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Why not student debt?

The Education Solution proposes replacing federally guaranteed student debt, as well as Pell grants and tax benefits for higher education expenses with a stipend of up to $10,000 a year that would be available for tuition and fees to any qualified high school graduate attending a qualified school. Rather than being a loan, the stipend would be repayable only as a tax of 2.5% of a former student’s income, plus 1.5% for an additional ten years after repayment. A qualified school could be a 4-year college, a 2-year college or a trade school. $10,000 is sufficient to pay tuition at most in-state 4-year public colleges.

The principles behind the stipend program are:

  1. All federal support for college students should be repayable to the extent that the student succeeds economically.
  2. An equity partnership between the nation and the former student is fairer to both sides than a debtor-creditor relationship.
  3. No former student’s life should be adversely affected in any significant way by the support the nation gave for schooling.
  4. The government should be at least reimbursed, on average, for amounts it advances to support students’ educations.

The current system offers different types of assistance to students whose families have different levels of income. But Pell grants do not pay enough even for most 4-year in-state public colleges; tax benefits do not help lower-income students very much; tax benefits help high-income students somewhat (but not a great deal); therefore a majority of students from all income levels except the highest end up also taking subsidized loans. Those loans have, historically, had high delinquency rates, which have caused high levels of anxiety as well as ruined credit for a great many Americans who either have tried to get degrees and failed or have earned degrees but have not succeeded economically. That is not fair to the students.

It is not fair to the taxpayer that Pell grants and tax benefits are never repaid, no matter how successful the student becomes economically.

The current system, for these reasons, does not work properly for the taxpayer or for low-income families or middle-income families. And it provides tax benefits to wealthy families that they do not need.

The current system also is so complex that college counselors, who should be spending their time and knowledge helping high school seniors to choose the college that is best for them, end up spending a great deal of their time keeping up with the complexities and helping students and parents negotiate the system. The stipend system would help college counselors to do their jobs more efficiently.

Martin Lowy

February 28, 2015

The Proposed Early Education Program

The important criteria for the early education program are:
  1. It begins from birth (or earlier).
  2. It must target health and parent education as well as the child’s education. One of the factors that seem consistently to enhance early education efforts is home visits.
  3. It must be professionally run. The teachers and health care professionals have to be professionals, not neighborhood volunteers.
  4. Men must be attracted to do some of the work because many of the boys would do better with male supervision.
  5. Everyone in the program has to understand and embrace its goal that these kids are going to go to college or another form of post-secondary school and this is their first step.

The program also should cover enough hours—at least for children of two or older—to serve as a meaningful part of childcare for working parents. And it should be voluntary. Parents should have the right to opt out if they do not want the assistance, but participation should be the default option.

Assume that of the 4 million babies born in the United States each year, we are going to provide significantly more help to a million of them. During the first five years of life, we are going to give them a new program that provides health care and education both for them and for their parents. They will need that care and education in order to get them ready for kindergarten so they will not be behind kids that are better off and, especially for boys, so they will have the needed behavioral skills.

Assume that each year the public is going to need to spend an average of $14,000 on each such child (about 50% more than the cost of Head Start per child). Since the program is projected to cover five years, from birth to kindergarten, the total federal cost per year will be a little over $80 billion, net of the approximately $9 billion that Head Start currently costs, and it would cover something on the order of six times the number of children-years as Head Start.

Local Initiatives, Reporting and Management

Though the program needs federal funding, it should have local flexibility and a significant degree of local governance. We envision a program with local flexibility, as well a key role for non-profit foundations in providing quality control. In our formulation, the foundations also would have to provide a small percentage, say 10%, of the local program’s funding requirements. (Head Start often requires 20% to be provided locally.) That would ease the federal funding burden, but, more importantly, it would provide an interested overseer from outside the government. Local groups (that might include local school systems or other established education and care providers) could apply for the federal funding, but they could not do so without a committed non-profit foundation.

Annual review, measurement and public reporting are integral to each local program. Three annual reports on each local program would be required: One by the program itself, one by the supporting foundation, and one by a previously selected academic institution. All the reports would be filed with the government and would be publicly available online. The objective of this reporting regime would be to provide prompt feedback to the program administrators and a way for parents and the community as a whole to have input and to provide support or criticism. The program design is explained in more detail in Appendix F that is available on this website.

This program design permits communities to utilize and expand their existing local programs.

For more information about how the program would work and why it would be effective, please click on the link to buy the book.

To share your thoughts on the early education program, please go to join-the-conversation.org, where we would like to hear from you.