President Obama paints himself as the man who wants to do something about college loan debt.
And college loan debt is a killer: in 2012 the average debt for somebody graduating from a four-year college was $29,000 (up by a fourth from four years earlier).
Democrats tend to favor low interest loans and even debt forgiveness altogether in some circumstances to solve the problem.
But such remedies are–to use an expression the president likes–putting the cart before the horse.
The problem isn't interest on the loans–it's the cost of the degree. Indeed, if the federal government makes loans easier to obtain, colleges will merely find it expedient to raise their tuitions. They can hire more administrators, build more fancy labs, and do things that sparkle but don't contribute to educating young men and women.
In fact, reducing the available loans might be more helpful. Judah Bellin, who studies higher education and minds the Minding the Campus blog at the Manhattan Institute, notes in City Journal:
Smart federal reform—gradually reducing loan amounts or fining schools, say, if a certain percentage of their students defaulted on loans—could help push college costs down again or at least keep them from rising so fast. So far, though, Congress’s efforts to improve college affordability have been either small-bore, such as lowering the interest rates slightly on student loans, or quixotic, such as Senator Elizabeth Warren’s attempt to secure for students the same near-zero interest rate that the Federal Reserve charges big banks—and have not attacked the actual cost structure of the schools.
The good news, according to Bellin, is that the inaction of the federal government is pushing state governments to experiment.
Bellin describes several state attempts (which, it must be admitted, have severe faults) and then gets to a state that has come up with a promising idea…Texas, of course.
Gov. Rick Perry has made education reform a cause of his 14 years in office and his legacy, according to Bellin, may be lowering the cost of a college education in Texas.
Perry may come to be known as the Father of the $10,000 degree:
In his 2011 state of the state address, Perry announced his $10,000 degree challenge. Arguing that the growth of college costs called for a “bold, Texas-style solution,” he asked the state’s public and private colleges and universities to design bachelor’s degree programs with a total price tag of $10,000 or less, and suggested that college administrators “leverage web-based instruction, innovative teaching techniques and aggressive efficiency measures” to do so.
Unlike the less successful plans Bellin cited, the $10,000 degree isn’t a top down program: it is up to each college or university to design such a degree, though Perry’s staff has been involved in the process in several schools. Several schools have come up with new programs. One is the Texas Affordable Baccalaureate Program (TABP):
If successful, TABP could provide a revolutionary new model for American higher ed. Through the program, students can get a bachelor’s degree in applied science, with a focus on “organizational leadership,” mostly online. The program could be completed in three years, for a final tab of just $13,000 to $15,000, its designers say. TABP is currently offered through South Texas College and Texas A&M–Commerce. Students complete 90 lower-division credit hours by working through online “modules” that involve readings, video learning, scenario-based assignments, and tutorials. Once they finish, they take 30 credit hours in upper-division courses on advanced business and managerial topics. The program culminates with a “digital capstone experience,” in which students use the skills they’ve learned to navigate hypothetical business situations.
Van Davis, THECB’s “Director of Innovations,” says that TABP is “changing the way we deliver education.” Perhaps the program’s biggest innovation is that it awards credits for mastery of material, not time spent in the classroom.
The important thing to say about the experiments in Texas under Perry: unlike President Obama, Governor Perry goes after the real villain, the cost of education, not the terms of the loan.