America's financial aid system imposes too much debt on college graduates, provides too much taxpayer support to banks making college loans, and demands too little of students assuming them. Last week, Higher Ed Watch staff proposed a new "College Access Contract" that responds to each of these challenges.
Our College Access Contract is a supplement to existing federal financial aid. It would allow low-income students to graduate with zero federal student loan debt and middle-class students to graduate with interest-free loans if they: (1) work hard in high school to prepare for college -- as evidenced by completing a college prep track or scoring college-ready on a placement exam; (2) work or engage in community service while in college an average ten hours a week; and (3) evidence a minimum level of competency in an academic area upon completing college. We suggest that the design of federal student loan subsidies to banks be reformed to pay for the supplemental financial aid / loan forgiveness that our College Access Contract envisions. Why these three conditions?
I. Encourage Students to Work on an Academic Track in High School
In general, federal financial aid is available to any student accepted by any post-secondary education institution -- no matter how rigorous or ridiculous their entrance requirements or degree path. The benefit of this system is that higher education is broadly accessible in America. The problem is that we pay students to learn in college what they should have learned in high school. Approximately 40 percent of college students need to take at least one remedial mathematics or English class in college. Almost 50 percent of four year college students drop out. For remedial students, the percentage is higher.
The single greatest change we could make to improve college graduation rates would be to ensure that all students take a rigorous college preparatory curriculum in high school. High school curricular rigor is the number one indicator of college completionmore important than race, family income, or parent education, according to two major Department of Education studies. Getting high school students to complete a college preparatory curricular track in high school would significantly improve college completion rates, not to mention high school achievement.
II. Reward Working Your Way Through College Instead of Penalizing It
The only thing Higher Ed Watch hates more than the wasteful diversion of billions of taxpayer dollars each year in unnecessary student loan bank subsidies is the federal financial aid work penalty. There is a reduction of 50 cents in federal financial aid for every dollar a student earns above approximately $3,000 over the course of a calendar year. That's self-defeating. We should reward working your way through college, not penalize it.
A College Access Contract should condition new, additional federal student loan debt relief on a manageable work or service requirement. In exchange for debt reduction, students should be required to work at a paid job or perform community service an average of ten hours a week while in college. Regular earnings will reduce the total amount that students need to borrow, and therefore, taxpayer financial aid costs. Beyond that, however, a work or service requirement mitigates the moral and political hazard associated with guaranteeing debt-free college or zero-interest borrowing. Loan forgiveness in the absence of reciprocal responsibility on the part of students encourages more borrowing.
But more important, a work or service requirement is likely to help students do better academically in college. Students who work up to 15 hours a week while in college report that they manage their time better, take their studies more seriously, and study more effectively, according to the U.S. Public Interest Research Group. Fifteen hours a week is the tipping point: more than that, and students studies suffer. But ten hours of paid work a week leads to improved academic performance.
III. Reward Academic Work in College
The excess taxpayer payments to student loan banks, the disregard for academic preparation in high school, the work penalty, and even the grant / loan imbalance all might be more tolerable if students in the end were getting in college the skills they need in the workplace. But too many students are not working hard academically in college and too many colleges frankly are failing students. Consequently, students leave postsecondary institutions ill-prepared for work and thus less able to pay down their sizable student loan debt.
Not only do half of all four year students not graduate, according to the National Assessment of Adult Literacy (NAAL) more than half leave post-secondary education institutions, which includes trade schools, community colleges, state colleges and universities, and private universities, without basic quantitative or literacy skills. According to the latest NAAL report, more than two thirds of those who have pursued some post-secondary training, including college graduates, are unable to comprehend ordinary narrative texts like a newspaper article. Ask employers. They'll tell you, it's not surprising.
We submit that a College Access Contract should condition new debt relief on evidence of leaving school with minimum competency in an academic area. An existing higher education accrediting agency, the U.S. Department of Education, or some other body would have to define minimum competency. It might simply mean graduating with a degree in an academic major from a rigorously accredited institution or, in other cases, passing a critical analysis and communications skills competency test, such as the existing Collegiate Learning Assessment.
Regardless, participating colleges should be required to report results. Public reporting would inspire institutions of higher education to pay more attention to the quality of teaching and learning. Institutions that fail to prepare students to a minimum competency level would have to improve or face a loss in consumer demand.
We believe this type of supplemental, College Access Contract will improve high school performance, college access, and college affordability. But the main reason to embrace if not this exact deal, than this type of overall bargain, is to teach young people that in this life, you don't get something -- even a college education -- for nothing. You have to work for it.
--Intermittently weaved among future blog posts, watch more on the financing, logistics, and political assessment behind our College Access Contract thinking. Even if you don't like elements of our contract proposal, the thinking presented in those posts may be applicable to other high school improvement, college access, and college affordability ideas.