“Educare for all” would free students from overwhelming debt

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When President-elect BidenJoe BidenUS intelligence report on COVID-19 origins inconclusive: WaPo NBC correspondent: History will remember Afghan withdrawal as ‘very dark time’ Defense and national security overnight : Outcry over Biden Afghanistan deadline MORE takes office in January, he may, depending on which party controls the Senate, have the opportunity to resolve the nation’s problems $ 1.6 trillion student debt problem. Debt and uncontrollable costs have become a permanent feature of American higher education. The average amount of debt of college graduates in 2019 was $ 29,000. It is $ 65,000 for master’s degrees and over $ 100,000 for students with professional degrees. These debt charges are worn disproportionately by students of color and contribute to the persistent inequality of racial wealth.

Students shouldn’t start their careers under the oppressive yoke of debt, because they owe the most when they earn the least. For this reason, debt relief, which was proposed by Sens. Elizabeth warrenElizabeth WarrenFCC proposes M fine against Tory activists for robocalls Progressive GOP Senator urges Biden to rename Jerome Powell MORE (D-Mass.) And Bernie sandersBernie Sanders On the money: House Democrats break internal deadlock to adopt .5T budget plan (I-Vt.), Would be welcome. However, the periodic cancellation of student debt does not replace a comprehensive approach to financing higher education.

What if, instead of the current system, students could apply to schools – vocational, college, graduate, and vocational – knowing that their tuition and other fees would be covered? The federal government would pay tuition fees to schools on behalf of enrolled students, and it would monitor schools for cost and quality. These payments would be financed by a progressive income tax. This model may sound familiar because it is a version of Medicare for education. Call it “Educare for All”.

Under Educare, the government would commit to funding the full cost of education – tuition, fees and related expenses – for all students except the very wealthy. Students would be assigned a percentage share of the cost of attendance based on their family’s income and assets. For most students, the co-payment would be zero, but students from wealthier families would pay a fraction of the tuition at each school. Students could apply free of charge to a fixed number of establishments and to any establishment knowing that they could attend if they were admitted.

Since students would no longer be incentivized to choose schools on the basis of price, the government, as the payer, would have to monitor the cost and quality of each institution. It would be a welcome change from the current market in which students are often overcharged for degree programs that offer few benefits, and tuition fees consistently exceed inflation due to reduced public support, increased salaries for professors and administration and expensive equipment. As with Medicare, all educational institutions would be required to accept Educare, and the government would determine an appropriate reimbursement per student for each institution based on the cost and quality of its services. This reimbursement would correspond to the tuition fees of each student eligible for Educare.

Educare would end the student debt problem as we know it and encourage more students to pursue higher education at all levels. It would also advance the cause of equality in higher education. Higher education institutions should not function as finishing schools for the rich. Still in the 70 or so level 1 colleges10 percent of students come from families with incomes in the top 1 percent, while only 4 percent come from families with incomes in the bottom 20 percent. This system of financial exclusion must end. Educare would put every college, college and vocational school within the financial reach of students from working-class and middle-class families.

How much would Educare cost? Americans spend about $ 150 billion per year on higher education. Suppose that Educare covers $ 120 billion in expenses, which is a high estimate given that Educare would cut costs by imposing fiscal discipline on schools. Americans already borrow nearly $ 80 billion a year from the federal government for higher education spending, so Educare would effectively convert the government’s investment in students from debt payable in fixed installments to equity paid. as a progressive percentage of income. Educare would then need an additional $ 40 billion annually, which makes it fiscally comparable to Senator Sanders’ “College for All” planexcept that Educare would cover all higher education programs.

It is widely accepted that both student debt and higher education spending are on unsustainable trajectories. What we need is a plan that allows all students, not just the rich, to apply to any school they qualify for, to attend any school they are in. admitted and launch their careers without getting into debt, while reducing the cost of education. By achieving each of these lofty goals, Educare would establish a system of financing higher education that is both responsible and fair.

Prasad Krishnamurthy is Professor of Law at UC Berkeley, where he teaches and writes in the area of ​​financial regulation.



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