A New Proposal for Student Aid

Last week, I attended a presentation by William Doyle, a professor at Vanderbilt University, about his proposals to change the way student aid works in America. His analysis was sponsored by the Committee for Economic Development, who also hosted the presentation. You can read the report on CED’s website.

Professor Doyle’s ideas center around one basic principle: federal and state aid should be going to students who would not be able to attend college without it. This sounds like a fairly basic idea that most people would agree to, but it would mean some pretty significant changes, the most dramatic of which (in my opinion) would be a significant scaling down, or even elimination, of merit-based aid. According to Professor Doyle, merit-based aid generally goes to students who would be able to afford college without aid, and so the money would be better spent on students who currently cannot afford college. The same goes for the $18.2 billion spent by the government in tax credits for students attending college.

There are also a number of suggestions that I think most people would agree make sense: for example, since the information needed on the FAFSA (Free Application for Federal Student Aid) form is generally the same as the information needed on one’s tax returns, there should be a simple mechanism in place to copy the information over.  Professor Doyle said that there is research showing that just lowering the barriers to applying for aid–even if you don’t actually give out any more money–makes it more likely that students will attend college. From my own experience, I think this is exactly right. Student loans are not only hard to pay back once you’ve graduated, they are complicated and difficult to understand, even to understand how much you owe and to whom. Making the process simpler from the start would make life much easier for lots of students.

The main structure of the new plan would be a joint federal-state grant program in which states paid for 20% of the costs and the federal government the other 80%. In this way, it is similar to the Medicaid expansion that was part of Obamacare in 2010. The Supreme Court ruled that states cannot be required to participate in that program, and some are choosing not to. In fact, a lot about Professor Doyle’s proposal reminded me of health care reform, though on a smaller level.

Unfortunately, given the many challenges facing the country right now, I don’t think a major overhaul of the student aid system is likely to happen. Still, some of the ideas could make their way into public policy — the proposal to tie loan repayment to income and have it by default deducted from a graduate’s paycheck is similar to one proposal in Congress now.

There are lots of other details in Professor Doyle’s report that I haven’t begun to describe — a Race-to-the-Top-style competition for additional funding, institutional competition, different ways of controlling college costs, and others. If you are interested in the future of student aid and college access, the report is definitely worth reading for some of its ideas. There will probably be ideas you agree with and those you disagree with. There certainly was for me. So for that reason, it’s a great way to start a discussion about the goals and methods of student aid.

You can read report here or see the PDF here:

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