Jeb Bush promised a higher education plan back in September, and finally, he’s released one.
The biggest change would be giving colleges “skin in the game” and punishing them for low graduation rates or high student-debt rates.
Bush has spoken about the necessity of reform for colleges, and tapped Andrew Kelly of the American Enterprise Institute and Jason Delisle of New America to serve as informal advisers for his policy. They explained his policy in National Review.
Like Marco Rubio’s plan for higher education, Bush harkens back to Milton Friedman’s idea of income-share agreements. Whereas Rubio sold his plan as funded by investors, Bush’s plan, through the federal government, “would extend a $50,000 line of credit in a flexible account to high-school graduates who wished to enroll in postsecondary education or training.”
That would replace loans, then students would repay “1 percent of their income for 25 years for every $10,000 they used.” Student repayment would be limited to “1.75 times the original amount they draw down,” which means that no student would repay more than $87,500, regardless of future income.
The repayment process would operate through tax withholding, which would “all but eliminate defaults,” according to Kelly and Delisle.
Pell Grants would be available still for low-income students under the Bush plan, and parents could elect to have the IRS assess their children’s eligibility for aid instead of filing the FAFSA.
“Under the new system, then, a college student would start with a set amount of federal aid in an account that follows him through his career. Students will have incentives to spend wisely and more power to chart their own path,” Kelly and Delisle write.
The most meaningful reform from the plan is adding pressure on colleges. Bush advocates risk-sharing for institutions – if students don’t repay, they will have to “share the risk of failure with students.” The consequences are meant to encourage cost reductions and improve graduation rates, as well as make students more marketable so they can find a job quicker.
How that will occur isn’t clear. Reducing federal support for higher education would be the most immediate consequence. If funding were threatened, college admission requirements would tighten. The lackluster 39.4 percent four-year graduation rate would disappear. Accessibility would be a bigger issue overnight, as colleges would be less willing to take a risk on marginal students who are less likely to complete their degree.
For current borrowers, Bush would transfer them into an income-based repayment system. He would also allow private student debt to be discharged in bankruptcy. Income-based repayment lowers monthly payments for borrowers, and after a certain time period, any unpaid debt is forgiven. Graduates and dropouts wouldn’t have that debt hanging over their heads, but the federal government would be responsible for the unpaid difference.
Bush also wants to make information on student outcomes publicly available and “expand access to new models of education.”
His full plan is substantive and makes Bush only the second Republican candidate to detail an approach to higher education. Higher education policy has been a top concern for millennials, along with the economy, but the campaigns have spent little time addressing college reform.
Jeb! needs to detail how he would make colleges have “skin in the game” based on student outcomes, as well as the possible negative affects to accessibility his plan might have. Finally, however, Republican candidates have taken higher education policy seriously.
