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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

Research after Publication

This section is a resource for readers who would like to follow the discussion beyond the publication date of The Education Solution. At least weekly, papers and articles are published that bear on the issues. In this section, Martin Lowy will comment on the new research and ideas and on how they bear on the book’s thesis. These commentaries also may appear on his blog at join-the-conversation.org.

“There's little disagreement about early education's importance, but funding and policy approaches are a different matter,” Christina A. Samuels wrote in Education Week early in January 2015 under the headline “Consensus on Early Ed. Value, But Policy Questions Remain”.

“[T]he conversation about early-childhood programs, particularly preschool, has in many cases transcended political divides. Red states and Republican lawmakers have taken up the preschool cause almost as eagerly as Democratic politicians in blue states,” Samuels wrote. But many questions remain. One set of questions derives from what Samuels called “the siloed nature of early learning programming”:

There's also the siloed nature of early-childhood programming itself. A single child might receive services through a federally funded homevisiting program as an infant; day-care services paid for by a different federal funding stream as a toddler; a state, federal, or privately financed preschool at age 4; and a state-funded public education on entering kindergarten. The connections between all those programs have traditionally been tenuous or nonexistent, though earlychildhood policy advocates are working to forge closer bonds among the many programs that may touch the life of a child in his or her early years.
I did not discuss this silo problem in The Education Solution. But I think Samuels is making an important point. As I did write, there are hundreds, possibly thousands of local, state and national programs that are designed to help less affluent children and families. And they are not coordinated very well. The Education Solution’s early education program would encompass a great many of those hundreds or thousands of fragmented programs and would, thereby, bring more effective help to parents, children and communities.