Over the past few decades, increased tuition costs for US undergraduate and graduate programs have been accompanied by accelerating student debt. On Wednesday, education and economics experts gathered at AEI to discuss the effects of easy access to government credit that encourages debt and facilitates tuition hikes. Overall, panelists agreed that institutions of higher education benefit the most from student loans and therefore ought to share the losses of their students’ defaults — that is, those institutions ought to have more “skin in the game.”
New America Foundation’s Jason Delisle argued that unlimited borrowing and loan forgiveness at the graduate level unnecessarily take away resources that could be used to open pathways to undergraduate degrees. Ohio University’s Richard Vedder reinforced this point in his discussion of the unintended consequences of the 1978 College Opportunity Act, which promoted increased tuition costs.
While Matthew Chingos of the Brookings Institution argued that the hype surrounding the student loan bubble is not justified by the relation between debt and wages, AEI’s Andrew Kelly pointed to a growing demographic of Americans who incur debt without competing their degree. Finally, AEI’s Alex Pollock ironically suggested a wealth tax on the biggest 1 percent of college endowments to finance the cost of student loans, pointing out the severe inequality inherent in the fact that 1 percent of colleges have 51 percent of endowment assets.
In the last 10 years, the number of student loan borrowers has more than doubled, and outstanding student debt is now $1.2 trillion. The average borrower owes almost $30,000 upon graduation, but average wages for recent college graduates have declined. Nearly 15 percent of borrowers default on their loans within three years of graduating, suggesting that we are in the midst of a crippling higher education “bubble.”
Policymakers are scrambling to solve the student debt problem. Advocates have pushed for lower interest rates and more generous loan forgiveness programs, while reformers have touted income-share agreements and called for colleges to bear some of the responsibility for defaults. Please join AEI to explore new research on and discuss possible solutions to the student loan bubble.
Registration and Lunch
Matthew Chingos, Brookings Institution
Jason Delisle, New America Foundation
Andrew P. Kelly, AEI
Richard Vedder, Ohio University
Alex J. Pollock, AEI
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For more information, please contact Brian Marein at [email protected], 202.862.5890.
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Matthew Chingos is a fellow at the Brookings Institution’s Brown Center on Education Policy. He has written extensively on class-size reduction, teacher quality, and college graduation rates. Chingos’s first book, “Crossing the Finish Line: Completing College at America’s Public Universities” (Princeton University Press, 2009), was coauthored with William G. Bowen and Michael S. McPherson. His work has also been published in academic journals including Education Finance and Policy, Economics of Education Review, the Journal of Policy Analysis and Management, and the Quarterly Journal of Political Science, and he has received support from the Laura and John Arnold, Lumina, Smith Richardson, and Spencer Foundations. Chingos studies a wide range of education-related topics at both the K–12 and postsecondary levels. His current research examines online learning, the quality of postsecondary instruction, student loan debt, public employee pensions, and the effects of school districts and their leaders.
Jason Delisle is director of the Federal Education Budget Project at the New America Foundation, where he develops and manages content for the project, writes issue briefs on the education budget process, researches federal education policies, and develops new policy proposals. He also oversees the management of a database of information on federal funding for every school district and institution of higher education in the country. Delisle regularly publishes articles on the project’s blog, EdCentral.org. He has been featured on numerous national television and radio programs including PBS’s “NewsHour,” ABC’s “World News Tonight,” and American Public Media’s “Marketplace.” His work has been cited in many national media publications including The New York Times, The Washington Post, National Review, Congressional Quarterly, and National Journal. Before joining New America, Delisle was a senior analyst on the Republican staff of the US Senate Budget Committee, where he played a key role in developing education legislation. From 2000 to 2006, he was a legislative aide in the office of Representative Thomas Petri (R-WI).
Andrew P. Kelly is the director of the Center on Higher Education Reform and a resident scholar in education policy studies at AEI. His research focuses on higher education policy, innovation, financial aid reform, and the politics of education policy. Previously, he was a research assistant at AEI, where his work focused on the preparation of school leaders, collective bargaining in public schools, and the politics of education. His research has appeared in the American Journal of Education, Teachers College Record, Educational Policy, Policy Studies Journal, and Education Next as well as popular outlets such as Education Week, Inside Higher Ed, Forbes, The Atlantic, National Affairs, The Weekly Standard, and The Huffington Post. He is coeditor of “Stretching the Higher Education Dollar: How Innovation Can Improve Access, Equity, and Affordability” (Harvard Education Press, 2013), “Getting to Graduation: The Completion Agenda in Higher Education” (Johns Hopkins University Press, 2012), “Carrots, Sticks, and the Bully Pulpit: Lessons from A Half-Century of Federal Efforts to Improve America’s Schools” (Harvard Education Press, 2011), and “Reinventing Higher Education: The Promise of Innovation” (Harvard Education Press, 2011). In 2011, Kelly was named one of 16 “Next Generation Leaders” in education policy by the Policy Notebook blog on Education Week.
Alex J. Pollock is a resident fellow at AEI. Before joining AEI, he was president and CEO of the Federal Home of Chicago from 1991 to 2004. Pollock focuses on financial policy issues including financial cycles, government-sponsored enterprises, housing finance, banking, retirement finance, corporate governance, the housing bubble, financial crises, and the ensuing political responses. He is the author of “Boom and Bust: Financial Cycles and Human Prosperity” (AEI Press, 2010) and numerous articles and congressional testimonies. Pollock is the lead director of CME Group, a director of the Great Lakes Higher Education Corporation, a past-president of the International Union for Housing Finance, and chairman of the Board of the Great Books Foundation.
Richard Vedder is distinguished professor of economics at Ohio University, director of the Center for College Affordability and Productivity, and an adjunct scholar at AEI. He previously served as a member of former US Department of Education secretary Margaret Spelling’s Commission of the Future of Higher Education. Vedder has written widely on American economic history, authoring such books as “Out of Work: Unemployment and Government in Twentieth-Century America and The American Economy in Historical Perspective” (NYU Press, 1997) and “Going Broke by Degree: Why College Costs Too Much” (AEI Press, 2004). Vedder is also the author of numerous scholarly papers for journals in economics and public policy, as well as shorter pieces for the popular press including The Wall Street Journal, The Washington Post, the Christian Science Monitor, The American, the CATO Journal, and Forbes.