Senator Elizabeth Warren has been a vocal, if unsuccessful, advocate for higher-education reform. So far her efforts have either been unrealistic—such as her proposal to reduce student loan interest rates to below 1%—or insufficient, such as her push for student loan refinancing. But in a speech last week, Warren outlined a higher-education agenda that’s ambitious, prudent, and potentially game-changing.
Our national student debt problem has a clear cause: the inflation-outpacing, federally abated rise of college tuition. The Department of Education provides students aid on the basis of their college’s cost of attendance, meaning colleges can raise prices knowing that the federal government will simply increase aid awards.
Warren is likely the most prominent Democrat in recent memory to acknowledge these backwards incentives. “Conservatives are right,” she said. Colleges take advantage of the “availability of guaranteed federal loan and grant dollars” to raise tuition prices. She suggested that most colleges are completely unaccountable, since the federal government’s generosity ensures that “there’s far less pressure to hold costs down or to ensure that their services are worth the price.”
Warren understands that reform must take aim at the problem’s root causes, and that the way to ease student debt burdens is not simply to offer students more funding, but also to change the way we invest in colleges and increase college accountability.
In addition, Warren called for greater accountability from the Department of Education. Noting the department’s frequent failure to respond promptly to data requests and its infrequent testimony before Congress about student debt, she argued that the it must be more forthcoming. Conservatives concerned with government transparency can get behind this proposal, too.
These ideas would certainly help improve the federal government’s return on its investment in higher education. But Warren and like-minded conservatives could go even further. While these proposals would ensure that schools spend their federal aid dollars wisely, it’s worth questioning whether schools should receive a federal guarantee at all. In that vein, Congress might consider making more generous federal aid awards contingent on a school’s graduation and loan-repayment outcomes. Congress could also delink aid awards from the cost of attending a specific college and tie them to an industry-wide cost of attendance, thereby removing the individual subsidy colleges receive.
Warren argued for increasing and making mandatory Pell Grant program spending to give poor students “a real chance at college.” While conservatives might squirm at the prospect of another mandatory spending program, they can certainly support the goal of promoting social mobility through higher education. Moreover, they might note that Congress can also help the poorest students by rededicating funding for programs designed explicitly for students with “exceptional financial need”—such as the Perkins Loans and Federal Supplemental Education Opportunity Grants—that policymakers have slashed in the recent decades.
There’s fertile ground for bipartisan higher-ed reform. Conservative policymakers such as Senator Lamar Alexander and institutions such as the American Enterprise Institute already champion ideas similar to hers. Republicans and Democrats should seize the opportunity.
