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First EditionPublished by:All Rights Reserved: Copyright © 2015 by Conservative Reform NetworkNo part of this book may be reproduced or transmitted in any form or by any means, electronic ormechanical, including photocopying, recording, or by any information storage and retrieval systemwithout written permission, except where permitted by law.Printed in the USA4.


Dear Reader:The Conservative Reform Network (CRN) recognizes that today’schallenges won’t be met by yesterday’s solutions. That’s why weare eager to deliver a new series of important policy papers thatwill offer fresh, innovative solutions to some of the biggest policychallenges facing America—practical solutions that are ready to beput into action.Building on the tremendous success of our 2014 essay collection,Room to Grow: Conservative Reforms for a Limited Governmentand a Thriving Middle Class, we are pleased to bring you Room toGrow: A Series. Each briefing book in the series will tackle a specificset of domestic policy challenges and provide thoughtful analysisfrom a leading expert in the field. CRN commissioned this seriesof more than a dozen briefing books to show how a conservativeagenda can empower individuals by replacing failed one-size-fits-allgovernment programs with policies that foster opportunity, choice,and competition. It is our belief that the demonstrable failure of theliberal welfare state provides an opportunity to advance conservativereforms, firmly rooted in our constitutional order, that advance theaspirations of all Americans.The books in this series were the subject of a conference that tookplace in Middleburg, Virginia, this April. We are deeply grateful tothe authors and the other talented policy experts who engaged inlively discussions about these pressing issues during the conference.We owe special thanks to Yuval Levin and Ramesh Ponnuru, whoskillfully edited all of the books in this series. They were there whenwe first conceived of this collection of reform conservative ideas,and together with Pete Wehner, have continued to offer supportand direction. We are grateful for the invaluable advice of KarlynBowman, who reviewed our public opinion data. And we offer oursincere thanks to the Conservative Reform Policy Center and itsdonor, the Lynde and Harry Bradley Foundation, whose generositymade this project possible.Sincerely,John MurrayChairmanApril PonnuruSenior AdvisorStacey JohnsonExecutive DirectorNeil BradleyChief Strategy OfficerKate O’BeirnePolicy AdvisorThe Conservative Reform Network (CRN), organized as a non-profit 501(c)(4), is the leadingorganization supporting the Conservative Reform Movement by producing, incubating,and promoting ideas, policies, and efforts to grow the American economy, expand themiddle class, and create opportunity for all Americans. All section 501(c)(4) organizationsmust operate primarily to advance social welfare. The Conservative Reform Policy Center(CRPC) is organized and operated as a non-profit 501(c)(3) educational organization andis affiliated with CRN.4. 5.


A CONSERVATIVE AGENDA FORHIGHER EDUCATION REFORMANDREW P. KELLYEDITED BY YUVAL LEVIN AND RAMESH PONNURUWhen Americans think about opportunity and mobility, we thinkabout higher education. Nearly three-quarters of Americansbelieve that getting a credential beyond high school is necessaryto find a good job, and more than eight in ten believe it willbecome even more critical in the years ahead. 1 But after yearsof relentless tuition hikes, families increasingly feel trapped,forced to choose between taking part in a system where costshave skyrocketed while benefits have become more uncertainand consigning young adults to a lifetime of low wages. Seventysevenpercent believe that higher education is not affordable forthose who need it, 2 and only 40 percent believe higher educationdoes a good or excellent job of providing value for the money. 3Not surprisingly, affording college has come to preoccupyAmerican families. Fully 93 percent of survey respondents seecollege costs as an obstacle to getting ahead. 4 When askedwhich reforms would help the middle class the most in onerecent survey, more respondents chose “making college moreaffordable” (38 percent) than any other answer; cutting the cost ofhealth care came in a distant second. 5These anxieties reflect real, structural problems in Americanhigher education and in public policy. Tuition at public four-yearcolleges has nearly quadrupled since the early 1980s, and 70percent of students now take on debt to finance their education. 6More than half of the students who set out to earn a collegecredential fail to be graduated within six years. 7 Workers whoattended college for some time but did not get a degree now6. 7.


A Conservative Agenda for Higher Education ReformANDREW P. KELLYearn little more than high school graduates—but many of themhave still taken on debt. 8 Effective delinquency rates on studentloans are now as high as they were on subprime loans during thehousing crisis. 9Liberals insist that we can solve these problems by spendingmore on student aid. Unfortunately, their standard approach—increase spending, watch tuition rise, increase spending again—has made the problem worse.At best, conservative policymakers have acted as an importantcheck on wasteful spending (and wrong-headed regulation), butthey have largely failed to enunciate their own agenda. At worst,they have sent a tone-deaf message to middle-class voters,complaining that “too many people go to college” and suggestingthat reducing or eliminating federal aid would solve our problems.Both strategies have ceded the rhetorical high ground to the left,allowing liberals to focus the debate on how much money wespend rather than how we spend it.In each case, they should transform the features of the highereducationsystem that blunt real competition. On the demandside, easy credit combined with under-informed consumers andinadequate quality assurance has enabled poorly-performingcolleges to continue to attract students. On the supply side,accreditation requirements keep new ideas and potentialcompetitors out of the market, thereby limiting the optionsavailable to students and protecting the market share of highpriced,low-value programs. Though the proposals outlined belowfit together into one agenda, making progress on any of themwould be a step in the right direction.An alternative vision for higher-education policy should not seekmerely to pour more money into a broken system—or, for thatmatter, just to pour less money into a broken system. Instead,policymakers should create space for new postsecondary optionsand financial-aid tools that better reflect the needs of today’sstudents and can foster more competition.Specifically, conservative reformers should:• create more effective, sustainable ways to pay for college;• give institutions a greater stake in their students’ success;• break down barriers to entry for new postsecondary options;and• empower consumers to make wise investments.8. 9.


A Conservative Agenda for Higher Education ReformANDREW P. KELLYAverage Net Price of Attendancejust one percentage point (from 23 to 24 percent). 13 More studentsare enrolling, but far too many drop out.That is true, in part, because the flood of federal money givescolleges every incentive to enroll students, but less reason toworry about whether they are successful. Easy credit also putslittle pressure on institutions to keep their tuitions low, and likelyencourages some to increase them. 14 It has also allowed states toshift funding from higher education to other priorities. As a result,though the federal government has spent record amounts ongrants and tax credits, those investments have been washed outby continued tuition increases.$30000.00$25000.00$20000.00$15000.00$10000.00Figure 2: Average Net Price of Attendance By Sector, Selected Years (2012 Dollars)$5000.00$0.00PUBLIC TWO-YEAR PUBLIC FOUR-YEAR PRIVATE FOUR-YEAR$24,000$14,100$10,300$25,600$15,100$10,500$27,700$16,300$11,300$27,900$18,000$11,6001999 - 2000 2003 - 2004 2007 - 2008 2011 - 2012Data Source: Author’s calculations using U.S. Department of Education, “Data Point: Out-of-PocketNet Price for College,” April 2014. Net price of attendance is equal to total price minus grants, scholarships,and tuition waivers.The problems go beyond tuition inflation. Because high-schoolgraduates are entitled to student loans, and they can takethose student loans to any accredited institution, colleges thatwould never pass a market test can continue to attract students.Generous loan-forgiveness programs bail out students who investin poorly-performing institutions, further reducing the incentive toprovide an effective, affordable education.Easy money would not be as much of a problem if prospectivestudents acted as savvy consumers do in other markets, votingwith their feet to reward quality programs and punish those thatdo not make the grade. But often, that doesn’t happen. In part thissecond problem is unavoidable: College is difficult to evaluateuntil you actually experience it. Other blind spots are selfinflicted.Basic information needed to make a sound investment—actual out-of-pocket costs, the likely return on investment—iseither incomplete or nonexistent. That’s due, in part, to a 2008law that prohibited the federal government from collectingstudent-level postsecondary data. As a result, prospectivestudents typically have no idea whether a given program will beworth the investment.Accreditation is supposed to ensure institutional quality: To beeligible for federal grants and loans, institutions must be accredited.Accreditation agencies have had this gatekeeper role in federalpolicy since the Korean War GI Bill. But accreditation agenciesface a clear conflict of interest in evaluating existing institutions.They are sustained by dues from the schools they regulate, andfaculty from peer institutions conduct accreditation reviews.And because federal aid is the lifeblood of many institutions,accreditors are reluctant to revoke a school’s accreditation.Poorly-performing schools are allowed to muddle along, proppedup by continuing access to federal funds. 1512. 13.


A Conservative Agenda for Higher Education ReformANDREW P. KELLYAccreditation is also at the heart of the third problem: It creates abarrier to entry that keeps new providers out of the system. To getaccredited, schools must have served students for at least fourto five years. To attract students, however, most new educationalorganizations need access to the federal grants and loans thatenable students to afford the price of admission. This creates achicken-or-egg problem for new educational providers.Accreditation also judges institutions based on a highly traditionalmodel of higher education. Reviewers focus mainly on inputs—facultycredentials, facilities, learning resources, and mission statements—meaning organizations that look nothing like existing brick-and-mortarcampuses will have a hard time meeting the standards. In addition,only institutions that grant degrees or certificates can get accredited,which excludes those that provide targeted job training, coursework,or professional certifications. These barriers protect incumbents fromcompetition and limit the options available to consumers.The standardliberal approachto collegeaffordability—increasespending,watch tuitionrise, increasespendingagain—hasmade theproblem worse.14. 15.


A Conservative Agenda for Higher Education ReformANDREW P. KELLYA New AgendaProgressives interpret these market failures as evidence that weshould move away from the voucher-driven market entirely. PresidentObama’s free-community-college proposal is a case in point: It wouldfund public community colleges directly in exchange for more federalcontrol over institutional practice.While borrowers at risk of defaulting should have the optionto tie payments to their incomes, that option does not requiresuch open-ended loan forgiveness. Sens. Marco Rubio (R.,Fla.) and Mark Warner (D., Va.) have introduced legislationto streamline the repayment process while conditioningloan forgiveness on the amount of debt accrued. Those withlarger debts would pay for longer.Conservatives should wholeheartedly reject this notion. Instead theyshould focus on three main goals: creating effective, sustainableways to pay for higher education; giving educational providers agreater stake in student success; and lowering regulatory barriers toencourage a wider array of options.› Create effective, sustainable ways to pay for higher education.1. Reform income-based repayment programs.In the rush to help struggling student borrowers, policymakershave created a poorly targeted and increasingly expensiveincome-based repayment program. Under the Obamaadministration’s Pay As You Earn (PAYE) program, qualifiedstudents pay 10 percent of their income for 20 years, at whichpoint any remaining balance will be forgiven. Those who gointo “public service” jobs (including most non-profits) qualify forforgiveness after 10 years.In the rush to helpstruggling student borrowers,policymakers have created apoorly targeted and increasinglyexpensive income-basedrepayment program.2. Consolidate student aid to one grant program and one loan program.The PAYE program is deeply flawed. Graduate students—who have access to unlimited federal loans—can qualify evenwith relatively high incomes. Costs are ballooning. Recently,the Department of Education announced that IBR would cost$22 billion more than expected. 16 This is only the beginning.Reforming the repayment process is important, but it doesnothing to fix the loan programs that put students in debt inthe first place. Policymakers should reform these programsby moving to a single federal loan with responsible limits,and refocusing resources on a targeted, need-based grant.16. 17.


A Conservative Agenda for Higher Education ReformANDREW P. KELLYConservatives are right to question how federal studentaid affects tuition. They should also discriminate amongaid programs: PLUS loans are much more problematic thanundergraduate Stafford loans or Pell Grants. 17 Stafford loanshave an aggregate, lifetime limit of $31,000 for dependents($57,500 for independents). Parent PLUS and Grad PLUSloans, on the other hand, allow for unlimited borrowing up tothe cost of attendance with no lifetime limit. These programssend a clear signal to colleges: Feel free to raise yourtuition. Parent loans also carry a high interest rate and putmany adults with few work years left in significant amountsof debt.Figure 3: Parent and Grad PLUS Loan Disbursements Over Time (In Millions, 2013 Dollars)Reformers should eliminate PLUS loans and consolidateremaining programs into one need-based grant and one loanprogram with clear limits. Existing public resources should bededicated to needy students that are striving for college, notexpensive loan refinancing for the college-educated.3. Create space for new financing tools.So long as the government is willing to lend to any program,loan reforms can only do so much. Conditioning loan termsand amounts on the value of the asset—as we do in otherlending markets—could improve market discipline, but thefederal government does not have the capacity or politicalwill to do so.$20.0$18.0$16.0$14.0$12.0$10.0$8.0$6.0$4.0$2.0$0.0$7.9GRADUATE PARENT TOTAL$9.1$9.8$11.7$9.3$2.4$12.1$8.6$3.5$12.8$8.2$4.62003 - 20042004 - 20052005 - 20062006 - 20072007 - 20082008 - 20092009 - 20102010 - 20112011 - 20122012 - 20132013 - 2014Data Source: The College Board, “Trends in Student Aid 2014,” Table 1.$15.8$9.7$6.2$18.8$11.3$7.4$19.2$11.5$7.7$17.8$10$7.8$17.5$10$7.5In place of PLUS loans, then, policymakers should createspace for private financing that can underwrite on the basisof a student’s likely outcome after graduation. Under anIncome Share Agreement (ISA), for instance, private investorspay the cost of attendance in return for a percentage of thestudent’s income after graduation. It’s not a loan, and there isno balance due. Students who earn more than expected willpay more, but those whose choices don’t pan out will payless—perhaps nothing.The benefit of the ISA model is that investors have a directstake in guiding students toward programs that provide apositive return. Contract terms send prospective students aclear signal about the value of the different options open tothem. These agreements thus provide the same back-endprotection as income-based repayment, but couple thatprotection with powerful front-end guidance. This approach18. 19.


A Conservative Agenda for Higher Education ReformANDREW P. KELLYwould make sense for some students in some fields; it couldnot replace all existing aid programs. But it could improvethe entire system and allow considerations of value to play alarger role in student aid.A handful of firms offer this kind of financing in the U.S., but alack of legal and regulatory clarity is the main barrier to a largermarket. Congress and the states should spell out the enforceabilityof these contracts and give them a regulatory home.› Give colleges a stake in student success.4. Empower consumers with better data.Many students and families have difficulty distinguishingbetween postsecondary options that lead to success andthose that do not.Reformers could help individual consumers and themarket as a whole by collecting and publishing data thatenable aspiring students to discern the value of differenteducational products. The simplest step would be to improvetransparency about student outcomes—such as graduationrates, expected earnings, and loan repayment rates, brokenout by program—so that students and parents have a bettersense of which programs will best serve them. Forwardthinkingstates like Texas, Florida, Colorado, and Tennesseehave built state-level databases to inform consumers andtaxpayers, and conservative governors should follow theirlead. But states cannot follow graduates who leave the stateafter graduation.The federal government is uniquely positioned to track postgraduationoutcomes. The Student Right to Know Before YouPercentage of Those Entering RepaymentThat Defaulted Within Timeframe20181614121086420Go Act introduced by Sens. Ron Wyden (D., Ore.) and MarcoRubio (R., Fla.) would repeal the 2008 ban and make such dataavailable. Note that the federal government should not bethe sole source of consumer information based on these data.Instead, making the raw federal data available to the public (inways that carefully guard privacy) could facilitate all mannerof private ratings, rankings, and financing programs.Conservatives are rightly concerned that additional datacollection could lead to a federal accountability system(like college ratings). Therefore, reformers should includea provision that prohibits using such information for thosepurposes. Laws can change, of course, but such a provisionwould create a statutory obstacle to overreach. Collecting5.9Figure 4: Two- and Three-Year Cohort Default Rates Over TimeTWO-YEAR5.4 5.2THREE-YEAR4.58.65.18.34.62000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011Data Source: Mark Kantrowitz, “Student Loan Default Rates Drop,” Edvisors, September 2014. Three-yearcohort default rates were not reported prior to 2004.9.15.211.76.712.2713.48.814.79.113.71020. 21.


A Conservative Agenda for Higher Education ReformANDREW P. KELLYand publishing such data can invigorate market disciplinewithout centralized sanctions and rewards.5. Give colleges skin in the game.Under current loan programs, colleges bear very little riskif their students fail. So long as they keep their three-yeardefault rate below 40 percent for a given cohort of students(or 30 percent for three consecutive cohorts), they cancontinue to benefit from federal aid.Reformers should work to implement a risk-sharing policythat puts colleges on the hook for a portion of student loandefaults. The simplest way to do this would be to chargeall colleges a flat percentage of any defaulted dollars (or,alternatively, a penalty proportional to the amountof outstanding principal that is not being paid down). Toavoid sanctioning high-performing institutions, the policycould phase in penalties above a particular level ofperformance. A modest penalty would likely be enoughto get institutions’ attention. 18Critics argue that institutions will respond to risk-sharingby becoming more selective. In some cases, this would bean improvement: Too many colleges knowingly encouragestudents who have little chance of success to take out largeloans. But federal policy could also offer colleges a bonus forevery Pell Grant student that successfully graduates.› Encourage More Options.6. Develop alternatives to accreditation.Members of Congress have made worthwhile efforts toclear away some of the federal rules and red tape that22. 23.


A Conservative Agenda for Higher Education ReformANDREW P. KELLYhamstring existing colleges. But a truly deregulatory agendamust go beyond freeing up existing institutions; it mustalso lower the regulatory barriers that keep innovative,low-cost challengers out of the market. Here, reformerscan learn from experiences in trucking, airlines, andtelecommunications, where deregulation cracked openclosed markets, encouraged new entrants, and fosteredcompetition. They can also take a page from the charterschoolmovement, where state laws have allowed newschools to emerge.Specifically, federal policymakers should develop a parallelpath to federal-aid eligibility that serves as an alternativeto the existing accreditation process. Providers who wish todeliver education differently and are willing to be held to clearstandards for cost and quality could use this alternative path toapply for access to federal aid. To keep the federal governmentUnder current loan programs, collegeslack “skin in the game”: They bearvery little risk if their students fail.out of the business of evaluating innovative offerings directly,the parallel system should devolve gatekeeping power tonew authorizers with expertise in specific subject areas.These independent authorizers could then hold new providersaccountable for how well they serve their students, not whatthey look like.Under this bill, states could apply for the flexibility to approvenew accreditation organizations that could then allow providersto operate within the state and receive federal financial aid.Making space for more options would also allow forspecialization among colleges, and thereby make roomnot only for more professional or science and technologyfields but also for more and different classical and liberaleducation options that some students and families desire.Making our higher-education system more open to newmodels is not a threat to liberal education. It could well beits saving grace.7. Expand Other Paths to the Middle ClassConservatives are right to remind Americans that abachelor’s degree is not the only route to a successful life.Indeed, rigorous research shows that blending educationand work experience promotes economic opportunity. 19Unfortunately, career and technical education is oftentreated as an option of last resort for struggling students.Though the federally registered apprenticeship programreturns nearly $50,000 in net social benefits per apprentice,there were only about 315,000 registered apprentices in2014, down from 405,000 a decade earlier. 20 They representless than two percent of all undergraduates (18 million).Likewise, most short-term training programs and industrycertifications are not eligible to receive federal student aid,which makes these offerings less attractive to students whomight benefit from them.One proposal along these lines is the Higher Education Reformand Opportunity Act, sponsored by Senator Mike Lee (R., Utah).Conservatives should pursue reforms that expand career andtechnical options and make them attractive to students and24. 25.


A Conservative Agenda for Higher Education ReformANDREW P. KELLYemployers. The slate of policy changes already discussedwill help in this regard. Accreditation reforms will allowfor new, more flexible training options, ISAs will financeinnovative approaches, and better data will illustrate thevalue of vocational programs.In the short term, targeted policy changes and experimentationcould create more opportunity. For instance, access toapprenticeships is often limited by low rates of employerparticipation. In an effort to encourage firms, South Carolina,Michigan, and Arkansas have created modest tax credits forcompanies that take on apprentices. Senators Tim Scott (R,S.C.) and Corey Booker (D., N.J.) have proposed a federalcredit for apprenticeships. Leaders could also considerchanging federal financial aid rules so that students can usegrants and loans to pay for short-term training that preparesthem for the workforce.Conservatives are right toremind Americans that a bachelor’sdegree is not the only route to asuccessful life. Indeed, rigorousresearch shows that blendingeducation and work experiencepromotes economic opportunity.26. 27.


Conservatives should pursuereforms that expand careerand technical options......and make them attractiveto students and employers.28.


A Conservative Agenda for Higher Education ReformANDREW P. KELLYFrequently Asked Questions1. Shouldn’t we help borrowers who are struggling to repaytheir loans?Government policy should help struggling borrowers toavoid default. But those efforts must meet two criteria: Dothey target the help to those who need it most, and do theydo so in a fiscally responsible manner?Existing efforts like PAYE and proposals like Elizabeth Warren’sstudent-loan refinancing plan fail on both counts. Warrenwould allow federal loan borrowers to “refinance” their loansat today’s interest rates. But the plan would cover almost allborrowers, many of whom are having no trouble paying offtheir loans. It would cost upwards of $60 billion, money thatcould be better spent on targeted, need-based aid. 212. What’s wrong with free community college?Most students already pay nothing in tuition to attendcommunity college after you account for grants andscholarships. 22 Yet these institutions have extremely lowcompletion rates and high loan-default rates. Makingtuition free will not reverse those patterns. The Obamaadministration’s plan would attempt to improve communitycolleges through federal regulation, an approach thathas largely failed in K-12 education. At the same time, thenew funding would crowd out promising ideas from theprivate sector.3. Won’t federal college ratings improve accountability?President Obama has proposed to tie institutional eligibilityfor federal aid to measures of access, affordability, andstudent outcomes. Coming up with comprehensive ratingsthat fit the many diverse institutions in our country is anexceptionally difficult task that the federal government isill-suited to perform. The more complicated a policy, theharder it is to manage and the easier it is to game. There aresimpler ways to increase accountability (such as requiringskin in the game for loans).4. Wouldn’t going back to private loans solve our problems?There is a common misconception that the system offederally guaranteed private lending that existed prior to2010 was a functioning free market. 23 It is true that underthe old system, federal student loans were originatedthrough private banks. But those banks had no discretionover eligibility or loan terms, meaning there was no moreunderwriting or competition than there is today. In exchange,banks received a guaranty against default, ensuring thema return whether or not the student repaid the loan. Ratherthan a free market, this was a public program administeredby private actors at considerable expense to taxpayers.Conservatives should pursue private sector financing optionsindependent of government.30. 31.


A Conservative Agenda for Higher Education ReformANDREW P. KELLYPolling: Americans’ Views on Higher Education32.


A Conservative Agenda for Higher Education ReformANDREW P. KELLY34. 35.


A Conservative Agenda for Higher Education ReformANDREW P. KELLY1. Lumina Foundation and Gallup, What America Needs to Know about Higher Education Redesign (Washington,DC, February 25, 2014), www.gallup.com/services/176759/america-needs-know-higher-education-redesign.aspx.2. Ibid.3. Pew Research Center, Is College Worth It?: College Presidents, Public Assess Value, Quality and Mission ofHigher Education (Washington, D.C., May 16, 2011), http://pewsocialtrends.org/2011/05/15/is-college-worth-it/.4. Allstate and National Journal, Heartland Monitor Poll XIV (Washington, DC, September 19, 2012), www.allstate.com/resources/Allstate/attachments/heartland-monitor/heartland-XIV-data.pdf.5. Allstate and National Journal, Heartland Monitor Poll XVI (Washington, DC, April 9, 2013), http://syndication.nationaljournal.com/communications/ASNJ%20Heartland%20Monitor%20XVI%20Topline%20Results.pdf.6. College Board, Trends in College Pricing 2014 (Washington, DC, 2014), https://secure-media.collegeboard.org/digitalServices/misc/trends/2014-trends-college-pricing-report-final.pdf; Richard Fry, “The Changing Profile ofStudent Borrowers,” Pew Research Center: Social & Demographic Trends, October 7, 2014, www.pewsocialtrends.org/2014/10/07/the-changing-profile-of-student-borrowers/.7. Alexandria Radford et. al, “Persistence and Attainment of 2003-04 Beginning Postsecondary Students: After SixYears,” (Washington, DC: Institute for Education Sciences, 2010), http://nces.ed.gov/pubs2011/2011151.pdf8. Daniel Carrol and Amy Higgins, “A College Education Saddles Young Households with Debt, But Still Pays Off,”Federal Reserve Bank of Cleveland, July 16, 2014, www.clevelandfed.org/en/Newsroom%20and%20Events/Publications/Economic%20Trends/2014/A%20college%20education%20saddles%20a%20household%20with%20debt%20but%20still%20pays%20off.aspx.9. Meta Brown et. al., Measuring Student Debt and its Performance (New York, NY: Federal Reserve Bank of NewYork, April 2014), www.newyorkfed.org/research/staff_reports/sr668.pdf.10. Jason Delisle and Alex Holt, Safety Net or Windfall?, (Washington, DC: New America Foundation, October 2012),http://edmoney.newamerica.net/sites/newamerica.net/files/policydocs/NAF_Income_Based_Repayment.pdf.11. The Congressional Research Service reports that higher ed tax credits cost $24.5 billion in 2014 (the CollegeBoard cites $18.7 billion). See Margot L. Crandall-Hollick, The American Opportunity Tax Credit: Overview,Analysis, and Policy Options (Washington, DC: Congressional Research Service, July 28, 2014), http://fas.org/sgp/crs/misc/R42561.pdf.12. George B. Bulman and Caroline M. Hoxby, “The Returns to the Federal Tax Credits for Higher Education” (workingpaper no. 20833, National Bureau of Economic Research, Cambridge, MA, December 2014), www.nber.org/chapters/c13465.pdf.13. Sarah Turner, “Going to College and Finishing College: Explaining Different Educational Outcomes,” in CollegeChoices: The Economics of Where to Go, When to Go, and How to Pay For It, ed. Carolyn Hoxby (Chicago:University of Chicago Press), http://www.nber.org/chapters/c10097.pdf14. Dennis Epple et al., “The U.S. Market for Higher Education: A General Equilibrium Analysis of State and PrivateColleges and Public Funding Policies” (working paper no. 19298, National Bureau of Economic Research, August2013), www.nber.org/papers/w19298.pdf.15. Government Accountability Office, Education Should Strengthen Oversight of Schools and Accreditors(Washington, DC, January 22, 2015), www.gao.gov/assets/670/667690.pdf.16. Michael Grunwald, “The College Loan Bombshell Hidden in the Budget,” Politico Magazine, February 5, 2015,www.politico.com/magazine/story/2015/02/the-college-loan-bombshell-hidden-in-the-budget-114930.html.17. This point was noted by Rep. Paul Ryan in his recent anti-poverty proposal. See Rep. Paul Ryan, ExpandingOpportunity in America: A Discussion Draft from the House Budget Committee (Washington, DC, July 24,2014), http://budget.house.gov/uploadedfiles/expanding_opportunity_in_america.pdf. See also Andrew Gillen,“Introducing Bennett Hypothesis 2.0” (Washington, DC: Center for College Affordability and Productivity,February, 2012) http://centerforcollegeaffordability.org/uploads/Introducing_Bennett_Hypothesis_2.pdf.18. Douglas A. Webber, “Risk-Sharing and Student Loan Policy: Consequences for Students and Institutions,” WorkingPaper, February 23, 2015, https://www.ilr.cornell.edu/sites/ilr.cornell.edu/files/cheri_wp163.pdf19. See Andrew P. Kelly, “Preparing Students for the World of Work,” (Washington, DC: Cato Institute, November2014) http://www.cato.org/publications/cato-online-forum/preparing-students-world-work; On high school careeracademies, see James Kemple, “Career Academies: Long-Term Impacts on Labor-Market Outcomes, EducationalAttainment, and Transitions to Adulthood,” (MDRC, 2008), http://www.mdrc.org/publication/career-academieslong-term-impacts-work-education-and-transitions-adulthood20. Debbie Reed, et al., “An Effectiveness Assessment and Cost-Benefit Analysis of Registered Apprenticeshipin 10 States,” (Mathematica Policy Research, 2012), http://wdr.doleta.gov/research/FullText_Documents/ETAOP_2012_10.pdf; For historical data on apprenticeship participation, see United States Department of Labor,“Registered Apprenticeship National Results (Multiple Fiscal Years),” http://doleta.gov/oa/data_statistics.cfm. Notethat the 315,000 and 405,000 exclude participants in the military apprenticeship program, which is reserved foractive duty servicemen and women.21. Andrew P. Kelly and Kevin J. James, “ The Democrats’ Student Loan Weapon,” Wall Street Journal, September 17,2014, www.wsj.com/articles/andrew-kelly-and-kevin-james-the-democrats-student-loan-weapon-1410997498.22. See College Board, “Figure 2013_12: Net Prices By Income Over Time,” In Trends in College Pricing 2014, http://trends.collegeboard.org/college-pricing/figures-tables/net-prices-income-over-time-public-sector23. Mitt Romney, for instance, called for a return to this private lending model in the 2012 campaign.An alternative vision forhigher-education policy should createspace for new postsecondary optionsand financial-aid tools that betterreflect the needs of today’s students.36.37.


A Conservative Agenda for Higher Education ReformANDREW P. KELLYAndrew P. Kelly is a residentscholar in education policystudies and the directorof the Center on HigherEducation Reform at the American Enterprise Institute (AEI), where heworks on higher education policy, innovation in education, financialaid reform, and the politics of education policy.Kelly’s findings have appeared in the American Journal of Education,Education Next, Educational Policy, Policy Studies Journal, andTeachers College Record. He has also been published in popular outletssuch as The Atlantic, the Chronicle of Higher Education, EducationWeek, National Affairs, National Review, and The Wall Street Journal.He has edited many books on higher education, including“Reinventing Financial Aid: Charting a New Course to CollegeAffordability” (Harvard Education Press, 2014),“Stretching the HigherEducation Dollar: How Innovation Can Improve Access, Equity,and Affordability” (Harvard Education Press, 2013), and “Getting toGraduation: The Completion Agenda in Higher Education” (JohnsHopkins University Press, 2012). In 2011, Education Week’s PolicyNotebook blog named Kelly one of its 16 Next Generation Leaders ineducation policy.Edited by Yuval Levin & Ramesh PonnuruReihan Salam on CitiesVikrant Reddy on Criminal JusticeYuval Levin on CronyismSteven Hayward on Energy and the EnvironmentW. Bradford Wilcox on the FamilyJames Capretta on the Federal BudgetGrace-Marie Turner on Health CareAndrew Kelly on Higher EducationReihan Salam on ImmigrationDavid Beckworth on Monetary PolicyKatherine Bradley & Robert Doar on PovertyPatrick McLaughlin on RegulationsAndrew Biggs on Retirement SecurityFrederick Hess on SchoolsJames Pethokoukis on Start-Ups and EntrepreneurshipRyan Ellis on TaxesDaniel Ikenson on TradeMichael Strain on WorkKelly has a Ph.D. and an M.A. in political science from the Universityof California, Berkeley, and an A.B. in history from Dartmouth College.38. All Rights Reserved: Copyright © 2015 by Conservative Reform Network39.

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