tv Discussion on Student Financial Aid and Voucher Programs CSPAN April 8, 2016 11:44pm-1:12am EDT
eastern on c-span's q&a. >> next, proposals to eliminate federal student aid programs and with direct em federal funding to the states. the panel discussion with higher s ucation lead ers and scholar was hosted by new america. this is an hour and-a-half. >> thank you all so much for being here today. we really appreciate you taking time on this cold saturday to enjoy this debate with us. this debate was actually not focused on our paper that we released a few months ago the ing from scratch, but idea came about as we were debating the different topics
that ormed our paper, so is printed in the lobby for anybody that's interested in shiny copy.e we also have copies of the new paper released today called strengthening the relationship, hat analyzes many proposals about a new state and federal artnership that have been proposed by candidates, think anks and compares them to the new american proposal, and they're also in the lobby. we hope both publications are thought provoking and we hope also ebate today is thought provoking. the proposition of today's dollars any federal for higher education should go to directly for states and than student rather aid. arguing for the proposition are alexander, president of university, andal -- arguing
flannigan, at rah the national association for independent colleges and andrew kelly, american enterprise institute scholar on higher education reform. moderator today is for the washington post. our should be able to see proposition up on the screen pretty quick here. want to explain the voting process that we're going to be doing. there we go. o as you can see, the proposition is now up on the screen. the temperature of the audience before and after debate to see how much our ebaters have changed how much people see this particular issue. texting new by
america all one word 33322, and putting in a or b, depending on whether you agree or disagree with the proposition. i think the debaters cannot vote. so with that, i'm actually going to turn it over to danielle to continue on with the debate. thanks. danielle: thank you guys for joining us this morning. we'll start with opening statements so we can sum up the proposition in favor and against. i'll start with dr. alexander. dr. alexander: thank you. thank new america but i know a lot of you out here. a s is about as serious of discussion as we could have. we've been working on the government to use any of up what billion to show states are doing. states have figured it out. investing in their
public universities. louisiana will out do colorado, and our legislators have told me that i can get reelected. this is in another state. can get reelected by not raising taxes. i'll give uv authority to go to he federal government and get that money through loan money or however you can get it. 1962, the great debate went on. it was about direct student aid. decide versus incentives institutions and/or enroll the right populations, the meaty populations. we took the market route. we took the market route and went to direct student aid. the assumption was made that the states would take care of public universities. the states have vanished and now we have a federal market based fee-based system
that has allowed a whole new sotor to emerge because it's lucrative, the for profit grants 30% of the pel and has 40% of all student loan defaults. would you want your k-12 system to have the same structure where for-profit universities schoolers, dle elementary school ers and high no ol ers and we would have idea that the federal government would become the main suppliers of higher education. the university of chicago said, with public funds, we'll be more like the university of illinois, will oo will -- we increase our lower income access control our cost better. university of chicago is just as it was then. the only difference is the university of illinois is trying o become the university of
chicago. the low income access is only entire ivy - the richest mbined, the institutionos this earth, the more and more of it, have lest pell grant students at lsu. we had 15,000 in the ivy league combined at 9800. 140 to 170 billion worked? well, our 55 to 64-year-old population in this country ranks number 1 in college degrees. our 25-34-year-old population ranks 13th in college degrees and it's dropping. it's time to do something different. it's time to incentives our states to do the right thing. center medical chancellor told our legislators in a special session a couple of
weeks ago that for every dollar they cut from him in medical lose three e'll federal dollars. that changed the entire dialogue of our legislature. in louisiana, we actually raised we s to make sure that didn't lose the federal money. now it's time. we know it works. ssig was a federal matching program to encourage states to thing.right this stimulus packages, the reason it worked for education ance of ut a mainten effort provision from the federal government that said you an't collect education resources, if you cut your funding elow the 2006 level. he fda did it, we do it, it's time we use new federal dollars, dollars, to ral encourage and incentives states game. back in the otherwise, we won't have college and universities starting in the
next eight years when they fall off the map. >> thank you. 2015, the case, the program for the cornerstone of federal -- keep over he the years, as college prices system has the become less and less effective. we ly, they argue that should stop handing out vouchers and instead stop giving money to states or institutions. argue for rary, they writing bonuses for high performing campuses. let me say that i agree with 2013 nigh america and believe in federal roles from student aid to government be an improvement. first, providing it on their us to target scarce public dollars to those that would not
be able to afford it. his is the real reason the federal government got into this business in the first place. funding, the direct public colleges quite regret it. and could pay more to attend than they do. nce more, state funding formulas short change the most low income students. public research universities receive nearly $7400 student in 2012 compared to community colleges. in maryland, the formula provides 25% of the student four-year ions for colleges. going to tudents are attend four year colleges in a flagship. they have every right to. let's not pretend it aligns with concern, targeting age
of a student to low income student. the second point. these grants and power students to choose the option where likely to succeed, be it public, private, in state state. of lowers tuition at only a sun set of institution. institutions the best fit for students. might e suggesteds this be a bit for trade-off. n the 28 states and the district of columbia have no ublic colleges with four year graduation rates over 54%. actually led scholarshipship graduate to fwraut at lower rates. why? ecause the income subsidy was lower than the schools and those schools had lower graduation rates. even though they paid more,
they're more likely to graduate. third, choosing a range of a new america -- laid out compelling rates like education, mooks, funding and other things. emerge? those many, if not all, came outside he public sector, for profit and nonprofit organizations. a system, with reasonable state and performance standards places the power to decide which innovations are worth while in he hands of the market, not bureaucrats in washington or state capitals. fourth and last, i believe critical to is accountability. it. dretrimental to this is an, i agree, area where my partner and i disagree. institutional aid believe that by giving the money for schools tates
instead of students, they'll thembetter ability to hold to standards than today. makers.h is policy fiduciary -- it's not clear why direct funding would change that. percent of d one colleges lost accreditation over year period half and since 1999. regulators answer to many masters, members of congress, nfluential groups and one of many. driven ast, a voucher system, arising to hundreds of housands individual systems to award punish. dvocates say this market does not work nearly as well as it performance in
iduciary standards, without acrificing focused on... >> thank you for having me. hat could i do to provide more context and background to presidentialal's remarks. the rgument is that assumption that underlie our system for affordability no longer hold. 40 years ago. federal was that the government would provide financial aid directly to the nts and they weren't only stakeholders. public institutions in stage tion well, and state governments would provide providing appropriates, (indiscernible) statand then the institution,
their commitment was if they were charges prices well above al aid system ci obligation had an to make sure scombn was covered. our argument is that besides federal government, the other stakeholders have drifted away from their commitment. if you think of the state and nstitutions, public institutions, the state -- between 2000 had 2015 has increased by 80%. at the state inancial aid, if an american student is attending a public institution compared to the aid a state financial aid problem. same amount of money for that student. it increased by 450% during the same time period.
the state drifted towards high income students. the institutional aid in tudents have a lot of work on this, in america, what's happening with terms of the institutions commitment to students, well, look at private institutions. have ivate institutions increased substantially since 2012, an 150% increase. compare to the 260% income that high students saw during that same time period. making over ily 125,000 in financial aid, it increased by 230%. it's a massive increase. you can see state institutions drifting away from the commitment. the solution to me, is to give every nstitutions incentive to go back to their original commitment. nd asking them to do so, we're
going to point out that they're not doing so. to e need to find out a way give judicial funding to give every incentive to do so and the to make sure is that the federal funding can go states tates and the have to both change their spending and how institutions those are the main points i want to make. >> i will give you the last word. >> i will take a different approach, as it was assumed that some form of what is in the atmosphere right now, giving more federal aid to public states,ions via the actually come to pass. let us look 10-20 years from now, some assumptions about what it might look like. i think you will the disparity among states. because some states will buy into this, some will not. 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 public. institutions,y whether they be public or private wealthy institutions, they will be funding their own student aid. those institutions that are wealthy are also selected. so we will have low income students who are very bright, may be able to have the same options that they had before. but the familiar -- this landscape is very familiar. it looks like american higher education, circa 1964. this is exactly what the federal government came into address in 1965, when they set up the
higher education act in 1972 with the current framework. where are the holes in that framework? i agree. andglad that both well anwill mentioned the original structure. it is not functioning. the health grant is not the only -- the pell grant is not the only one. theyhole concept was that will start with low income students. but we're also going to alsotivize the states to step in for low income students. so we set up a program, the federal government completely different in that eight years ago. as soon as they did that, four states stepped out of need-based aid. if you give me $200 increase in
ants, my low income students have lost a thousand dollars. the same process with ssig. grant go upthe pell to one or dollars, and the state takes away $1200, we saw this happen with the stimulus bill . it did not work well for low income students. a study by jennifer delaney out of the university of illinois shows that low income students, whether at public or private colleges, lost in that scenario. now we could fix that. we can fix that scenario. thatn simply put the moe work so well for public colleges into a new ssig with a lot of money. we can add need-based aid, not protecting, not an unintended consequence. then we look at institutions. i'm going to surprise you. we are not against adding
whatever those accountability du jour are for institutions. in a well-funded campus aid program. there is no institution that is not getting enough seog. so let us get real money into it. the house did this in a proposal in 2009 in the purchase loan program. completion rate percentages for pell, and price even, that formula could be worked. so my main argument today is that the federal government in 1972 recognize that institutions are institutions. they have mixed obligations. they have to also survive within the institution of have to balance books. states have mixed obligation. they want to educate the citizenry. but they also want to keep the best and brightest at home because they're competing with
the other 49 states. so the federal government, in many ways, they just want to get low income students who are capable through. let us not throughout the current system. let us work on it together. ,et us work towards 2064 instead of 1964. thank you, guys. >> we will start with your team first. >> dr. alexander, if we were to follow additional aid directly to the states, have them make the decisions as to how to disperse that, how would you protect colleges from being subjected to the whims of state legislatures question mar? alexander: well, one thing has been constant. i have been a kentucky, illinois, wisconsin. statetually every state, legislatures have told me that i have told them, why do take medicaid money? because we do not want to leave
any federal dollars on the table. that is the biggest influence that i can see with legislatures. now somewhat political aspirations have not done that, because they have said i have future political aspirations. years,hin a couple of they go after that money. and i can just tell you that louisiana did not take the medicaid money until a new governor got in, the first act he did. that we would leave the millions and millions of federal dollars on the table. funds, why doy they invest in highways for higher education? why did they invest in medicaid before higher education? why did the land-grant diversities get created --diversities get created? partnership, the greatest public university system in the world that resulted from that. so legislatures, state legislatures, one of their top motivations and incentives is
whether or not they will leave federal money on the table. and i will point out one other thing about the 1972 act. grant forhen pell past but there is also a consensus that following the pell grant students, passed by congress, what was supposed to happen was $2500 what follow those students to the institution. to the institution, provide programming for the low income students. the cost of education allowance were passed at the same time pell grants were. they have never been funded a penny. so institutional aid and programming was recognized and needed, but it was never funded by the federal government. >> i think the only thing i would add is that we do need to learn the lessons of the affordable care act. but it is important to learn too much. it was just past, and the accountability are still pretty intense.
and a lot of things states and schools are expected to do, there doesn't appear to be a ton of resistance. not a lot of states saying this will not happen. the affordable care act is one act, only look at different federal government uses its power to leverage state power, it works. >> i just want to point out a couple of things, just quickly, on these points. the medicaid and highway examples are particularly good. , the state direct appropriations. the need-based program, they are 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 is further targeting more dollars for the low income people. highways, and keenan would
probably d disagree, people needed to get around. higher education does not serve everybody in highway does, right? i think these arguments about federal-state partnership that use medicaid and highways in particular, they're not really great analogies. because higher education is of the same kind of service. >>? i think the original question you asked is so important. because i'm a present private nonprofit colleges. and obviously, there is concern at whatever you look at. but i often say i would be more afraid of i were a public college. proposals outst there do not come free for public colleges. they come with incredible controls.
that i think will take away the innovation and creativity and the ability of the public colleges. we have a very competitive marketplace out there. private colleges -- most competition is regional private competing with national private. and national public with national public. that is what students are choosing between. of there are a lot accountability measures that people expect, even more that's eight legislatures would -- even more that state legislatures would add. or the validity of public higher education to get revenue streams that they will still need to fill in. >> continuing with this thing tackleing, how do we investment crisis? sarah: i think the increase in prices is very complex.
the whole economy, let me take on something simpler on the investment. i would go back to this ssig program and constant. i think we should consider, what would an effort look like if we had a lot of money out there for the states to partner with the federal government on grants? but you did have a maintenance in there that did not just include need-based aid, but include public institutions and private institutions, whatever the objective, that part of it institutionally, it didn't work in the stimulus bill. so that is where i would begin. >> i agree with that. i think this is an area, i know the president alexander writes about ssig and testified about it as a working federal-state project. this is an area where i think we could agree that a federal
effort to incentivize states that is given to students, a could be a workable arrangement. and again, it allows for targeting the students we want to help the most from a federal perspective. and to point out that that is a very different model, than giving money to states that they then divvy up to institutions lower prices for everyone in the state. >> would you like to respond? >> i think it is wonderful. i was listening, i think it is amazing. when we propose that, you guys were opposed to it. you did everything to stop it. i think it is wonderful you can the sparkman realize how important it is encouraging states. [laughter] and i love account ability. we are not afraid of accountability. i need a two thirds vote from mine legislature.
i am not worried about the federal account ability. i need more regulation to stop corinthian colleges from stealing public money and stealing state aid grants. in california, the program -- the university of united states of america, agenda because there is $13,000. i give it goes to california state gets $5,500. think about how that works in your own states. these are not your need-based programs. ohio has a program that only goes to private monopolies. regulationsng the necessary. i need more help from the federal government on account ability to go to the right places that would remain affordable and committed to the low income students. and that would include the trinity university in washington, the private universities to have 55% low income, who cannot raise
money. they have nothing but low income kids and they cannot charge anything. but they do not get me help through the voucher program. we are very much in line with this maintenance of effort provision. we be more federal health to tie $170 billion in federal assistance in-state behavior. that is the only state behavior. >> so, i would start out by saying that i agree with expanding state student incentive programs, something like that federal matching aid program is a great place to start. but we cannot keep on trying to figure out how to cover these price increases. it is a spiral we have and try to cover through all different types of eight. whatever is left over goes to debt, we have been trying everything to defeat it. how to defeat it. how do we cover the price increases? we just cannot keep having policies that do that. so a program is great, as long as there is a change in institutional behavior at the same time. the institutions are strongly
encouraged and incentivized to fund low-income students, as long as tuition increases are moderate and relative to what families can afford to pay. i do not think tuition should increase with the median family income. we have to figure out, without that tuition, some, nation of in state funding efficiency, a cannot just keep on assuming that we will figure away to cover these prices every time. that is not going to work. >> affordability and completion, very much tied to each other. i will post the same question to both sides, starting with you first. how would you use state directed a and the quality of education? >> it is not one thing. it is about 100 things. it is campus culture. campuses toat two working on the third now, where the graduation rate was 20
points above what was predicted. at cal state long beach we had 50% pell-eligible students. we had 1000 students undocumented. we got graduation rates up from 40% to 50%. in fact we testified two days ago to the state legislature, do one of two things. reward performance in the institutions that are improving what they're doing with low income and all populations. or let it go. set us free. let us run can we know the market. we can do neither. we are not allowed to do either. up what happens to we end that public higher education serves 80% of the students in this country. the scale of the snake of all populations, are the institutions in the current model. start,the first place to always member that you cannot compete unless you get in.
of course need to worry about goals. learned fromlso the research. if you change the price of higher education by $1000 you will get about 3% more students enrolled. we know that, i'm a researcher, and we have a lot of other findings. we can say that with a great degree of certainty. what do we know about the impact of redesigning financial aid for student completion? we don't know nearly as much. if we try to do something where you provide incentives with a certain number of credits or restructure it to get students incentivize the right way, i am very skeptical of those efforts. the research is not nearly as clear/ . so, it seems funny to me. we are hesitant to do what works. we have to start by getting them. and we have to get them on campus, working on improving the exciting research, and restructuring.
but we know that works. then from there, we need to do a lot more to figure out how more students can complete. >> i will say two things. will's point on of all we know about financially. i do agree, there is a book on the evidence not nearly as sick as it needs to be. to a paperr people on the future of children which asks what we know about research? one of the lesson they pullout is that the incentive-based grants on academic benchmarks, they are encouraged to get more funding. but they do tend to have -- they seem to have a positive effect. there are not as many as you would like. for instance, one is the west virginia promise scholarship. this was in the paper. students have a need for benchmarks, and they found that
that increased on-time completion rates by scholarship students by 7%. and that it was the incentive, because as soon as they reached the fourth year, at which point the academic did not matter, it went away. i do think that one of the things -- the second point is that where we have this problem in institutional improvement, and i'm guessing you will agree as well, we are focused on the cost. the upfront cost of doing things to help more students succeed. we are not focused on the cost-effectiveness. and to me, i would much rather see state legislatures and federal legislators be discussing cost-effectiveness. by that, i mean it may cost more up front to government interventions. but it is far more students being successful, and the cost of the degree goes down. buildabout how can you that kind of idea into your performance based funding
scheme? as opposed to just doing it on the basis of the outcome, try to minimize the cost of from. i do think it's a conversation we should have. very much supportive of that. >> first of all, i don't want to miss the opportunity to have a gmoment. i'm not saying you did. but that was part of the background battle. that is why i say was very intentional. if we can protect need-based aid, we might be of the worsening of you. so, but on the completion question, it is very complex. i agree with wel and dr. ill and dr. alexander. different students are going to have different issues, too. for some, 90 lack of money for it might beave -- lack of money. for some it might have this alarm clock, that someone is
tracking them to get out of bed and to school. and into class. that can make a huge difference. so there are multiple solutions. we're learning a lot about this as we had a federal focus on completion which i think is been very positive. whatever we do, i think the biggest mistake that we have had in the policy debate that has gotten more and more dramatic over the last 10 years, is that we have talked too much about penalties and not enough about incentives. penalties, yout instantly start to run into debates about states rights and institutional autonomy. and you are never going to find a positive solution. we need more conversations like this, potentially moving forward. and i do have a long-standing proposal out there, and we see as part of the completion agenda. we set somethat sort of a federal thing.
we will give you $35,000 in grants to get through. if you get through faster, good for you. you will get your money sooner. because there is a financial incentive and a pathway to help people stay in and take as many classes as they are capable of to get through, as soon as they can. >> i get the sense that there are aspects of the current system that both of you would say are flawed. and you have already discussed a couple of them. but in addition to things like improving campus aid, what would you do in order to correct some of the design flaws within the current student aid system? sarah: i would begin by saying they are not design flaws. society continues to evolve and change. and so we always have to constantly update things. we learn lessons as we go. we are going to learn a lot on the completion as more and more schools focus on it. ifhink that we should have,
we want degree attainment to be a goal, we also set up a certain amount of money, $35,000 to get through. we have put hard targets and there's a people are not spending money slowly. that was surly be wondering i bring back in this partnership as i mentioned before, i think we do need to bring back states and institutions through incentives. into a positive national conversation. which we all do our part, it is static. studentsncentives on and incentives for institutions, incentives for states, certainly pieces of the federal formula, certainly need analysis needs to be updated. but recent publication, so many issues on the table. this is where i think again, there is common ground. i agree with dr. alexander.
who suggested we need to hold colleges to higher standards. i think we need to hold all of them to higher standards. to make sure they have incentives to keep tuition low on low income students. you know, if i were entirely of favor of preserving the current system, what was originally how the debate was pitched, i would not have much to do all day. right? as anyone who is read my work knows, that is not my position. sarah and i probably disagree on this. frankly, we have to punish some schools were not doing the right thing. some of them need to go out of business. we have written about the notion of setting a stricter performance floor, getting rid of the fall rates, loan rates, and we are putting schools on the hook for some percentage of the loans the students do not repay. and that is something that we can discuss after-the-fact. [laughter] which i'm sure he will have fun
with. but we had a similar panel. and on those terms, these are the ways we get incentives right. and institutions thinking about how best they can reach the standards. years oned for seven the college report card scorecard to get new information in hands. they want to know what our graduates are doing great not discounted we turned away. which is u.s. news & world report. how are they doing when they graduate? are they getting jobs? are they in debt or not? we have been fighting since 2006, and this was a fight against the for-profits and private partners, but the privates fought us to report student indebtedness. and i can tell you that is when the critical elements and issues that parents raised me talk to me. what are the students doing? we fought to get the college scorecard to put more
information marketplace. one of the reasons the higher education market system does not work is that there are no informations for parents and students. we given the same glossy brochures. we do not share what is happening at the end of the day. we know more about the cars we buy because of a blue book than we do about the colleges and universities that we invest for a lifetime in. and so we are very much in favor of more accountability, showing parents value for the dollar they are investing. but we certainly would like the private sector of higher education in washington not to fight us every step of the way, to make this information available to students. useful, andvital, absolutely essential information for them to make the most important decision in their lives. socal ability, we are not afraid. why is one reason corinthian colleges went out of business.
because they persuaded people to go to the institution, and ended up with nothing afterwards. that is why many of these insane institutions are milking our veterans blind. the company and say i use of my g.i. bill. they are getting public vouchers vouchers for worthless pieces of paper. they have had them milked from them. without her system is far out of control. is far outher system of control. we have to have institutional aid. about her to nowhere does not get you anything. scholarships to nowhere do not get you anything. so, we are not against student aid, the we need to rebalance what we are doing to providing institutions who serve the students. >> one additional to point to make, there is an argument for direct funding to students.
if one is edition is not doing what they should, they do not have the right sort of characteristics for the individual, that you take the voucher and go elsewhere. but it is not much of a market for a lot of students. travel less than 14 miles to campus. and 80% of students travel less than 100 miles to campus. there are not that many campuses close to that many people. more students do not have that many choices. -based idea that a student funding system is going to help out the market and induce institutional improvement is not borne out. there has to be something in there that forces the institutions available to students in a local area to be better. to push on them to use their own funding better. that they can fund the students who need a higher education, and they can enroll that they have access to. >> the idea of account ability keeps coming up. and that was one of the key
focuses of some of the presidential proposals around college affordability in this campaign season. proposals have been floated as far would be beneficial to your position of how college aid should be disbursed, or to your position? i will let team b go first. sarah: sure, well, we have -- i mean i think if you kind of dig into hillary clinton's proposal headline,ow th, below the she is looking at that. i think that is solid. she does not exclude the private nonprofits from her proposal, that he is not very clear with a fit him. i think the conversation we're having, a very rich conversation about that anyway, some of it is overinflated. the cost of loans is very valid to have. thatthink questions around
are good to continue. studentsd we be having repay? how long should they be repaying? those are the questions. >> well, it strikes me that most of the plans of the remaining contenders at the very least -- >> there are other plans. >> a plan i helped work on, out there in the ether somewhere, go look it up, mainly focused on the debt question. they are in the forefront of family's minds. wavey concern is that they their hands mostly at issues of completion and value. and i think you see that in both the sanders and clinton plan. solving that -- mechanically lowering tuition is going to
increase rates. i just don't think we have any evidence that that is true. compelling evidence that is necessarily true, i should say. on howto see a lot more to we actually think about improving the quality of higher education, and ensuring that the federal investment, we are getting a return. i just don't think that we have seen enough of that yet. few things,es say a but bernie sanders, my recollection is that a whole lot. i think that is part of the conversation. >> the clinton plan has our federal partnership as a third leg, to incentivize or whole states accountable. if you remember at the beginning of president obama's administration when he give the state of the union address, he
said we are going to hold colleges and universities and states accountable. well, the college or card is about holding them more accountable. what has not happened is the state part of it. and that is part of senator clinton's plan, the state federal partnership which we have had the opportunity to work on. marco rubio said something interesting. he said when he was running, our accrediting bodies are like a cartel. we are the only country in the world that allows private accrediting bodies to dictate where $140 billion in student aid goes. and you cannot think of an institution that has not been re-accredited or accredited. everybody gets accredited. everybody has access to public money.
that is why we cannot control it. we tried to address the issue in the early 90's when bill clinton and secretary long had an opportunity to tackle it. we killed it. now we have a problem that is so out of control, that we need greater accountability. and the accrediting bodies have fallen flat on their face on this issue. when fasttrack university in fort lauderdale, fasttrack gets millions and millions in pells hired exotichey dancers an in admissions, we need a new system. >> i think they're both recognizing the same issue that really concerns me. the federal government has to start using leverage with the states to ensure there will be nges to how they are behaving. one thing i can pick out is a
reservation about either of them, there is a provision about how the institutions have to spend the money -- a certain amount, certain faculty, and so on. i think that is where you get, and i would agree, this kind of overreach and exactly how these institutions are going to accomplish how we set out the goals. it is better to let them figure out somebody get there. specifying the kind of specific business model for institutions too far in setting up the plan. and the interesting thing with the clinton plan, and this is some in the came up in mid-america as well, how much of an out would you allow states? and the clinton plan includes that, which makes it obvious that a lot of states would just not do that and continue with the federal government to get slack. the federal government said no way you will get this money. you have to dissipate in the way
we restructure this -- participate in the way we restructured this. there are trade-offs. those are the things i would point you. andrew: one of the things i don't think anybody mentioned, and i should have, is making free the big boilerplate. free college is a big idea. that would surprise anyone in disagree,that would it is not a silly goal. but will not lead us to an efficient system, were people who can pay pay what they are able to pay. the clinton plan is much better on this, obviously. but this notion that we are somehow locked into this debate about whether it should be free for everyone, universal free college for everyone or not of the next decade at least, it is now a litmus test for democrats. it is a shame because i think we do have a much more productive debate about who pays what share, what is reasonable?
that is iu know, think where politics have made it harder in some sense to have the policy debates you need to have. >> one final question what he will kic, them to the audience. if a district it to the states, how would private institutions work in this? i mean, certainly there are notr institutions that are as much of a concern when you think of some minority institutions that are private, how a huge pell population, we think about them in his overall kind of model? >> i can start. let's go ahead. >> this is one of the reasons i am not in favor, because the privates play a very different role in the division of higher education. this depending on what state you
are in. substantial be a account ability for privates because they educate so many students. new york, massachusetts, state like that. in other states, there is a small private sector. relatively well-funded company not need as much. they may not need as much of a relationship with the state. allowing the possibility is hugely important to me. the programso have from an privates do benefit disproportionately from those. so keep in mind that privates have 26% of the students. but they get about 46% of all student aid. a lot of it is price-sensitive. so if funds went into that program, they would benefit from this type of discussion. more importantly, yesterday in the national academy of sciences, we released the recommendations from the lincoln project. the lincoln project is about saving our public land-grant universities. are part of that.
we are on the edge of financial exigency. in illinois, we have, chicago state. and we have grambling. we need to focus on saving our private institutions now. our first land-grant universities have grown from 21,000 229,000 per student. that seems good. but private have grown from 31,000 to 61,000. we are becoming and have become many of us, the proving ground. per student expenditures and faculty salaries, we all know this. that was 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.
talking about financial exigency in louisiana and illinois under the current conditions, and he will see this more and more so in the coming years. so i would say 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 the institutions, of which are the biggest losers today, compared to where we were 20 or 30 years ago. eah, i think it is a good question. of course, i am interested in the role of the private nonprofits. states, and the district of columbia, more students in the private non-profit sector. a higher percentage of in-state students are pell at private colleges. we have seven other states and
the district of colombia, where there are more total moments. and there are many, many private colleges that have very efficient degree production for state taxpayers, for the small investment that the state might make. 30% ofhe state funding the degrees, they have those listed. so, we need both sectors to be part of the solution. i think all of the sectors benefit from each other. it makes a bridge from higher ed. i also want to mention and take matthewther point, really pioneered the concept of some sort of a federal consumer piece. easy to access, federal consumer piece that was sort of counter this u.s. news & world report problem we have. it has been out for 10 years.
land grants like it so much among the bar of the first pages. we gave it to the. let us try to create a universal system. our problem with the scorecard, it was a letter grade. we all share that concern. ,b,c,d. it needs more improvement. but it is a good start. we will open us up to audience questions. keep in mind to keep this to 30 seconds. anyone like to ask our panel questions? >> i'm sure some of you have heard of the bennett hypothesis that raising direct student aid essentially allows colleges to raise tuition, because they are sure the federal government will take over part of the cost increase. and recent work by the new york
fed found a confirmation on this. that when you raise pell grants by a dollar, you see an increase in $.50. i was wondering if those in support of funding colleges through direct student aid, if you could address how we could design student aid so as to avoid this issue? participated. because -- i don't know why bennett gets credit for it -- it is about institutions making decisions. that was supported, too, through federal loans. private institutions as well as many other institutions who have particularly use the loan programs, the more they could get, the more they can charge. and there is institution in this town that used to brag about that. george washington, i will mention them.
[laughter] leading the country in what you charge, you will get more. they will blow the cap off the loans. there is a correlation. but in the public sector, there is not. unless we have our own tuition and autonomy, but we do not. the government says freeze it for two years. we have a state legislature. we havepublic sector, these controls that do not allow us to roll in the hypothesis. there are many institutions that have taken advantage of that. and many that have not. so it is a mixed bag of who is using it. we have for-profits saying that is exactly how they set policy. so we need better controls. we have to have better controls. >> i would jump in.
it is a great question. i do think we are seeing more evidence and more convincing evidence from more rigorous work, that it is actually a real thing. and to make sense, i think we have studies that line up with it. particular leave the new york one you decided. cited. the literature, the effect for need-based aid are not as large as the effects of student loans. and in some cases for tax credits, dollar for dollar substitutions. i do think it is worth asking, i have written about the need to rein in or eliminate some of the federal aid programs that are the most perverse, the plus programs that have unlimited borrowing. that's and one signal to colleges about what they can do, raise prices. we need to talk about which programs are likely to have this
effect on tuition. and which are not. gamesmanship,ome we have seen some papers that show -- one out of university of maryland -- that shows private colleges in particular actually substitute money away from students towards other students. institutional aid they would have given. president alexander is right that the effect on public colleges, it is much smaller in that regard. so your question is a good one. what we need to do, i think, what parts of the federal portfolio are like to rise genetically? and we need to maintain a commitment to need-based student aid. eah, 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. the tuition revenue has so many factors attached to it that it's really a decoupled position. but let me -- 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 at 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 at 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. institutions probably got the exact opposite. and 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? i believe the studies have found positive effect. i've read them carefully, and
i think they're well designed. it's hard to ignore the middle income students act in 1978. that that's when the tuition uptick really started, right? and so, we have to ask the question, what's going on there? and so, 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 credits to subsidized loans 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. >> alright, 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. art: 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. here, just to say state disinvestment, the decrease in federal funding and atapement are all things that really require more discussion. and they are missed, to some extent. 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 institutional incentives. i wouldn't vote to replace vouchers with it. two -- anyhow, so that's one. i forgot. then, the second is, states have it within their power to do these things now. why are they not doing it? i mean, 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? sarah: so, it is additional aid. that is the proposition. but whoever would like to take that part. >> it changed. it evolved over time. [laughter] >> i like that. >> in the prep, we all disagreed with the premise. >> yes. >> we didn't have to charge. alexander: 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 in 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 1965, 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 1967, 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 1967 law. we only had it during the stimulus package. and 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. is that 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 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 strange 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. and 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? and so, 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? right? in which case, it's worth asking whether the fed has a commitment problem, right? vis-a-vis its incentive -- its
partnership and its incentive program. these are eventualities that are not hypothesis. es. 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 disproportionately in down times is it's the only category that has it alternative source. schools, prisons, all the rest do not have an alternative revenue source. 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.
and we're 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. but 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 virtue of the structure of their budget. the federal government can help with that. and you know, 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. i think a given year, if you have to make a match, you make a match. as the target moves little bit, it just doesn't concern me as as much. >> a question in the audience? amy: 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. and 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. 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. you have to realize -- 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. 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 voter, 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.
sarah: 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 much, what have all the balanced budget amendments done to the states? this 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. and so, i think 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. and 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 so, 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? and so, they fund the flagships really well and provide a lot of merit aid. and 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. and so, 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 subsidies 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 remark. h,nce we ended with sara we will start with sarah. ok, 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. this incredible 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 each other up. and that we can work within the framework. back to king 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 just go down the line. >> ok, 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. and i think it's worth asking. and i think there's a sense in washington among abbasid groups and that state -- among advocacy groups and that state investment is unambiguously a good thing, for low-income families in particular. and to me, that's 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. one thing 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. >> yeah, but the throw-away line is by increasing the sales tax, right? in that 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 worth thinking about distributional consequences of all this. and not just wave our 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 unambiguously 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 such an inefficient way. king?
>> 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. well, within six months, most states cut it to that level, and left it there. lamar alexander, tennessee had a fought us tooth ande o
nail on this, 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 incentivize our states? so, my fight, which is an every day fight, i said we have to cut 4,000 classes. they didn't budge. them, i'm going to take the "s" off the football helmet. that got their attention. [laughter] 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.
>> you get the last word. >> i started talking about a set of assumptions that were in place in the early states. 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 certain rate every year, that states have to spend money on a lot of high-income students. that the institutions, too, 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, that's why i think the federal government must change the way it's investing in higher education. thank you. >> thank you, guys. we will open up the polling again, one last time, for a few minutes to get a final conclusion. i'm still going to stick to the structure. >> live or die thing.
ideas, what's of it's about. >> wait. >> we are getting crushed. [laughter] fun?n't data >> yeah. >> it actually is all one vote. >> people can vote strategically. let us point that out, too. side youly helps the agree with. i have been part of this before. >> in our first conversation with the trouble with all of this is that it is not an either or.
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