The Most Important Piece of the Democrats’ Plan to Reauthorize the Higher Education Act

As if there weren’t enough higher education stories this week—from the downfall of one of the most notorious for-profit colleges, to a Brookings study that it seems everyone in the world (including yours truly) weighed in on—Tom Harkin, Chairman of the Senate Health, Education, Labor, and Pensions Committee, released the opening salvo in the reauthorization of the Higher Education Act, the law that governs the vast majority of the federal government’s role in higher education. You can read all 785 pages here, if you have that kind of time.

Right on cue, House Republicans also outlined their principles for HEA reauthorization, teasing what is likely to be a long, drawn out battle on how to allocate (or in the GOP’s case, whether to allocate at all) federal funds to improve college access, affordability, and attainment.

Given the inherent hugeness of the HEA debate—from federal grant aid, to student loan origination and repayment, to how to hold colleges accountable, to funding for pilot programs, HBCUs and Hispanic Serving Institutions, to better consumer information—it’s easy to get caught up in twelve discussions at once. Indeed, some contours of agreement can be seen around streamlining loan repayment options (there are 9, currently) on federal student loans, simplifying the financial aid application process, as well as reinstituting the ability to use Pell Grants year-round (though again, there will be harsh fights on whether this is done by cutting eligibility or aid elsewhere). There are likely to be huge fights over institutional accountability (especially with regard to for-profit schools) and how much leverage the federal government should have over institutions of higher learning on a variety of fronts.

But before we get lost in a years-long debate, nestled in Part H (section 499!) in the Democrats’ laundry list of ideas is an idea that has by far the most potential to solve one of the most vexing problems in higher ed: the rising cost of college. According to the release, Harkin’s bill would create a “State-Federal College Affordability Partnership to increase state investment in public higher education and lower the costs of tuition for students.”

Frankly, if Congress gets this right, that’s a lot of the ballgame.

Let’s backtrack for a moment. As Demos and others have shown time and time again, a massive part of the rise in costs at public schools has been state disinvestment. It’s a main reason that the federal government has taken on a larger role in financing college. It’s a main reason that tuition growth at public schools is outpacing that of private non-profit schools. And it’s a main reason that college is no longer the debt-free proposition it once was for most students just a generation ago. As states have been derelict in their obligation to fund higher education—just as more students are being encouraged to attend and just as the maximum Pell Grant has failed to keep pace—much of the undergraduate debt burden has fallen on students.

What a federal-state partnership has the power to do is eschew the traditional remedy of dealing with college costs—sporadically increasing grant aid, offering a few more generous loan terms, helping with repayment—by attacking the cost drivers in the first place.

That’s why several organizations—including (spoiler alert) Demos in an upcoming policy paper—have advocated for the federal government to use its leverage to get states to do their part.

Harkin’s proposal would act as a matching grant to states whose per-student level of support exceeded a certain level (in this case, 50% of the maximum Pell Grant, or $2,865), with a marginal increase in federal matching funds for states who increase funding levels. Funds would have to be spent 100% either to directly reduce tuition costs (or reduce the need to increase costs) or to support enrollment of low-income students, in addition to reporting requirements.

Of course, this only covers public institutions (and of course, the bigger the commitment to states, the more likely they’ll be to participate). But that’s still a huge piece of the puzzle. Around 75% of students attend public schools, and two-thirds of bachelor’s recipients and slightly less than half of all associate’s degree recipients from public schools borrow in order to finance their degrees. That is a radical shift from how we’ve previously designed our system of higher education financing, and it has a lot to do with states pulling back funding.

It also undermines conservative arguments that the primary driver of college costs is government support. As the argument (colloquially known as the “Bennett hypothesis”) goes, schools see federal dollar signs as a cash cow through which they can pocket money and pass along costs to students. There’s very little evidence that this is happening at the public undergraduate level anyway, but when you keep in mind that state support is also a form of government support, and that it has been falling dramatically as tuition has risen, it would give a lot of credence to increasing public support in order to keep costs to students down.

Finally, this week, Demos released—in conjunction with several of our partners, including the United States Students Association, AFT, the AFL-CIO, and LULAC —a letter outlining the need to return our system of higher education financing to one that is more equitable, and one that achieves what was once a promise of debt-free higher education, primarily through a federal-state commitment to reducing costs to students. It’s a great first step that the Harkin bill proposes to do just that.