Higher Education and how we pay for higher ed has entered the political debate more and more in recent years. The issues are sure to be part of the 2016 election cycle. In this month’s interview, Andy Hibel speaks with Andrew P. Kelly of the American Enterprise Institute about the need for reform and the place of politicians in this important conversation.
Andrew Hibel, HigherEdJobs: Your background is in higher educational policy, financial aid reform, and innovation in higher education. How did your interest in higher education policy develop and what led you to your current position?
Andrew P. Kelly, Ph.D., American Enterprise Institute: My interest in education and education policy certainly stemmed from my early years as an American Enterprise Institute (AEI) research assistant working for Rick Hess. Once I was exposed to the education policy world, with its politics, intrigue, and cast of characters, I was hooked. AEI’s education program has an amazing platform that allows me to interact with and reach a diverse audience and contribute to the policy debate.
Having some education after high school has become, more expensive, riskier, and more important to economic success and mobility than ever before. This has put families in a bind: many feel they can’t afford education after high school, but they recognize that the cost of not going has never been higher. Yet our current system of policies and institutions is woefully ill-equipped to deal with these new demands and challenges. Colleges (and financial aid programs) are typically set up with a particular student in mind – the first-time student between the ages of 18-24 who attends full-time. But, that student is increasingly outnumbered in American higher ed, and our policies and institutions need to change to better serve the needs of a changing student body. Existing colleges are unlikely to do it out of the goodness of their own heart, so the question is how we create incentives for existing institutions to change and for new ideas to enter the market and compete.
Hibel: You are the director and a resident scholar at AEI. How does your work affect the constituents of the higher education community?
Kelly: I would say that our work seeks to affect the higher education world by shaping the debate among policymakers, researchers and observers. The idea is to make our ideas and our perspective part of the bloodstream, if you will, such that leaders solicit our work as they develop policy and others-including opponents-have to acknowledge and tangle with the arguments that we make in their own work. . We also pride ourselves on being important sources for journalists who are trying to make sense of the higher education news of the day.
Perhaps more importantly, though, our work on higher education reform has provided a broad agenda in an environment where leaders on both the left and the right are desperately searching for new ideas. Our work has served as a model for numerous legislative proposals and discussion drafts, in part because we’re thinking bigger than many other groups. Rather than tweak the existing system, layer new programs on top of the old, and otherwise leave the status quo intact, we’ve worked to come up with ways to transform the market. We don’t want to “blow up” the existing system as much as we want it to feel compelled to compete for students.
Hibel: You recently wrote an article on Three Things to Watch in Higher Ed This Year with one of the topics being the priorities of Sen. Lamar Alexander, the Republican Chairman of the Senate Committee on Health, Education, Labor and Pensions. In your article you state that, “It seems safe to say that forcing existing accreditation agencies to change will not be a high priority.” What are the negative consequences of the accrediting agencies not changing?
Kelly: I think I would probably start my answer by revising this somewhat; Chairman Alexander released a forward-looking white paper on accreditation reform that laid out a series of options, some of which would reform the way accreditors do business. He seems interested in changing that system to improve quality assurance, and I look forward to seeing in which direction he chooses to go.
In terms of negative consequences of the status quo, I think there are two. First, we’d continue to suffer through waste, fraud and abuse that comes with inadequate quality assurance. Accreditation agencies are not ensuring even a bare-bones level of quality at this point. That’s putting students and taxpayers at risk.
Second, the accreditation system will continue to serve as a barrier to entry for new ideas and competitors. To get accredited you have to award degrees or certificates and must have served students for a certain amount of time. But attracting students without any access to financial aid is difficult, and you can’t get access to financial aid without being accredited. What’s more, accreditation reviews are input-focused, essentially asking “how much like a traditional college are you.” They measure faculty credentials, physical plant, learning resources-all the trappings of a traditional college. That means they’re skeptical of new organizations that look nothing like a traditional college even though they may be helping students learn. A failure to reform accreditation would lead to more anti-competitive behavior.
Hibel: In your article you also mention that other priorities will be “deregulation of existing colleges and universities, and continued effort to put the brakes on the Obama Administration’s gainful employment and college ratings policies.” What do you think of these priorities and what will each of their impacts be if implemented?
Kelly: In general, I think the committee’s deregulation agenda is laudable. It is an attempt to curtail unnecessary regulations that have accumulated over time and are extremely burdensome for existing institutions. I would say, though, that deregulation should not stop with existing institutions, but should be extended to peeling back the regulations new institutions face when trying to enter the marketplace as well.
Secondly, leaders are right to prioritize putting the brakes on gainful employment and college ratings. Gainful is arbitrary and full of carve-outs for favored constituencies, while the ratings dramatically overestimate the federal government’s wherewithal to rate the top to bottom quality of higher education. Matching students to colleges is not the role for the federal government, but actors that are closer to the ground and who can customize resources to reflect the preferences of different consumers.
Hibel: Senators Mike Lee (R-UT) and Marco Rubio (R-FL) propose developing a path to federal aid that does not rely on accreditation agencies. What will the impact be if Alexander supports these efforts?
Kelly: Last year, Senator Lee proposed the Higher Education Reform and Opportunity (HERO) Act that would devolve the power to recognize accreditation agencies to states that applied for such power with the Secretary of Education. All accredited programs would be eligible to receive federal student loan money. The bill represents one route towards creating an alternative to the current system of accreditation. This could solve one of the biggest problems with the status quo: accreditors are not interested in approving new, innovative providers. A set of new actors would be friendlier to innovation and experimentation.
If Senator Alexander supported the Lee proposal it would be an important rhetorical vote of confidence, although the idea would have a long way to go before it was enacted.
Hibel: In a recent statement, Alexander said that there are two bipartisan bills introduced addressing key issues in the Higher Education Act (HEA), which include the FAST act to simplify the student aid system and the REPAY act to simplify student loan repayment. These seem to be positive steps for the borrower. What are your thoughts on if these acts will be approved?
Kelly: Federal Student Aid (FAFSA) simplification is a priority of both the Right and Left. As such, I could see the FAST act gaining traction in the HEA Reauthorization. One caveat: observers have expressed concern that the bill as currently constructed may be too simplified and that critical information on a student’s financial circumstances could be lost in the process. Thus, if passed in Reauthorization, the FAFSA may not be as simple as what is proposed in the FAST act.
There’s also much agreement on both sides that loan repayment processes are currently too complicated, which leads to confusion and inaction among borrowers. As such, I would say that many of the ideas in the REPAY act stand a decent chance of approval as well.
Hibel: In his statement, Alexander also said, “Senator Murray and I are going to work together on a bipartisan process for reauthorizing the Higher Education Act and we hope to produce a bill this fall.” Do you have any thoughts on what will be included in the bill this fall?
Kelly: So far, the Senate HELP Committee has held hearings on higher education deregulation, consumer information, institutional risk-sharing (in which I testified), college affordability and student loans, and accreditation reform. I think that it’s fair to say that these five topics will be discussed and debated in the HEA Reauthorization.
Sen. Alexander has always emphasized higher education deregulation, including during the last reauthorization and in the previous months. I think the bill will focus in large part on attempting to clear out some of the redundant regulatory underbrush that colleges have to deal with. Additionally, institutional risk-sharing – putting colleges on the hook for a portion of students’ defaulted loan dollars – has garnered a large amount of bipartisan support lately, by the likes of Representative Paul Ryan (R-WI) and Senator Elizabeth Warren (D -MA). And of course, FAFSA simplification and streamlining repayment options seems likely as well.
Hibel: What are the priorities of higher education reform that need to be addressed that haven’t by the current committee?
- Create space for new financing tools. Up to this point, the HELP Committee has not held hearings on new, private financing options for higher education. Over the past year, we have written in great length about the potential of Income Share Agreements (ISAs), through which a private firm could pay for a student’s education in exchange for a percentage of his/her income over time. Right now, the growth of these financing arrangements has been stunted due to a lack of legal clarity, but provisions could be included to shore up the ISA regulatory environment.
- Research and Development. I would also say there is a clear federal role for funding research to get a better sense of what works in education. Unlike the college ratings, this is one of the tasks that the federal government is actually well suited to perform – and the sector could only stand to benefit from more research on effective interventions and policies.
All opinions expressed by Andrew Kelly are his own and do not necessarily reflect those of HigherEdJobs.