions, or private wealthy institutions, because they'll be funding their own student aid. so those institutions are that are wealthy, are also selective. so we will have low-income students who are very bright, may be able to have the same kind of options that they've had before. the familiar -- this landscape is rather familiar. it looks like american higher education, circa 1964. this is exactly what the federal government came in to address in 1965, when they set up the higher ed act in 1962, when they really filled out the current framework. so what has -- where are the holes in that framework? and i agree, i'm glad that both will and dr. alexander mentioned the past, mentioned the original structure of this. because much of the original structure is no longer
functioning. the pell grant program was not supposed to be the only program. no one wants to talk about ssig anymore. i'm glad that dr. alexander did. the whole concept with the federal government said we're going to start with low-income students, but we are also going to incentivize the states to also step in for low-income students. and so we set up an ssig program. the federal government completely defunded that about eight years ago, as soon as they started defunding it, four states stepped out of the need-based aid. dr. alexander has said in his testimony before congress, if you give me $200 in a pell grant and louisiana makes me raise tuition $1,200, my low-income students have lost $100. the same principle applies with ssig. if you make the pell grant go up $200 and the state takes away a $1,200 aid, low-income students also lose.
we saw this happen with the stimulus bill. what happened with the stimulus bill, it worked well for public constitution institutions, but didn't work well for low-income students. low-income students, whether they're at public colleges or private colleges, lost, in that scenario. now, we could fix that. we could fix that scenario. we could simply put the moe that works so well for public colleges into a new ssig, with a lot of money. we could add to it an mnoe, need-based aid, it was not an unintended consequence. and then we can look at institutions. i'm going to surprise you. we are not against adding whatever the accountability de jure measures are on institution. perhaps into a reinvigorated, well-funded campus-based aid formula. there is no question that institutions have served a large number of pell grant students. i'm not getting enough sgoe.
let's put real money into pinpoint the house did this in a proposal in 2009 on the purchase loan program. issues ethe injury, completion rates, percentage pel, and price, even. and that formula could be worked. so my main argument today is the federal government in '72 recognized that institutions are institutions. they have mixed obligations. they have to survive an institution. they have to balance the books. states have mixed obligations they want to keep their best and brightest at home, because they are competing with the other 49 states. they want to get low-income students who are capable through. let's not throw out the current system. let's work on it together. let's work towards 2064, instead of 1964.
thank you, guys. >> i'll start with your team first. dr. alexander, if we were to funnel additional aid directly to the states and have them make the decisions as to how to disperse that, how would you protect colleges from being subjected the to the whims of state legislatures? >> well, one thing has been constant. and i've been president in kentucky and california and now in louisiana, and worked in louisiana and wisconsin, and in virtually every state, our state legislatures have told me, i've said -- i've told them, why do you take the medicaid money? because we don't want to leave any federal dollars on the table. and that is the biggest influence that i can see with legislators. now, some with political aspirations have not done that because they have said, i've got future political aspirations. but within a couple of years, they go after that money and i can tell you that louisiana did
not take the medicaid money until the new governor got in. it was the first act that he did. that we've been leaving millions and millions of federal dollars on the table. states, highway funds, why do they invest in highways before they invest in higher education? why do they invest in medicaid before they invest in higher education? why did the land grant universities get created? because the federal government gave them lands that they could sell under the partnership that states had to do the following things, which create the greatest public university system in the world, which resulted from that. so state legislators, their top motivations and incentives is whether or not they're going to leave federal money on the table. and i'll point out one other thing about the '72 act. in 1972, when pell grants, bgoe was passed, there was also a consensus that following the pell grant students, the cost of education allowances were passed by congress.
what was supposed to happen was $2,500 would follow those students to those institutions, to the institutions, to provide the programming for the low-income students. the cost of education allowances were passed at the same time pell grants were. they've never, ever been funded a penny. so institutional aid was recognized. institutional programming was needed. but it was never funded by the federal government. >> will, would you like the respond? >> i think the only thing i would add is we do need to learn the lessons of the affordable care act. but it's important not to learn too much. they just passed and the accountability provisions in there are still actually pretty intense. there's a lot of things that states and schools are expected to do. and there doesn't appear to be a ton of resistance. a lot of states saying, this is not going to happen because the states are asking too many. the affordable care act is one particular example, but when we look across a lot of different policies, when the federal government uses its power to leverage state behavior, it
works. >> i just want to point out a couple things, just quickly, on these points. i think that the medicaid on highway examples are particularly strugtive, vis-a-v vis-a-vis, state funding. not state stay tuneding -- not need-based state student aid, but medicaid is a need-based program, right? it's means tested. in-state tuition, not means tested, right? so the federal government has an incentive to ensure that states spend more on a need-based program, because it's further targeting -- it's targeting more dollars to the low-income people. highways and ken would probably disagree with this conception a bit, highways are pure public goods. people need them to get around, right? higher education doesn't serve everybody in the state the way a highway does, right? it doesn't serve large swaths of low-income population. so i think these arguments about federal state partnerships that
use medicaid and highways in particular, they're not really great analogies, because higher education is not the same kind of service. >> i represent private non-profit colleges. and obviously, there is concern about this, what a proposal for free public higher ed or whatever version of it you look at, would do for those institutions. but i often say, i would be even more afraid if i was a public college, because most of the proposals that are out there do not come free for public colleges. they come with incredible controls that i think will take away the ability of the public colleges to compete. we have a very competitive market place out there. most competition is regional privates compete with regional publics, and national publics
compete with national privates. that's where students are choosing among and between. and there are a lot of accountability measures that people expect and even more than, i think, state legislators would add or the feds will add, that i don't think will lead to a higher quality, higher education. or lead the ability of public higher ed to get revenue streams they'll still need to fill in. >> so, kind of staying with this, if you are for preserving the current system of student aid, how would you address state disinvestment and increasing prices? how do we tackle that? >> i think the increase in prices is very complex. it's a whole section of the economy. let me take on something simpler on the disinvestment. i would go back to this ssig concept. and i think we should consider, what would a maintenance trip look like, if we had a lot of money out there, for the states, to partner with the federal
government on pell grants. but you did have a maintenance and effort in there that didn't just include need-based aid, but included state aid to institutions, to public institutions, to private institutions, to whatever their is. what didn't work is the money for net price for low-income students. that's where i would begin. >> i agree with that. i know that president alexander writes about ssig as a working federal partnership and this is an area where i think we could agree a federal effort to incentivize states to invest more on need-based aid that is given to students could be a workable arrangement. and it allows for targeting to the students that we want to help the most, from the federal
perspective. a and, but to point out that's a very different model than giving money to states that states then divvy up to give to institutions to lower tuition prices for everyone in the state. >> guys, would you like to respond? >> i think it's wonderful. i think that's amazing. in '05, '06, '07 when we proposed it, you guys were completely against it. i think it's wonderful you've come this far. we're not afraid of accountability. i need a two-thirds vote to increase a fee. i need more federal accountability, more federal regulation the to keep corinthians colleges from stealing public money. a kid that goes there gets
$13,000. a kid that went to long beach got 5,500. think about how your voucher system works in your own states. these aren't pure need-based programs. ohio has a need-based program that doesn't even go to public universities. we're giving them to for-profit institutions, giving them to anybody without the weglations necessary. i need more help from the federal government on accountability, to encourage the money to go to the right places, who will remain ifrdable, remain committed to low-income students, and that will include the trinity universities in washington, the privates that actually have 55% low income kids. the bria colleges of kentucky, who actually also agree with me. they have nothing but low-income kids, and they can't charge anything. but they don't get any help through the voucher basic program. so we're very much in line with this maintenance of effort provision. we need more more federal help to tie $150 billion in federal assistance to state baffert, not
just $350 million, which is the only part tied to state behavior. >> i'll start by saying, yes, i agree that expanding the program, a federal state matching program for federal aid is a great place to start. but we can't just keep on trying to figure out how to cover these price increases. this is kind of the spiral that we've been trying to cover through all different types of financial aid, and whatever's left over goes to debt. how do we cover these price increases? we can't keep having policy do that. so a state student incentive grant program, great, as long as there's a change in institutional behavior. as long as the institutions are strongly encouraged and incentivized to use their own funds to fund low-income students. as long as tuition increases are moderate and are relative to what families can afford to pay. so i don't think tuition should increase more than median family increase increased in the state for that year.
between the state and the institutions, you've got to figure out, how are you going to make it work? it's some combination of increased state funding efficiency. but we can't keep on assuming we'll figure a way to cover these prices every time. that's not going to work. >> so affordability and completion, very much tied to each other. and i'm going to pose the same question to both sides, starting you guys first. how do you use state-directed aid to increase completion rates and the quality of higher education? >> it's not one thing, it's a number of things. it's campus culture. our graduation rate was 20 points above our predicted graduation rate. at cal state long beach, we had 50% pell-eligible students, but over 1,000 undocumented students that would tell us they're undocumented, that we're educating. we've got our graduation rate up from 42% to 60%. we're not afraid of performance. in fact, we testified two days
ago to our state legislature and said, do one of two things. award performance and the institutions that are improving on what they're doing with low income in all populations, number one, or let us go. set us free. we're not allowed to do either. and what happens, we end up serving 80% of the students in this country. the scale of this nation and all populations are the institutions that are being put out of business. in the current model. >> so the first place to start is to remember, you can't complete unless you get in. we know from the research, if you change the price of higher education by $1,000, you'll get about 3% more students enrolling.
we can say that with a great degree of certainty. what do we know about the impact. we don't know nearly as much. if we were try to do something to provide incentives, and try to restructure it. research isn't nearly as clear on those. it seems funny to me, sometimes he's hesitant to see what works. and then the specifics of how the campus works on improving this and there's a lot of different exciting research and developmental education and in restructuring in the first couple of years of college. but start with what works. we know that getting more financial aid means you can go. but from there, we need to do a lot more. >> i'll say two things. one building on will's point about what we know about financial aid. and i do agree, i did a book on
how the -- volume on how the evidence base is not nearly as thick as it needs to be. i will say, i will refer people to a paper by scott clayton, which just asks, what do we know from research on financial aid. and one of the lessons they pull out, that incentive-based ramps with academic benchmarks, where students are encouraged to microacademic benchmarks, that they do tend to have -- they seem to have positive effects. the studies are not as many as we'd like. for instance, one is that the west virginia promise scholarship, and students had to meet particular benchmarks, and she found it increased on-time completion rates by 7 percentage points. and that it was the incentives, because as soon as the student reached their fourth year, at which point the academic standards didn't matter, the effects went away. so that would be the first thing. i do think, one other thing that -- the second point is that we have this problem, i think,
in institutional improvement, and i'm guessing dr. alexander would agree, and will as well, thatware focused on the up-front costs of doing things, to help more students succeed, and we're not focused on the cost effectiveness of implementing things that would help students succeed. and to me, i would much rather see state legislatures and federal legislatorss discuss cot effectiveness. it may cost more up-front, but if far more students are successful, the cost-per-outcome or cost-per-degree goes down. so productivity increases. and so think about how you can build that kind of idea into your performance-based funding schemes, as opposed to just doing it ton basis of your scout comes and trying to minimize the cost. i think that's a conversation we have to have. >> first of all, i don't want to mess you up trying to have a kumbaya moment on moe.
back to moe, the public fought us on need-based aid. so if we can protect need-based aid and protect all state funding, we might be able to work something out here. but on the completion question, i agree with will. it's very, very complex, i agree with dr. alexander. it depends different institutions are going to have different cultures, but different students will have different issues, too. for some, it might be lack of money. for some, it might be lack of academic prerpparation. we have the great alarm clock example, for some students, it's literally making sure there's an alarm clock and somebody is tracking them to get them out of bed and to school and into class. that can make a huge difference. these multiple solutions, we're learning a lot about this, suns we've had a focus on completion, which has been really positive. whatever we do, i think the biggest mistake we have had in the policy debates that's gotten
more and more dramatic over the last ten years is that we have talked too much about penalties and not enough about incentives. when you put out penalties, you instantly start to run into debates about state's rights and institutional autonomy. and you'll never find a positive solution. i think that we need more conversations like this, potential on how we could move forward. mike has had a long-standing proposal out there that we see as part of a completion agenda. the idea is we set some sort of a federal thing. we'll give you $35,000 in pell grants to get through. and if you get through foster, you'll get your money sooner. and to take as many classes as they're capable of to get through as soon as they can.
>> so, i get the sense that there are aspects of the current system that both of you would say were flawed. but in addition to things like improving campus-based aid, what else would you do in order to correct some of the design flaws within the current student aid system. >> i'll begin by saying, i'm not sure they're design flaws. i think that society continues to evolve and change. and so we always have to constantly update things. we learn lessons as we go. we're going to learn a lot on the completion, as more and more schools have focused on it. i think that we should have -- we want degree attainment to be a goal, we ought to set up a certain amount of money. is it $35,000, pell, to get through. we ought to put some hard targets in there, so people aren't spending money swirling. we, that certainly would be one. i bring back in this partnership
as we mentioned before. i think we do need to bring states and institutions, through incentives, into a positive national conversation, which i think we -- we all do our parts, but it's scattered. and so i think incentives, incentives on students, incentives on institutions, incentives for states. there are certainly pieces of the federal formula, especially that need analysis, that constantly need to be tweaked and updated. there's simplification of the past we can do. some of the issues on the table. >> this is where, i think, again, there's common ground. i agree with dr. alexander, to suggest that we need to hold colleges to higher standards. and i think we need to hold all of them to higher standards, and make sure that they have incentives to keep their tuition low, and to continue low-income students. you know, if i were entirely in favor of preserving the current system, quote/unquote, which is
originally how the debate was pitched, i wouldn't have much to do all day. but anyone who's read my work knows, that is not my position. sarah and i probably disagree on this. frankly, i think we've got to punish some schools that are not doing the right thing. and some of them need to go out of business. and we've written about the notion of setting a stricter performance floor, getting rid of core default rates, setting a stricter performance rate, and then above that, putting schools on the hook for some percentage of the loans that their students don't repay. and that will -- that's something sarah and i can discuss after the fact. which i'm sure we'll have fun with. i actually have on a panel, similar to this, off to the sides. so on those fronts, i think these are there ways we have to get the incentives right, and let institutions think about how best they can reach those standards. >> i worked for seven years on the college report card,
scorecard, to get good information in students' hand. when i talk about orientation, they want to know how gad our graduates are doing, not just how many we turn wade. how well are they doing mid-career, how well are they doing when they graduate. are they getting jobs? in debt or not in debt. we had to fight since 2006 to get our -- and this was a fight against the for-profits and private partners. but the partners fought us to report student indebtedness. and that's one of the critical elements and issues that parents raise when they talk to me. what are the students doing? we fought to get the college scorecard to put more information in the marketplace. the one reason the higher ed market fouch voucher system doesn't work is because there is no information for parents and students. we were given the same glossy brochures. we don't share with them what's happening at the end of the day
we know more about the cars we buy than the colleges and universities we invest for a lifetime in. we certainly would like the private sector in higher ed in washington not to fight us every step of the way to make this information available to students. this is vital, useful, and absolutely essential information for them to make the most important decision in their lives. so accountability, we're not afraid of accountability. that's one reason why corinthians colleges went out of business. because they persuaded people to go to their institution and they ended up with nothing ev afterwards. that's why many of these same institutions are milking our veterans blind. they come to me and say, i've used up my gi bill benefits, at a variety of these institutions that are getting public voucher
and gi bill vouchers for worthless pieces of paper. and then they're asking for us to come up with scholarship help, because they have had their gi benefits milked from them. this gi voucher system is far out of control. we want more accountability in it, we're not against student aid, but we have to have institutional aid. a voucher to nowhere doesn't get you anything. a scholarship to nowhere won't get you anything. so we're not against student aid, but we need to rebalance what we're doing for these students. >> and there's an argument that says, well, if one institution isn't doing what it should and they don't have the right set of characteristics for that individual, they can take the voucher and go elsewhere, but it's not much of a market for a lot of students. 80% of students travel less that
be 100 mile to campus. and there's not that many campuses close to that many people. most students just don't have that many choices. so the ideas a student-based funding system will sort itself out in the market and reduce institutional improvement isn't born out by the way most students attend college. there's got to be something in there that forces the institutions that are available to students in a local area to be better. >> the idea of accountability keeps coming up within this discussion, and that was one of the key focuses of some of the presidential proposals around campaign affordability. what if any other aspects are the proposals that have been floated thus far could be beneficial to your position of how college aid should be
dispersed. i'll let team be go first. >> sure, well, we have -- i mean, i think that if you kind of dig into lick lick's proposal a little bit below the headline, she's looking a lot at debt and i think that's a very, very valid question to look at. she does not seclude the private nonprofits from her proposal, although she's not very clear on where they fit in so i think the conversation we're having a very rich conversation about debt anyw anyway. i think questions around that are good to continue. how should we have students repay? how long should students be repaying? those are good questions. >> it strikes me that many of
the remaining plans, the plans of the remaining contenders, i think the remaining plans are focused on the cost and debt question, which i think are most -- they're at the forefront of family's minds, of middle class family minds, especially. and, but my concern is they wave their hands mostly at issues of equality and completion and value. and i think you see that in both the sanders and the clinton plan, there's an assumption that solving, that mechanically lower tuition is going to mechanically raise completion rates. to will's point, i don't know that we have any evidence that that's true, or compelling evidence that's necessarily true, i should say. so i would like to see a lot
mo more, on how do we think about improving the quality of higher education and ensuring that federal investment, that we're getting a return on federal investment, because students are completing we've seen enough of that. hillary clinton's plan has pretty much everything in it, so she says a couple things about that, but sabernie sanders, my recollection is not a whole lot. i think that's a missing part of the conversation. >> the clinton plan has our federal partnership as a third leg to incentivize or hold states accountable. at the beginning of obama administration's administration, when he gave his state of the union address, he said we're going to hold colleges and universities accountable and we're going to hold states accountable. the college scorecard is about holding colleges and universities more accountable. what hasn't happened is the state part of it. and that is part of senator clinton's plan, is the state/federal partnership, which we've had an opportunity to work with them on.
the interesting part about the accountability issue is marco rubio said something very interesting. he said when he was running that our accrediting bodies are like a cartel. we're the only oecd country in the world that allows private accrediting bodies to dictate where $140 billion -- they don't get the oatc part, but $140 billion in student aid goes. and you can't think of an institution that has not been -- that hasn't been reaccredited or accredited. everybody gets accredited. everybody has access to public money. that's why we can't control it. we try to address the spree issue in the early '90s when bill clinton and the secretary had an opportunity to tackle it. we killed it, and now we have a problem that's so out of control that we need greater accountability and the accrediting bodies have fallen flat on their face on this
issue. when fast track university in florida, ft. lauderdale, gets millions and millions in pell grants and hired exotic dancers as their recruiters and admissions officers, we have an accountability problem. that's how this system works. that niece why we need a new system. >> so looking at the clinton and sanders, i think they both recognize the same issue that really concerns me, is that the federal government has to start using its leverage with the states to ensure that there's going to be changes in how the states are fund iing and how th institutions are behaving. with the sanders plan there's this provision about how the universities have to spend their money, certain type of faculty and so on. again, that's where you get this kind of overreach and exactly how these institutions are going to accomplish what we set out. i think it's better to set out
goals and figure out -- let the institutions figure out a way to get there, because specifying business models for institutions is i think too far in terms of setting up these plans. the interesting thing with the clinton plan, and this is something that came up at the new americas as well, is how much of an out would you allow states -- do you allow states to refuse to participate and still the federal government will come in and fund students? the clinton plan includes that, which makes it obvious that a lot of states might not do that and assuming the federal government will pick up slack. new america instead said no way, you're getting this money, you have to participate in the way we structure this. there's risks and tradeoffs with either, but that's one of the things i would point to. >> i just wanted to -- one of the things i don't think anybody mentioned, and i should have, is free, right? making free the big -- yeah,
right? free college is the big idea. wouldn't surprise anyone in this room to realize that i disagree with that fundamentally. i think it's a silly goal and not a goal that's going to lead us to an efficient system where people who can pay, pay what they're able to pay. the clinton plan is much better on this, obviously. but, you know, this notion of we're somehow now going to be locked into this debate about whether it should be free for everyone, universal free college for everyone or not in the next decade, it's now a litmus test particularly for democrats is a shame because i think we could have a much more productive debate about who pays what share, what's reasonable. and so, you know, that's i think where politics have made it harder in some sense to have the policies. >> one final question, then we'll kick it off to the audience. if we were to go to a system where additional aid would be directed to the states, how
would private institutions work in this? i mean, certainly, there are very well-heeled private institutions that aren't of much of a concern, but then you think of some hbcus or other minority serving institutions that are private, have a huge pell population and are trying to serve that population. how do we think about them in this overall kind of model? >> i can start. >> whoever feels -- >> so, this is one of the reasons why i do favor sending the money to the states and allows the states flexibility in how they spend it because privates play a different role in the provision of higher education depending on which state you're in. in some there has to be a substantial state role in funding and accountability for private educations because they educate so many students. if you think of new york or massachusetts as examples. in other states it's a small part of the sector, most of the institutions are relatively well funded. they might not need as much
assistance and relationship with the state. a allowing that kind of flexibility at the state level seems important to me. >> the states also have the states day programs and privates do benefit disproportionately from those. private stigss have about 26% of the students but get about 46% of all student aid because a lot of it is price sensitive. they would benefit from this type of discussion. more importantly, though, yesterday in the national academy of science we released the recommendations from the lincoln project. the project is about saving our public land grant universities. and many hsbcus are part of that, on the vernal of financial exigency,ly point out. louisiana and illinois. chicago state, southern and grambling in the same situation. we need to phoenix on sal vanillaing and saving our public higher education stuss now.
they've grown in the last 20 years from 21,000 to $29,000 per student. that seems goold but our private peers have grown from $31,000 to $61,000 per student. fact um ti salaries, disparities, we've become the training ground for many private universities in this country because of first student expenditures and faculty salaries. we all know this. that was part of the initiative and part of the purpose of the lincoln project. so we really need to focus. the states are bowing out. our public universities are getting left and colleges are getting left with no resources, getting -- talking about financial exigency in louisiana and illinois under the current conditions. and you'll see this more and more so in the coming years. so i would say that we need to incentivize our states to make the right decisions, like we have in medicaid, where the
money will be rewarded to the states for putting them into our institutions of which are the biggest losers today, compared to where we were 20 and 30 years ago. >> your response? >> yeah. i think the good question -- of course i'm interested in the role of the private nonprofit. we have to remember that in seven states and the district of columbia there are more pell students, not just by percentage but more pell students in the private nonprofit sector than in the public sector, even more states, a higher percentage of instate students are pell at private colleges. we have seven other states and the district of columbia where there are more total enrollments. and there's many, many private colleges have very efficient degree production for state taxpayers for the small investment that the states might make. 3% of the state funding, 30% of
the degrees, 2% of the state funding, 20% of the degrees, i have those states listed. so we knee both sectors to be part of the solution. i think all the sectors benefit from each other. it makes for a higher ed thing. i also want to do mention and take um one other point, they pioneered the concept of some sort of a federal consumer piece. ize si to access federal consumer piece that would sort of counter this "u.s. news & world report" problem that we have. it's called you can. it's been out for ten years but they liked it so much they borrowed our first two pages. we gave it to them, said let's try to create the system. our problem was whether there was going to be a letter grade, which i think we all shared that concern. they agreed it was impossible and we think the scorecard they came out with needs more
improvement, but it's a good start. >> we're going to offer this up to audience questions. please keep your questions to 30 seconds. anyone who would like to ask our panel a question. >> okay. >> so i'm sure some of you have heard of the bennett hypothesis that raising directssentially a raise their tuition because they're sure the federal government will take over the cost increase. recent work by the new york fed has sort of found a confirmation on this, that when you raise pell grants $5 you end up seeing an increase in tuition from a lot of institutions by about 50 cents. i was wondering if those who are in support of funding colleges through direct student aid, if you would address how we could design student aid so as to
avoid this issue. >> i actually anticipated -- i anticipated that because it has been a hypothesis -- i don't know why bennett gets credit for it because it's about institutions making decisions, how they're making decisions. the gao supported that, too, through federal loans. and there are institutions, for-profit institutions as well as many other institutions, who have particularly used the loan programs, the more they could get to blow the caps off, the more they could charge. there's an institution in this town that used to brag about that, gw, i won't mention them, but used to brag about charging the most amount and leading the country in what you charge and we'll get more applications. they're one of the leaders in trying to blow the loan caps off so they could get their students more loan money. there is a relationship, a correlation. but in the public sector it's not, unless we have our own tuition and fee autonomy.
we don't. most of us, it's either controlled -- the government says freeze it for two years. well, we didn't play a role in it. we have a state legislature that needs a two-thirds vote to raise a tuition there are or a fee dollar. the public sector, we have these controls on us that don't allow us to roll into that hypothesis, but there are many institutions that have taken advantage of that and many that have not. so it's a mixed bag of who's using it, we've got for-profit institutions that's exactly how they set their tuition and fee policy. we need better controls. we have to have better controls. >> i'll jump in. it's a great question. i do think that we're seeing more evidence and more convincing evidence from that the bennett hypothesis is a real thing. intuitively it makes sense. i think we have studies that line up with that, particularly the up with yone you cited.
my sense from the literature the e fenlts for pell grants and need-based aid are not as conclusive and not as large as the effects for student loans and in some cases for tax credits. there are for dollar substitution. i think it's worth asking. you know, i've written about the need to get -- to rein in and/or eliminate some of the federal loan programs that are the most perverse on these ground, namely the plus programs, that allow unlimited borrowing. that send one signal to colleges about what they can do, which is raise their prices. i think we need to talk about which programs are likely to have this effect on tuition and which aren't. not to say there isn't gamesmanship around pell. i think we've seen that. some papers show -- turner has a paper out from university of maryland showing private colleges in particular, sorry, sara, actually substitute money away from student who is get pell and toward other students
institutionally that they would have given. there's some gamesmanship. presidentster is right, but the effect on public colleges is much smaller in that regard. your question is a good one. what we need to do i think is think about what parts of a federal profile are most likely to cause effect most dramatically and we need to rein those pieces in while maintaining a commitment to need-based student aid. >> yeah. so this has been looked at under the clinton administration, under the obama administration, under the bush administration of congressional instruction, and all thee said they could not find a correlation. so know for those advocates that finally had to draft that study that was somewhat flawed to use that as proof is to be problematic. we've seen archibald feldman look at it. i think the traditional way colleges set tuition is they're
looking at -- they're a section of the economy. the student aid money is such a small percentage of it. tuition revenue has so many factors attached to it that it's really a decoupled position. beyond the study, i know we have a lot of wonks in this room, but let me look at it from a practical point of view. i'm a college and i'm looking at somebody that walks in with an absolute poverty student. they walk in with a $6,000 pell grant. i know we're not there yet, but we're going to be there soon. that student as far as expected family contribution -- because i'm going to have to make up the rest -- looks more like a family making $60,000 or $70,000 as far as the money they can put on the table. i don't care if they're taking it out of their checkbook if i'm a college or taking it from uncle sam. it's how much do i -- how do i fill in that differential between what it actually costs me to educate that student and it's going to cost me less if
the feds put down the money. many institutions probably got the exact opposite. it's going to vary by institutions but for the publics and the privates it helps. it doesn't hurt. >> keenan, then andrew. >> i've seen so many studies on this, but i think the evidence is when an institution admits it under oath and under testimony then it seems like it's real. and when they have to admit that they've been doing it that way, and they have, that's pretty good evidence. >> i would just say that i think we -- you know, to me, itno co-ins deposition. i believe the studies have found positive effect. i've read them carefully and they're well designed. it's hard to ignore the middle income students act in 1978, that's when the tuition uptick really started, right, and so we have to ask the question what's going on there. and it's worth asking, right. the federal role went from
something that was focused and need based to something that has now grown into this frankenstein that covers the entire income distribution, right? from tax credit to subsidized loan to loans per parent. it's worth asking what that has done to the incentives for institutions and for states, frankly, right? and part of the problem i see is that we don't have a whole lot of proposals that propose to rein that in so much as just layer more stuff on top of it, which i think is likely to lead us down the path further. >> before we take our second question, a quick update on our poll. right now we have 42% of you who agree that extra federal dollars in higher education should go directly to the state, but we have 58% that actually disagree. let's see if that changes by the end of this conversation. next question. >> hi. art hoffman.
as one person who has dealt with these issues on the tuition and aid, it's not accurate to say there's no correlation. there's obviously a correlation. there's been no causal relationship proved, but there's obviously a correlation between the increase in aid and the increase in prices. just to say state disinvestment, the decrease in federal funding and atapement are all things that really require more discussion. three quick questions. one is what is the topic of this session? is it additional money or is it substituting for the vouchers that exist? because i would vote for one on the additional aid, to provide educational incentives. i wouldn't vote to replace vouchers with it. two -- anyhow, so that's one. then second is states have it
within their power to do these things now. why are they not doing it? what is it that's preventing them and why do we think the feds, given all the problems with the federal aid, would make the state programs better? >> so it is additional aid. that is the proposition. but whoever would like to take that part. >> it changed. it evolved over time. >> i like that. >> in the prep we all disagreed with the premise. >> yes. >> art, on the state thing, why don't they do it? because they don't have to raise taxes. they get re-elected. and that's -- that's been told many to me by a speaker of a state senate and the university of louisville parking lot. and in addition to that, the incentives, the point that was just made, is a very good one. when esea title i schools was
approved in 196 a, esea, which was just reauthorized, which let me point out is an institutional program to reward low-income schools that have a certain percentage of low-income students which would be wonderful if we had title i at the federal level. but when title i was authorized, the first thing that happened, states pulled their money out of the poor schools. they pulled their money out of the poor schools, leading to a maintenance of effort provision that was put into law in '67 two years later. the federal government had to sue the states to not supplant their money, to not take their money out, and won that case in a kentucky case in the supreme court, forcing states to put their money back in the poor schools. the same thing is happening here in higher ed. states have incentives to get out of the funding of higher ed and force it onto the backs of tuition policies at the federal level. that's what they're doing
nationwide. but we don't have the same '67 law. we only had it during the stimulus package. those are the only three years in the last ten years where pell grant increases have exceeded tuition increases in our public and state universities because states were halted in order to collect federal money. >> would anyone else like to take that? >> i think it's a great -- if you want to learn about it, it's been valuable to me. i would say this is one of the oddities i find in all these plans. they almost always start by saying these greedy state legislators, they're shortsighted and they don't know what they're talking about, don't know what they're doing. so we want to give them even more power in term ts of divvying up the money and in terms of having to continue to fund at a particular rate just because the feds come in and offer a carrot. that to me just seems like it's a very strapg way to think about this, and it suggests that the
politics of this would change overnight based on some federal incentives, which i just don't think is true. the other thing to also point out, one thing that worries me most about some of these proposals, especially the free college proposal, higher ed enrollments are countercyclical, right? what happens in the next recession when the states say, we have to balance our budget, we can't maintain the commitment that we pledge to you under this hypothetical free college plan. what happens then? do the feds then say you're out of this program and nobody gets any aid anymore or do the feds come in and give an influx of cash? in which case it's worth asking whether the fed has a commitment problem, right? vis-a-vis it incentive -- it partnership and its incentive program. these are eventualities that are not hypothesis. these are where we will end up at some point in the future. >> so i actually don't see the general trend of higher education financing at the state level as being one of intentional disinvestment over
the time. >> right. >> state legislators say we're going get out of this because we're done with it, we don't want to fund these colleges anymore. they're reacting in the short term. the reason higher education gets cut disprors nattily in down times is it's the only category that has it alternative source. schools, prisons, all the rest don't, but higher education has tuition. it's very appealing place to cut because they can raise the money through tuition, which is exactly what they've done. and so what you see over time is this boom and bust cycle with the general downward trend. we're actually back on the increase, not in louisiana, but in many states we are actually -- state legislators are again spending more on higher education than they have in the past. it's not a steady downward trend. the role of the federal government is to step in and change that exact pro cyclical that you're talking about, that the states have to be pro cyclical by the vir shoe of the
structure of their budget. the federal government can help with that. the game theory, we can talk about it and model it, as an academic, i love that, but i don't worry about the commitment problem that much. if you have to make a match, you make a match. it just doesn't concern me as as much. >> a question in the audience? >> hi. amy from new america. thanks for being here. this is maybe to tee off on will's point about whether or not states would or wouldn't pony it up, right, and so you talked about two different examples. the state highways and the medicaid. saying well, you know, state highways are for everybody and the other program is really just for a few, so we have seen states opt out. but i wonder if the politics are different for a program that affects poor people versus a program that affects everyone, middle class, upper middle class families who are very powerful and stimts. i was wondering if you could address that.
>> it sounds like you're talking to a state that puts 95% of its student aid money in merit-based programs. we had this conversation yesterday with the presidents of the land grant. when states have reduced their budgets like they have, college tuition has gone up. at some point the middle class population starts screaming and yelling they can't afford it because they're left out of the student aid equation. that's resulted in zell miller getting elected in georgia and 14 other states adopting merit-based programs. it's a middle class backlash because states have increasingly made their institutions less affordable by reducing their role in all this. and it's such a middle class backlash that president obama and secretary clinton got in a big debate over how high they're going to raise the aotc. and they raised it from $60,000 to $180,000, of which $22 billion in federal expenditures
go to. now, 55% of our parents take this. i bet that's going to get increased. i bet that's going up for 2,500 because the politics of hitting that middle class voters that i'm still waiting to see states tackle that issue. it's the number-one issue in louisiana. we may not get funded, but that merit-based scholarship program probably will. and so that's a big challenge for us because we're dealing with the politics of a middle class that feels disenfranchised because they weren't a part of the federal aid equation, and all they could turn to is loans. >> so i think amy raises a good question. there's the level at which states have -- there are a lot of programs where states have sort of bought in and that's been the history. we've seen a more recent turn recently especially over the health care issue. and probably at least one factor in that is because it was so strongly identified with one
political party. so you see a backlash on those other states. i am not so sure that the free public college debate doesn't suffer from the same politics. but i think that we have to, you know, ensure whatever we do, that we would work on something, that we just try to gauge against those consequences as much as we do. my concern with the states is a little bit different. my concern is that the states are so committed, the state legislators are so committed to i'm never going to vote for increased taxes, but i think one of the things i haven't seen smuch what have all the balanced budget amendments done to the states? which was a big trend 20 years ago. what ends up is education is almost in that counter circle of where higher ed is.
when the unemployment rate goes up, people go back to school. colleges are flooded with students and the states run out of money. so when the federal government -- i'm sorry -- when colleges need the money the most the states have the least and i don't know how you get out of that cycle because politically i don't see any movement among the states. i can't imagine that states would go back to being willing to borrow in the lean times. they won't have the money, back to will's point, they won't potentially have the money to do this. >> any -- >> yeah. i would just say to be clear, my point about medicaid and highways was just to suggest that's an instance where the federal government's goals are more directly aligned with the way the policy functions. that's because i'm defining the federal goals in something like medicaid is to provide health care to people who couldn't afford it otherwise. right? and what i'm suggesting is that in the case of higher education,
that states often have different goals than the feds. and some of the state goals are exactly this, to make sure that middle and upper income families' kids stay in the state. right? so they fund the flagships well and provide a lot of merit aid. those goals to me are not actually what the federal government should be pursuing. the federal government should be pursuing the other side of the spectrum, so that's the broader point i'm trying to make. part of what i worry about is, yes, middle class families would likely clamor in some places to be part of your plan, let's say, right, but at that point the federal government is delivering a bunch of sufbs di to middle class families in order to also reduce the prices for lowering. and to me that's not as efficient as providing the money for families.
>> we're giving everyone a two-minute closing mark. sara? >> i think we should not throw out a system that has incredibly deep and broad political support. that probably is the most significant thing we have with the current structure of student aid. the pell grant program, it's incredible it has the bipartisan support it has. the federal investment in it is bigger than many cabinet agencies. that is not nothing. and the thought that a new system that funds colleges, i wish colleges were as popular as we might think, that funds colleges or states i think politically is going to be very, very hard to sustain. i think it's a hard time to put in new programs. i think that we need to work on incentives and not beating eesm other up.
and that we can work within the framework, back to alexander's point about 1972, i think there are frameworks there of a federal partnership where the felds are not alone but are also working to kind of lure states and institutions into a national goal that might not be exactly 100% their own goals while recognizing that they have to survive as institutions and that states want to keep the best and brightest at home and recognizing all those things, renewing that partnership and looking at what it should look like today is the best way to go. >> let's go down the line. >> okay, down the line. i was trying to think of mine as we were going but i'll just shoot from the hip. to me, this is actually a debate about first principles and why the federal government's involved in the first place. that's where i started my comments. i think it's worth asking. and i think there's a sense in
washington that more state investment is unambiguously a good thing for low-income families in particular. to me that not necessarily borne out. it differs by different states but is not necessarily borne out by the funding formulas that states use and by the distribution of who actually attends college. i was reading last night a piece from washington monthly about the situation in louisiana, and there's sort of this throw-away line of scrimmage about how at the last minute the legislature was able to save the universities, right. >> it was the last minute. literally, the last three minutes. >> but the throw-away line is by increasing the sales tax, right in the sales tax is a regressive tax. it taxes low-income people the most. they spend their money on -- they spend far more of their money on goods and services than do rich people.
right? so it's worthying about distributional consequences of all this and not just wave ourg hands and saying, no, no, no, by definition more dollars to state, more dollars to state institutions to lower the price of tuition for everyone, regardless of their income is an unambiguous good. we have to start asking whether that's true and think about how a federal role could help the students we want to help without necessarily spending in an inefficient way. >> the greatest public universities on this planet were created by federal intentions to tell states they needed to to it. in 1862 and 1890. we need that intervention. we need the federal government to step to the plate. our states are getting out of the business. the greatest example i know is in 2006 we had 48 governors against us in the nga, completely against us. when we put the maintenance of effort provision in the economic
stimulus packages. they said it wouldn't work. the federal government has no business doing that. and that provision said that you could only take education stimulus dollars if you do not cut your higher education and education budgets below the 2006 funding level. within six months, most states cut it to that level and left it there. lamar alexander, tennessee had a $1.1 billion higher ed budget that year. they cut their budget within $13. colorado and oregon cut their budgets within $1. federal intervention is necessary. federal incentives are necessary. if we do not do this and we continue this course by simply putting more money, the new money, into the current programs that we're doing, we will have nothing but a federal system of higher education in 20 years. we're out of business in 2027.
the current trend shows colorado 2025. that's before the cut i just took. arizona 2030. iowa 2029. do we want to have a federal system of higher education that's solely based on tuition and loans and grants or do we want to keep and incent viivizer states? my fight, which is an everyday fight, i said we have to cut 4,000 classes. they didn't budge. i said i'm going to take the "s" off the football helmet. that got their attention. the state and our name is what we're fighting to keep. to be those institutions that our mission says we were founded to be. >> last word. >> i started talking about a set of assumptions that were in place in the early seflts. what i worry a lot about is we're going to build policies assuming the way things are now that the way they'll have to be, that tuition has to go up a search rate every year, that states have to spend money on a lot of high-income students, that the institutions are going
to continue their shift away from funding need-based aid towards funding, you know, highly academically capable students. none of those have to be the way the system works. if the federal government can use its leverage to change the way states and institutions are behaving p than's why i think the federal government must change the way it's investing in higher education. thank you. >> thank you, guys. we're going to open the polling up again one last time. get a final conclusion. >> not an either/or. >> i don't think so. i'm still going to stick to the structure. >> we're getting crushed.
>> it is one vote, one person. >> people can vote strategically. you can vote for the side you disagree with and then switch your vote. that's how you help the side you want to win, win. i've been part of one of these before. >> in our first conversation, the trouble with this whole thing is it's not an either/or. it's not -- we've got to do both. and the states need help in making the right decisions to stay players in this vital enterprise for our country.