Commentary

Rubio Misses Cutting Subsidies for Student Loans

I know that Sen. Marco Rubio (R-FL) is running for President, and the natural inclination is to speak as if he will personally transform things. But the higher education reforms laid out in his recent Des Moines Register op-ed — not just his repeated use of “I” to say who will make the reforms — lend credence to the concern that, rather than getting government out of college funding and out of the way, he will retain, even if in some possibly improved form, federal control.

Rubio starts off on a good note, saying that, “I will reform our accreditation system to welcome low-cost, innovative higher education providers, which are currently being blocked by the existing institutions that control accreditation.” That’s a fine inclination, but keep in mind that the accreditation clot is primarily a symptom or an insidious root disease: federal student aid. The main reason accreditation is de facto required is that it is needed to get access to Pell Grants, federal student loans, etc. And, of course, the price of not having access to those things is a gigantic competitive disadvantage.

It is the next two paragraphs that really fire my fear neurons, both with how autocratic they sound, and more importantly, what Rubio proposes to do…or not do:

Next, I will help students and families earn the right degree at the right price from the right institution for them. I’ll require schools to tell students how much they can expect to earn with a given degree before they take out the loans to pay for it. I will open financial aid programs that allow working students to go to school at night, online, and on weekends. I will make career and vocational education more widespread, even allowing high school students like those President Obama will be speaking to today to graduate with a certification to instantly enter a good-paying career.

I will create new alternatives to student loans. I will also tie traditional loan repayment to each graduate’s income, enabling those who earn more to pay back their loans faster and those who earn less to make smaller payments over a longer period of time. This will dramatically reduce the financial risks of earning a degree.

The constant use of “I” belies the fact that a president is not given the power to do any of these things unilaterally. (Of course, the Constitution doesn’t empower the feds to do any of these things at all.) This is especially concerning given how happy the current POTUS has been to skip the legislative process and just coerce his preferred policies.

From a policy perspective, the biggest, most billowy red flag is that Rubio does not even mention eliminating, or at least substantially reducing, federal student aid. Heck, it appears he might expand it. But federal student aid is absolutely the primary problem in higher ed!

Massive federal subsidies underlie most of higher ed’s problems, and Rubio does not appear to seriously target them.

Income-share agreements — likely one of his “new alternatives” — would be better than traditional student loans, especially for repayment, with a graduate paying back a percentage of earnings rather than a uniform monthly installment regardless of her income. But if the ISA were to come through government, especially without concern for a student’s ability and desire to handle a meaningful, rigorous program — the case with federal loans — it would still fuel massive overconsumption of higher ed, resulting in continued completion debacles, credential inflation, etc. Same goes for income-based repayment of loans. Oh, and skyrocketing prices would keep on rising.

How about requiring schools to tell students how much they can expect to earn from a degree?

First, lots of information along these lines already exists but appears to be readily ignored. Conceivably, though, having schools report such figures directly to prospective students will get them to pay more attention. That said, to obtain the information schools will either have to survey their alums, by major, every year, almost guaranteeing a lot of nonresponse, or Washington will have to collect the info, a potentially troubling privacy invasion, especially for students who did not use federal aid. Perhaps most important, average performance for previous grads will not necessarily equal performance for any individual, future graduate. And the outcome for any school will likely have a lot more to do with the quality of its students than what the school itself does.

Post-secondary education needs to be loosened up so it can much more effectively meet rapidly changing needs. But massive federal subsidies underlie most of higher ed’s problems, and Rubio does not appear to seriously target them.

Neal McCluskey is the associate director of the Cato Institute’s Center for Educational Freedom.