The first few months of the Trump administration have likely been the most eventful of any administration in decades, with many implications for education policy.

In addition to several sweeping executive orders, the Department of Government Efficiency (DOGE), is making waves under Elon Musk.

There are many likely effects in the education space. President Trump and Musk have called for winding down the Department of Education (ED) and have sought to do so in a new executive order that prepares a wind-down for the department. After a closure notice this past week, nearly half of the ED staff are set to be laid off. Recently confirmed education secretary Linda McMahon acknowledged in her confirmation hearing that completely eliminating ED will still require an act of Congress. Earlier in February, DOGE officials gained credentials that give them access to the ED building, and some have full administrative privileges to access the IT system. The DOGE team has also reportedly used AI to analyze personal and financial data from ED.

The Trump administration is also looking to cut funding to universities through various purse strings including the National Science Foundation (NSF) and National Institutes of Health (NIH). The administration has also decided to cap university overhead reimbursements on NIH grants made to universities at 15 percent. Earlier this month, the administration announced it’s cutting $400 million in grants to Columbia University.

Various legal challenges will likely impede DOGE’s overall objectives of reducing government spending and curbing the administrative state, and could take years to work their way through the legal system.

In addition, the federal labor force has been offered buyouts, which public sector unions and others have opposed and urged employees not to take. There are also disagreements between senior civil servants and political appointees around whether such buyout agreements are binding, legal, and how exactly they would operate.

Potentially, defunding the ED may reduce the federal headcount as well as administrative bloat and return education policy to the states. However, the fate of other student debt programs looms large in the short-run. Student loan forgiveness, which began during the Biden administration and had also faced court challenges for exceeding executive authority, may end up being mooted by this administration. In addition, it’s possible that the student loan payment moratorium which began during the pandemic could also be ended by the Trump administration, forcing payments to resume.

Another target of the administration will likely be the Public Service Loan Forgiveness (PSLF). PSLF was signed into law in 2007 by George W. Bush and cancels student loan debt for federal borrowers working in a qualifying public-service job after 10 years. Unlike Biden’s loan forgiveness scheme that can be undone by executive order because it was initiated by EO, eliminating PSLF will require an act of Congress.

As we’ve written before, comprehensive education reform that helps Americans across all income levels requires much more than student debt forgiveness that skews toward high-skilled, higher-income individuals.

Education reform focused on promoting opportunity and mobility would consist of broadly cracking down on federal subsidies for negative ROI degree programs. Doing so would help align incentives between universities and the federal government allocating taxpayer dollars. Legislation like the College Cost Reduction Act could shift toward more income-based repayment, increase transparency around college costs through disclosures about tuition, fees, and financial aid, end regional accreditation monopolies, and make sure colleges are accountable by adjusting subsidies based on student outcomes.

FREOPP’s work is made possible by people like you, who share our belief that equal opportunity is central to the American Dream. Please join them by making a donation today.

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National test scores released last week once again confirmed that American children are struggling in the classroom. The National Assessment of Educational Progress revealed that 33 percent of 8th grade students and 40 percent of 4th graders scored “below basic” in reading.

National Center for Education Statistics Commissioner Peggy G. Carr explained that “[t]here’s a widening achievement gap in this country, and it has worsened since the pandemic, especially for grade eight.”

If these results are surprising, you haven’t been paying attention. National reading scores have been declining since 2017 and accelerated during the pandemic. Many of the 4th graders who were tested last year missed much of kindergarten and first grade when public schools were closed in 2020 and 2021. It was clear at the time that prolonged and unnecessary school closures would harm all children and particularly those from disadvantaged backgrounds.

With a new administration and federal and state legislative sessions under way, the nation’s elected officials have an urgent responsibility to create better learning opportunities for American children.

States are expanding parental choice options and requiring effective reading instruction

The historic reforms to expand parental choice in education are already continuing in 2025. In Tennessee, Governor Bill Lee’s Education Freedom Act proposal was approved by the state legislature and will soon become law. Families across the Volunteer State will now have access to scholarship funds that can be used for private school tuition, tuition, tutoring, and other education expenses.

As I wrote last month, several other states are expected to enact parental choice measures in 2025, including Texas where the governor continues to champion a universal ESA program. Our friends at EdChoice have the latest details on what’s happening around the country.

Beyond education choice reforms, we should take heart that many states are taking steps to promote effective reading instruction in public school classrooms. According to Education Week, at least 40 states and Washington, D.C., have passed laws to require reading instruction using evidence-based practices. While not a perfect solution, these laws will help reverse the troubling trend of many school districts using ineffective reading instruction exposed by Emily Hanford in her investigative podcast Sold a Story.

President Trump’s executive order to expand educational choice

On January 29, 2025, President Trump issued an executive order, Expanding Educational Freedom and Opportunities for Families, which directs federal departments to take action to use their existing legal authority to expand parental options. Notably, the EO requires the Department of Education to provide guidance for how states can use their grant funds to enable parental choice. It also directs the Defense, Labor, and Health and Human Services departments, as well as the Bureau of Indian Affairs, to issue guidance or develop plans for using existing federal funding to help families access better schooling options.

This is a welcome development. But in all likelihood Congress will need to pass legislation to enact the kinds of federal reforms that are needed to broadly expand equal opportunity in K-12 education.

Will Congress act?

It’s very possible that Congress will create a new scholarship program in the upcoming tax reform debate, which would be a great development. But Congress—and specifically the chairs of the Senate HELP Committee and House Education and Workforce Committee—should also introduce reforms to the major Department of Education K-12 laws: the Elementary and Secondary Education Act (ESEA) and the Individuals with Disabilities Education Act (IDEA).

Both laws play a critical role in public education policy. ESEA is broadly focused on assisting disadvantaged children, while IDEA is the federal law intended to ensure that special education students have access to a free and appropriate public education.

Congress should reform ESEA and IDEA to grant states and local education agencies more flexibility to use federal funding to expand parental choice in education.

• Reforming ESEA: Specifically, lawmakers should reform ESEA to grant states the option to consolidate programs and funding streams to trim bureaucracy and also allow states and/or districts to use Title I funds to provide assistance directly to disadvantaged children to attend a school of their parents' choice or to access new schools or tutoring. Eliminating unnecessary or ineffective programs within ESEA would ensure that more funds are directly used to actually help students learn.

• Reforming IDEA: Since the 1970s, IDEA has ensured that children with special needs have a right to a public education; however, the process for accessing benefits is complicated and too often requires parents to use due process complaints. Today, many states like Arizona and Florida have proven that offering children with disabilities a right of exit through choice programs improves families’ satisfaction. Congress should update IDEA to require states to provide parents with a right of exit from their child’s public school and could potentially secure support for such a reform by increasing federal IDEA funding.

In light of the devastating NAEP test scores and broad evidence that the nation’s public schools are failing a generation of children, Chairman Bill Cassidy (R-LA) and Chairman Tim Walberg (R-MI) ought to ask: “If not us, who? If not now, when?”

The D.C. Opportunity Scholarship Program should serve as inspiration and a model

For Congress to act, lawmakers will need to take political risks and engage in the hard work of convincing their colleagues on the other side of the aisle to support needed reforms. And, yes, this process will also involve negotiations and compromises. But such compromises in education reform were possible in the not too distant past, and the results were often worth it.

Last week, I had the privilege of attending a gathering in the Capitol to mark the 20th anniversary of the D.C. Opportunity Scholarship Program. One of my personal heroes, Virginia Walden Ford, described how underprivileged parents led the effort to convince Congress and the D.C. City Council to give low-income students a chance to attend better schools. Former Speaker John Boehner described his deep commitment to helping children access scholarships and how he forced former President Obama to continue the program or risk shutting down the federal government. Critically, former D.C. Mayor Tony Williams and former D.C. Council Member Kevin Chavous explained that they decided to support the program because it was the right thing to do to help kids. And their decisions took real political courage at the time. Their support was essential in securing and maintaining bipartisan support in Congress from former Senators Joe Liberman and Dianne Feinstein.

After twenty years, the D.C. Opportunity Scholarship Program has helped more than ten thousand children, thanks to the bipartisan coalition on Capitol Hill and in the D.C. government. America's disadvantaged children need lawmakers on both sides of the aisle to once again have the courage to do the right thing to help kids.

You can teach a child to read

While most of my writing at FREOPP focuses on public policy and the role of government to expand equal opportunity, it’s worth remembering that each of us can make a difference in the national literacy crisis. For example, I have seen firsthand how Dr. Siegfried Engelmann’s book, “How to Teach Your Child to Read in 100 Easy Lessons,” can teach a child to read. There are many other parent and homeschooling resources available online for anyone interested. Reversing the national childhood literacy will require parents and people from all walks of life to help do their part.

FREOPP’s work is made possible by people like you, who share our belief that equal opportunity is central to the American Dream. Please join them by making a donation today.

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2024 closed with more news about widespread problems in American education. An international test of students’ science and math achievement revealed sharp declines in 4th and 8th grade students’ test scores since 2019. Another international test showed adults’ literacy and numeracy scores dropped the last test in 2017. Twenty-eight percent of American adults achieved the lowest score in literacy.

But there are many reasons to be optimistic about the future of American education thanks to the historic progress of expanding choice in education over the past several years, including 11 states creating or expanding choice programs last year alone. More than 1 million American students are now benefiting from private education choice programs and more than 22 million are eligible.

These options give families the freedom to choose the right learning environment for their children, which has the potential to spur widespread progress and improvement.

Texas poised to enact education savings accounts

Texas Governor Greg Abbott has pledged to enact a broad education savings account (ESA) program, which could provide new options to more than five million children. The Lone Star state came close to enacting an ESA program 2023, but was narrowly defeated in the state house of representatives. But observers expect the governor to have more support for his signature initiative in the state house following the recent elections.

In 2023, I explained why ESAs would be a lifeline for at-risk children in Texas. At the time, more than half of Texas’s low-income children scored below basic on the NAEP 4th grade reading exam. In Austin, Houston, and Fort Worth, more than six out of ten low-income students scored in that range.

More Potential Progress in the States

Education reformers are optimistic that lawmakers will expand options in other states.

• In New Hampshire, they will consider legislation to make the state’s education freedom account program universal.

• In Tennessee, Governor Bill Lee has made establishing education savings accounts a top priority of his administration. After enacting Tennessee’s ESA program in 2019, Governor Lee is now backing the Education Freedom Act to make education choice more broadly available to families across the state.

• According to EdChoice, Idaho, North Dakota, and South Carolina are also expected to consider expanding choice programs in 2025.

Congress May Enact Sweeping Education Choice Initiatives

On Capitol Hill, lawmakers have an opportunity to enact the Education Choice for Children Act or similar legislation that would provide a federal tax credit to encourage donations to fund scholarships for students across the country. With the 2017 tax law expiring and a budget reconciliation package on the agenda for 2025, a federal school choice tax credit may soon become a reality.

Executive Actions by the New Trump Administration

We should also expect to see the new administration use executive authority to expand parental choice options, from reversing the Biden administration’s recent regulations of the public charter school sector—which are stifling innovation—to using existing authority to grant states and localities more flexibility to use federal funds to expand parental choice.

One important change that I hope to see is for the Treasury Department to provide guidance clarifying that the federal employer-provided child care tax credit can be used to provide educational services along with child care. This could encourage more employers to provide new schooling options as a means for offering child care.

A New Approach to Analyzing Return-on-Investment in Education

In November, FREOPP published a new report, Establishing a Practical, Return-on-Investment Framework for Education and Skills Development to Expand Economic Opportunity, which I coauthored with Matthew Barry and Arushi Mathavan of Learn Capital.

The report describes our work, in partnership with the University of Texas at Austin’s Salem Center for Public Policy, to create a learning impact index to measure the social and economic value created by education ventures to enhance lifetime earnings and achieve economic cost savings.

Based on existing academic literature about human capital development and economic impacts, the index provides a new way to evaluate return-on-investment (ROI) in education. The broader application of this index or other ROI frameworks will expand equal opportunity by elevating the education interventions that provide students with the most value. Our paper includes recommendations for how federal policymakers, researchers, and even the private sector can further develop and apply ROI frameworks.

Freedom and Progress 2024

I hope you didn’t miss our annual Freedom and Progress conference in November. But if you did, be sure to check out the session recordings here.

I was honored to host several of the panel discussions:

• During our education session, Rep. Candice Pierucci, who sponsored Utah’s groundbreaking ESA program, provided insight about the ongoing work to implement and expand that program, which is proving to be very popular.

• Robert Enlow, President and CEO of EdChoice, described the historic progress that has been made expanding parental choice options, which are now available to 40 percent of American students. But he explained that the new challenge for reform advocates is to ensure that there is the supply of high-quality education options to meet this rising demand.

• Learn Capital’s Arushi Mathavan shared her perspective from the venture capital community and discussed why education stakeholders need to focus on return-on-investment.

I also hosted lively panel discussions on whether AI will advance or hinder equal opportunity and using technology to improve program integrity and benefit delivery in government social welfare programs.

These sessions were all part of FREOPP’s broader mission to improve the lives of Americans on the bottom half of the economic ladder using freedom, innovation, and pluralism. Thank you for your interest in our work to expand opportunity—in education and beyond.

FREOPP’s work is made possible by people like you, who share our belief that equal opportunity is central to the American Dream. Please join them by making a donation today.

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Donald Trump's re-election in 2024 has many significant implications for higher education, including upending many decades of education policy spending sought by Democrats.

First, Trump will likely reverse Biden's student loan forgiveness efforts. His campaign indicated that a second Trump Administration would aim to eliminate current attempts from the Biden administration at blanket loan forgiveness such as through the SAVE program. Once rescinded by executive orders on Day 1, state attorneys general will likely drop their lawsuits against the federal government.

Going forward, the new administration will almost certainly move away from broad-based loan forgiveness. Instead, it is likely to focus on reforms such as promoting accountability at universities and alternatives to four-year degrees such as vocational training and apprenticeship programs, as it did during the first Trump Administration.

Legislation like the College Cost Reduction Act, sponsored by Representative Virginia Foxx (R-NC), would be a first step. The Act would shift toward more income-based repayment; increase transparency around college costs through requiring disclosures about tuition, fees, and financial aid; end regional accreditation monopolies; and make sure colleges have skin in the game by adjusting subsidies based on student outcomes. In addition, broadly cracking down on federal subsidies for negative return on investment (ROI) degree programs would be a welcome development.

The Trump Justice Department and other federal agencies are also likely to start investigations and bring lawsuits over diversity, equity and inclusion (DEI) policies toward universities, as they argue that many of those practices violate anti-discrimination laws.

Several education spending reforms may be proposed during the second Trump administration that would require Congressional approval.

The first Trump administration proposed the elimination of Public Service Loan Forgiveness (PSLF), a program signed into law in 2007 by George W. Bush, which cancels debt for federal student loan borrowers working in a qualifying public-service job after 10 years. Eliminating PSLF would require both an act of Congress and the political will to do it from the President. Also, when ending PSLF was proposed, there was an exception carved out to grandfather in those who had already entered the program.

The elimination of the entire Department of Education has also been proposed, sending education policy back to the states, and idea that has also been championed by Department of Government Efficiency (DOGE) co-leads Vivek Ramaswamy and Elon Musk. People might forget that the Department of Education is a relatively new federal department, created in 1980 by President Jimmy Carter to fulfill a campaign promise to the teachers union. During his Presidential campaigns, Ronald Reagan supported abolishing the department. Abolishing the agency does face political uncertainty as it would require congressional approval.

The second Trump Administration is poised to make significant reforms to education policy. The timing will likely heavily depend on what priority it gets.

FREOPP’s work is made possible by people like you, who share our belief that equal opportunity is central to the American Dream. Please join them by making a donation today.

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Earlier this month, a majority of lower-income Americans voted for President-elect Trump. With a new Republican-controlled Congress, the Overton window may soon be open for many of the policies that the Foundation for Research on Equal Opportunity (FREOPP) has been developing and recommending to improve the lives of Americans living on the bottom half of the socioeconomic ladder. 

For incoming lawmakers looking to expand equal opportunity in education in 2025, here are FREOPP’s top ten recommendations: 

1. Expand the supply of new nonpublic schools and child care centers. 

The Federal Employer-Provided Child Care Credit was created to encourage employers to expand the availability of affordable child care for their employees. The Treasury Department should issue guidance clarifying that employers using this credit could also provide educational instruction at child care facilities, which could help establish new schools that provide both child care and educational services to children.

2. Establish new education tax credits to expand school choice options. 

Offering parents and taxpayers benefits that provide flexibility to choose new schools or contribute to scholarship funds would improve American education by expanding choice and opportunity.

For example, the Education Choice for Children Act, legislation introduced in the House and Senate last year, would make $10 billion in tax credits available to taxpayers to contribute to organizations that award scholarships to children from lower-income families for private school tuition and tutoring. That’s enough to fund $10,000 scholarships for one million children.

3. Help lower income Americans access federal education savings accounts. 

The next administration and Congress should enact new reforms aimed at helping low- and middle-income families control more resources to provide for their children’s educations. 

For example, in 2022, Senators Maggie Hassan (D., N.H.) and Susan Collins (R., Maine) introduced the Helping Parents Save for College Act, which would have expanded the existing “Saver’s Credit” to allow for federal tax credits for contributions into 529s—accounts that can now be used for both higher education and K-12 expenses. According to Sens. Hassan and Collins, the change would have allowed a credit worth up to 50 percent, or $4,000, of 529 account contributions made by low-and-middle income families.

4. Repeal the Biden administration’s burdensome charter school regulations. 

A recent Stanford University evaluation found that children attending public charter schools received the equivalent of 16 days of learning more than their peers in traditional public schools. Low-income and English learner students in charter schools also demonstrated stronger growth than their traditional public school peers. 

The National Alliance for Public Charter Schools has warned that federal regulations enacted during the Biden administration “will discourage potential applicants from applying and burden charter school leaders and grantees with compliance requirements contrary to the mission of charter schools.” Public charter schools offer  high-quality options for many families and the new administration should repeal unnecessary regulations that prevent charter school growth.

5. Reform the Department of Health and Human Services (HHS) Community Services Block Grant program to expand parental choice.

In late 2020, President Trump issued an executive order to “allow funds available through the [HHS] Community Services Block Grant program to be used by grantees and eligible entities to provide emergency learning scholarships to disadvantaged families,” citing the need to access in-person learning during the pandemic. This program received $770 million in FY 2023. 

This executive order was not implemented, but the incoming administration now has an opportunity to reissue it, letting states use this funding to provide new and better options to disadvantaged children.

6. Improve transparency about K-12 public school performance and spending. 

The White House should direct the Department of Education to improve spending and performance transparency to give parents better information about their children’s schools and schooling options.  

Under federal law, states are required to publish school report cards with information about school spending and students’ academic achievement. But these report cards are often published too late or in formats that make it difficult for parents to use them.  The Department should ensure that state education agencies comply with federal law and publish student test results and public school per-student spending levels on the Department’s website. 

This information should be published before the school year starts so that parents can choose the best learning environment for their children. 

7. Reauthorize and reform the Elementary and Secondary Education Act (ESEA) and Individuals with Disabilities Education Act (IDEA).

Congress should reform ESEA and IDEA to grant states and local education agencies more flexibility to use federal funding to expand parental choice in education. 

For example, reforming the federal Title I program to allow funds to follow students to a school of their parents’ choice would improve educational opportunities for disadvantaged children. 

Congress should also reauthorize IDEA, which was last reauthorized in 2004, to establish a student right-of-exit if parents are unhappy with their children’s learning environment.

8. Expand education options in the nation’s capital. 

Twenty years ago, Congress established the D.C. Opportunity Scholarship program to provide private school scholarships to children from lower-income families living in D.C. In 2025, Congress should reauthorize and expand this program to offer scholarships or education savings accounts to additional families. Moreover, it should increase appropriations for the program and expand eligibility to include children with disabilities, foster children, and other at-risk students. 

Expanding educational choice in Washington, D.C., would provide a model for other states and school districts across the country.

9. Reform the Head Start program by establishing Head Start accounts.

Congress last reauthorized the Head Start program in 2007. This was five years before HHS published the final evaluation that revealed that by third grade any discernible benefits to Head Start children had disappeared entirely. 

Congress should hold hearings, conduct oversight, and take legislative action to reform the Head Start program to ensure that it provides better value and services to economically disadvantaged children and their parents. 

For example, Congress could reform the program to establish Head Start Accounts to provide direct funding to low-income families to pay for child care, preschool, and related services. This approach to reforming Head Start could involve providing transition subsidies to current Head Start providers to allow them to transition into independent fee-based child care centers that receive payments from Head Start Account holders and other parents seeking preschool and child care services for their children.

10. Expand parental choice in child care and eliminate unnecessary regulations that drive up costs. 

The White House should issue an executive order to expand access and reduce the cost of child care and preschool by expanding parental options and encouraging states to eliminate unnecessary regulations that drive up costs. 

Within the federal government, there is a growing recognition that the government needs to expand the supply of child care providers to meet growing demand. For example, the Department of Defense and Congress recently established a pilot program to help military families access in-home child care options due to a lack of supply at center-based care facilities. 

The White House could direct federal agencies to take steps to reform existing government child care and preschool programs to increase supply and parental options, while also directing HHS to conduct a national review of state child care regulations to determine opportunities to streamline red tape while maintaining health and safety rules to expand the supply of child care providers. HHS and other federal agencies should issue best practices and encourage states to update regulations to help more families access high-quality and affordable preschool and child care. 

Don’t forget to register for Freedom and Progress 2024! 

Want to talk about these ideas and more with others who believe in the American Dream and want to ensure that it endures? Join us at our annual Freedom & Progress Conference at the Park Hyatt in Washington, D.C., from November 17-19.

It’s not too late to register—simply visit the conference page at FREOPP.org to view the latest agenda and to sign up. We hope to see you in D.C. next week!

FREOPP’s work is made possible by people like you, who share our belief that equal opportunity is central to the American Dream. Please join them by making a donation today.

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Biden administration debt relief plan still halted in the courts

The Biden Administration’s student debt forgiveness plan remains held up in the courts, halting a largely regressive plan that does little to change the financial incentives that encourage colleges to raise tuition prices. Such a shift in incentives, particularly through limiting federal subsidies for negative ROI degrees, is needed to make meaningful headway on reducing the cost of higher education, which remains a huge challenge for those below the median income.

Since the Supreme Court’s June 2023 ruling in Biden v. Nebraska, which struck down the initial student debt relief plan passed through executive order, the Biden Administration has since formulated a new plan for broad based student debt forgiveness using the authority of the Higher Education Act—a different legal strategy from what the administration cited in its unsuccessful 2022 plan. 

Since announced in April 2024, the new Biden debt forgiveness plan is estimated to be in the amount of approximately $147 billion to more than 25 million Americans. This includes relieving the loans for those who accumulated decades of interest or failed to qualify for relief through other channels. It’s a particularly poorly designed policy which provides asymmetric relief for higher income individuals, in that it targets older individuals who attended college some time ago and have likely higher incomes when compared to individuals who recently attended college.

Several lawsuits filed by Republican state attorney generals have since followed.

Earlier this October, the Biden Education Department was on track to move forward with its planned forgiveness. However, a federal judge in Georgia found that the state of Georgia, one of the seven states that challenged the loan forgiveness program through its state AG, lacked standing and hence could not be the jurisdiction for the lawsuit. The Georgia judge’s ruling, by lifting a temporary restraining order halting the relief plan, in theory also allowed for administrative preparations for broad-based student loan forgiveness to continue. This created some expectation forgiveness could go into effect as early as Autumn 2024, getting the hopes up of forgiveness advocates and the Biden Administration.

However, the case was also transferred to the Eastern District of Missouri, and within 24 hours, the Missouri judge in the case granted an injunction at the Republican state AG’s request on Thursday, halting the Biden Administration’s progress on debt forgiveness.

All of this ignores the broader challenge in higher education: skyrocketing costs. According to the College Board’s 2023 report, Trends in College Pricing and Student Aid, annual cost of college (including tuition, housing, food, books, and transportation) now averages at $28,840 for four-year in-state public college, $46,730 out-of-state public college, and $60,420 for four-year private colleges.

Forgiveness, if anything further incentivizes further tuition increases on the part of schools without being held accountable to any outcomes for students. 

Improving college access and affordability

There’s no denying that federal subsidies are part of the cost problem. As I’ve written before, research by New York Fed economists David O. Lucca, Taylor Nadauld, and Karen Shen published in the Review of Financial Studies finds that increasing federal student-aid subsidies cause higher college tuition. 

Schools have every incentive to take advantage of charging more tuition when such funding comes through the federal government with no accountability.

Rather than forgiving student debt, the federal government should stop subsidizing degrees with a negative return on investment (ROI). As FREOPP’s ROI Calculator shows, 23 percent of bachelor's and 43 percent of master’s degrees have a negative return on investment. 

What could be the right long-term policy solution to provide opportunity through education to those below the median income? Promoting more affordable degrees with positive ROI. How might we do that? Restrict federal student loans to degree programs that do not have a positive ROI. Rep. Virginia Foxx’s College Cost Reduction Act includes a number of these ideas. It’s only by shifting the incentives of universities that we can make progress on limiting rising tuition, especially for college degrees that don’t foster upward mobility.

Register today for Freedom and Progress 2024 

Please mark your calendars for FREOPP’s annual Freedom & Progress conference in Washington, D.C., on November 17-19. (Details are available here.)

Last year, FREOPP honored former Education Secretary Betsy DeVos and former Arizona Governor Doug Ducey for their leadership in expanding parental choice in education. We hope you can join us for this year’s conference!

Register for Freedom & Progress 2024

FREOPP’s work is made possible by people like you, who share our belief that equal opportunity is central to the American Dream. Please join them by making a donation today.

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Neither candidate was asked a question about education in Tuesday’s presidential debate. And while both candidates have provided few details about their respective education agendas, they are offering very different visions. Former President Trump has called for closing the Department of Education, universal school choice, and strengthening parental rights. Vice President Harris has issued few policy recommendations focused on K-12 education. But the Biden administration has focused on increasing funding for the K-12 public education sector, including $130 billion in new funding provided through the American Rescue Plan. The DNC platform includes familiar calls for special education funding and strongly opposing private school choice.

But what neither candidate will likely admit is that neither of their visions for K-12 education will be implemented after November.  

What the candidates won’t admit about K-12 education 

The Department of Education will not be abolished. The federal government is in no position to provide significant funding increases for K-12 schools, since Washington will spend more on interest payments than the national defense budget this year. Even if it were, there’s little reason to believe that more federal funding will reduce education inequality since public schools serving low-income students now actually spend more than low-poverty school districts. With less than 11 percent of revenues coming from the federal government, there’s only so much that the next president or Congress can do to change K-12 education, and that’s a feature not a bug of our system of government. 

A realistic K-12 reform plan for the next White House and Congress

But that doesn’t mean that the president and Congress shouldn’t be pursuing serious reforms to the federal government’s education laws and programs to address the nation’s longstanding, bipartisan goal to promote equal opportunity in K-12 education. 

This week, FREOPP published our new report—Reforming Federal K-12 Education Programs to Expand Equal Opportunity—which provides recommendations for executive and Congressional action for 2025 to expand equal opportunity in K-12 education.  Here are some of the report’s recommendations. 

Executive actions to expand school choice and improve transparency 

1. Reform federal programs with statutory flexibility to expand parental choice 

Following the historic progress of parental choice across the country, the White House could use existing statutory authority to grant flexibility to enable parental choice, as the Trump administration proposed in December 2020, starting with the Community Services Block Grant program.

2. Improve transparency about  public school spending and performance

The Department of Education and the Institute of Education Sciences already collect and publish information about K-12 education, a federal role that dates back to the 1860s. In 2025, this federal statistical work could evolve to include collecting and publishing information in federally-mandated school report cards to improve transparency about students’ academic performance and to inform the public exactly how much all of the nation’s public schools are spending. This would help in two ways. States’ school report cards are opaque and hard to use–denying parents the opportunity to use this information to choose their children’s schools. Second, the public grossly underestimates what public schools spend per-student (guessing $5,000 when schools on average spend more than three times that amount) 

3. Reverse the Biden administration’s restrictive charter school regulations 

Yes, this one might be a bit awkward for a potential Harris administration to take on. But the next administration should surely reverse the Department of Education’s burdensome charter school regulations that are making it harder for innovative public schools to provide high-quality options. A recent national evaluation conducted by Stanford University researchers found that children attending public charter schools received the equivalent of 16 additional days of learning than their peers in traditional public schools. 

4. Issue policy guidance to leverage existing tax benefits to expand education options 

For example, the Federal Employer-Provided Child Care Credit was created to encourage employers to expand the availability of affordable child care for their employees. The Treasury Department could issue guidance clarifying that employers using this credit could also provide educational instruction at child care facilities, which could help establish new microschools that provide both child care and educational services to children. 

Congress should pursue reforms to major K-12 education laws 

The new report also describes actions that Congress could take, including considering legislation to reauthorize the Elementary and Secondary Education Act (ESEA) and the Individuals with Disabilities with Education Act or IDEA (which was last reauthorized in 2004). While past legislative efforts to encourage state flexibility and portability have had limited success, that was before the growing momentum across the nation to expand parental choice in education in recent years.  In addition Congress could consider tax reforms to expand parental choice and expand access to education savings accounts during the upcoming 2025 tax reform debate. Just this week, the House Ways and Means Committee approved the Education Choice for Children Act, which would make $10 billion in tax credits available to taxpayers who contribute to organizations that award scholarships for private school tuition and tutoring.  

What’s Ahead and the Freedom and Progress Conference in November 

Please mark your calendars for FREOPP’s annual Freedom & Progress conference in Washington, D.C., on November 17-19. (Check out the details here.) Last year, FREOPP honored former Education Secretary Betsy DeVos and former Arizona Governor Doug Ducey for their leadership in expanding parental choice in education.

Register for Freedom & Progress 2024

And keep your eye on the FREOPP website for more federal policy recommendations for 2025 and beyond in the coming weeks. While FREOPP’s scholars will be covering a broad range of issues in these new papers, I’ll be publishing my recommendations for preschool and child care as well as foster care. Stay tuned. 

FREOPP’s work is made possible by people like you, who share our belief that equal opportunity is central to the American Dream. Please join them by making a donation today.

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Much of the debate over President Biden’s efforts to forgive student debt revolves around the fact that the debts don’t simply disappear: they’re paid by other taxpayers. But an oft-ignored consequence of debt forgiveness is that it incentivizes universities to raise prices even further, knowing that doing so increases revenues for them at the expense of taxpayers and future student borrowers.

FREOPP’s pioneering work on the return on investment of higher education shows that many bachelor's and master’s degrees have a negative return on investment: 23 percent and 43 percent, respectively. Our federal student loan system subsidizes degree programs irrespective of their ROI. So why does President Biden keep pursuing the policy?

In the 2023 case Biden v. Nebraska, the U.S. Supreme Court blocked the Biden administration’s plan to forgive federal student loans through executive order because its scope was so large it required Congressional authorization. Despite the ruling, the administration continues to pursue forgiveness through executive action and keeps fighting in federal court. In April of this year, the administration unveiled a new more targeted plan that would still cancel hundreds of billions of dollars of loans for tens of millions of borrowers. 

The White House initially employed a two-tiered legal strategy to forgiveness, which largely skews toward those with higher incomes, a strategy one could hardly consider conducive to economic mobility.

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The administration’s first strategy pursued student-debt cancellation through the HEROES Act, a George W. Bush administration-era law that grants the education secretary emergency powers. During the COVID pandemic, the Trump and Biden administrations had used the law to pause student loan payments. In October 2021, the Biden administration used it to modify a student debt forgiveness program for public workers and, in August 2022, used the act again to expand student debt cancellation of up to $20,000. This was the expansion declared unconstitutional in Biden v. Nebraska. 

Undeterred, the Biden Administration tried to forgive student debt through SAVE, the Student Loan Accountability Verification and Education plan. This forgives loans by significantly modifying repayment terms to reduce student debt payments over time. 

In addition, the latest Biden plan eliminates student debt for borrowers who currently have been in repayment 20 years or more, which amounts to a taxpayer-funded giveaway to wealthier Americans. Older recipients of forgiveness have already advanced in the workforce to higher paying jobs, thereby giving relief to people who probably need it less than those just starting out in  the workforce. 

In July, the U.S. Court of Appeals for the Eighth Circuit prohibited the Biden administration from implementing some parts of the SAVE plan. 

Uncertainty still surrounds further legal challenges. If the challenges fail, scores of borrowers—many with higher incomes—could start to see forgiveness as early as October.

Successful higher education policy reform involves a permanent solution, not one-time forgiveness that creates bad incentives for schools to increase tuition and students get backed by government loans to enter negative ROI degree programs. 

Published research in the Review of Financial Studies by New York Fed economists David O. Lucca, Taylor Nadauld, and Karen Shen finds that expanded federal student-aid programs cause college tuition hikes. Schools have every incentive to take advantage of charging more tuition when such funding comes through the federal government with no accountability.

Taxpayers should not subsidize degrees from negative ROI programs which hurt such borrowers by dimming their job prospects.  

The appropriate policy to provide economic opportunity for Americans, especially poorer students trying to move up the economic ladder, should make quality education more accessible and affordable, not saddle people with debt for degrees that are not worth the cost. True reform would create institutional accountability, by subsidizing student loans for positive ROI programs and limiting subsidies for negative ones.

For example, Congress could enact reforms that restrict eligibility for student loans to degree programs that have a positive ROI, or render ineligible for those loans programs that are in the bottom quartile of ROI. Such a reform would force colleges to reduce tuition for those programs, and/or improve the economic prospects for graduates of those programs, in order to generate a positive ROI. Gone would be the days in which universities raised prices irrespective of the debt burden those prices impose on their students.

I’ll explore this concept in more detail in a future post.

Welcome to The Tassel, FREOPP’s education newsletter. This is where our scholars analyze the state of equal opportunity in American education, as well as share research and commentary from others that we think are worth your time. We are grateful for Preston Cooper’s past contributions and for establishing this Substack. To manage your subscription preferences, visit your Substack settings.

The state of equal opportunity in American education in 2024

When I joined FREOPP five years ago, my first report reviewed the state of equal opportunity in American education. I concluded that the United States had reduced past resource inequalities in public schools that had limited opportunities for low-income children. But large achievement gaps persisted. Children from lower socioeconomic backgrounds were still struggling compared to their more affluent peers. The biggest opportunity gaps that I identified were that children from wealthier families were more likely to attend a school of their parents choice and access outside of school learning and enrichment.  

Rereading my 2019 report now feels like opening a time capsule. So much in American education has changed after the pandemic. But these key opportunity gaps have been clearly exposed.  

Unnecessary public school closures widened the academic achievement gap 

You probably already know the bad news. Prolonged and unnecessary public school closures caused a generation of children to suffer serious learning losses. National test scores released last year showed historic declines in American students’ reading and math test scores. Children from lower income families suffered larger setbacks than their peers.

As I warned Congress during an August 2020 committee hearing, closing public schools for long periods risked expanding the academic achievement gap for a generation of American children. Our worst fears are now being realized. Harvard and Stanford researchers recently analyzed state-level testing data between 2022 and 2023 and found that “achievement gaps between rich and poor districts are even wider now than they were before the pandemic.” 

22 million children now have access to new education options 

But there is reason for hope. State policymakers across the country have responded to the academic damage caused during the pandemic by giving parents new power to choose their children’s schools and learning environments. In recent years, ten states (AZ, AR, FL, IN, IA, NC, OH, OK, UT, and WV) established universal school choice programs. So far this year, Alabama and Louisiana established universal education savings account (ESA) programs. 

According to EdChoice, 22 million children now have access to private school choice programs, and more than 1 million children are now taking advantage of such options. This includes nearly half a million children using ESAs that allow parents to pay for tuition or customize their child’s education. I proposed this vision of giving parents direct control of their child’s education funding through ESAs way back in 2005. It’s exciting to now see how parents, students, and educators are benefitting from ESA programs. For a glimpse of the future of American education, read the new report from Ron Matus with Step Up for Students: A Taste of A La Carte Learning. It describes how people are using ESAs in South Florida. Highlights include Saltwater Studies (a marine biologist teaching students in state parks) and Eye of a Scientist (a neuroscience PhD providing customized experiential science lessons).

Closing opportunity gaps with education savings accounts 

Thanks to these new education options, the major opportunity gaps I identified in 2019 are being narrowed. Nearly half of the nation’s K-12 students, regardless of their socioeconomic background, now have the chance to attend a school of their parents' choice or use their share of public funding to purchase a high-quality education. The proliferation of ESAs also has the potential to narrow the outside-of-school learning and enrichment gap, which remains a major source of inequality. 

While the movement to establish parental choice in education has made historic progress, a lot of hard work remains to ensure that disadvantaged children benefit from these new options. This includes effectively administering and implementing these new options, establishing customer-friendly services and technologies to help parents access accounts and make payments, and educating parents about these benefits.

Where I’ve been speaking 

The historic expansion of education choice options for American families is the result of years of hard work by parents, philanthropists, political leaders, and the research and advocacy communities. 

The Children’s Scholarship Fund’s annual summit 

I was very honored to speak at the Children’s Scholarship Fund’s annual summit in March. As I wrote last year, the national movement to expand parental choice in education really started in 1998 when CSF offered tuition scholarships to the nation’s most disadvantaged children. More than one million students applied even though parents had to commit $1,000 of their own money to pay a partial tuition payment. That means that the nation’s most disadvantaged families pledged $1 billion to help their children escape underperforming public schools. Over the past 25 years, CSF has awarded more than $1 billion in privately-funded scholarships (benefitting more than 200,000 students) and accelerated the national movement to change public policy to establish parental choice in education. 

Parents for School Options leadership conference 

I also had the privilege of delivering the keynote address at the Parents for School Options leadership conference last month. It was inspiring to meet with parents and advocates working on the frontlines across the nation to empower parents. My remarks focused on how education choice reforms are giving parents direct control of two of the most critical resources in their lives: time and money. 

Let me unpack this a bit. Theorists have reasoned that half of a person's “felt life experience” is over by age 18, based on the way that people experience the passage of time as a percentage of the time that they’ve already lived. It’s why time seems to move more slowly during childhood but flies by during adulthood. The 2,300 days that the typical student will spend in school through high school will account for a large share of her “felt life experience.” And with public schools now spending $15,600 annually per-pupil on average, a typical student will have about $200,000 spent on her schooling through high school. Giving families control of that precious time and money through ESAs would give all children a chance to get a high-quality education and have a fulfilling childhood filled with enriching and positive experiences.

What I’m researching 

I have been researching the relationship between education outcomes and human capital development, and exploring new ways that education stakeholders can estimate the return-on-investment from education interventions. Focusing more on the potential ROI of education investments and expenditures has the potential to promote human capital development and expand equal opportunity. We’ve also been developing our own policy recommendations for Congress and the White House in 2025 to reform federal programs to expand education opportunities for disadvantaged children, increase child care access and affordability, and to help foster children become independent when they age out of the child welfare system. We will be publishing this research in the coming months.

FREOPP’s work is made possible by people like you, who share our belief that equal opportunity is central to the American Dream. Please join them by making a donation today.

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IMPORTANT UPDATE: This will be the last newsletter I publish on the FREOPP Substack platform. Starting next month, I will transition this newsletter over to my personal Substack page. If you want to continue receiving updates from me, subscribe here.

Elite higher education isn’t terribly popular these days. Critics see many problems at top colleges: excessive costs, administrative bloat, outdated pedagogical models, and an abandonment of the principles of liberalism and free expression. Some of those critics have wondered whether we can really wait for elite colleges to fix their own problems. Instead, why not disrupt higher education from the outside, by starting an entirely new university?

In 2021, that’s exactly what several of them did. Spearheaded by several prominent public figures such as Niall Ferguson and Bari Weiss and backed by more than $200 million in philanthropic funding, the University of Austin was born. But as I explore in a new essay for Education Next, this new endeavor has run up against an underappreciated problem: red tape.

It’s too hard to start a new university

To get a new university off the ground, the first step is receiving permission from the appropriate state authorization agency. For the University of Austin to launch in Texas, this required more than a year of prep time, 2,000 pages of documentation, and ten months for the Texas Higher Education Coordinating Board (THECB) to process the school’s application. During that time, the University of Austin was barred from recruiting or enrolling students—and couldn’t even officially call itself a university.

But state authorization is just the first step. Most states, including Texas, require their colleges to be accredited or on a path to accreditation. This will add another five to seven years to the University of Austin’s approval process, not to mention millions of dollars and the attention of several full-time staff.

Most concerningly, accreditors are often skeptical of or hostile to different educational models that new schools might want to try. Mike Shires, a University of Austin official helping the school navigate these various approval processes, says that accreditors tend to engage in “benchmarking”—asking, in effect, whether a new school conforms to the practices of existing schools.

But that approach clashes with the innovative model that the University of Austin wants to pursue. “We’re trying to look different than other institutions—to blow up the departmentalized administrative process and create a more coherent whole,” Shires told me in an interview. “It’s very important to us that we’re allowed to hold on to that mission, and that we’re not going to be expected to go out and match whatever Baylor [University] or [the University of Texas] is doing.”

Why we need more colleges

I’m optimistic that the University of Austin will succeed, given the considerable resources, prominent public figures, and political capital at its disposal. But it may be the exception that proves the rule. Aspiring new universities without Austin’s profile often find these barriers to entry insurmountable.

As a result, almost all students attend colleges that first formed decades ago, if not centuries. The few “new” schools that have formed in the last quarter-century are mostly offshoots of existing universities. But while the number of degree-granting nonprofit colleges has stagnated since 1990, the undergraduate student population has swelled by 25 percent. Higher demand and inelastic supply explain the tuition hikes that college students have suffered over the past thirty years.

It may seem odd to worry about barriers to entry in higher education when college enrollment has started to drop and small schools are closing at a rate of one per week. But one major reason for falling enrollment is disillusionment: many Americans no longer agree college is worth the cost. To change their minds, colleges need to lower costs and improve quality. That will require innovation, which new institutions are best positioned to supply.

The University of Austin represents the hope that disruption can improve the college experience. But its experience also illuminates the artificial barriers that prevent American higher education from reaching its full potential. Read more in my full essay at Education Next.

Another reminder to subscribe here if you want to keep receiving updates from me going forward.

What I’m writing

• Protect students—and taxpayers—from the costs of college closures. (Inside Higher Ed) Philadelphia’s University of the Arts announced its closure last week, potentially leaving 1,200 students in the lurch. If they can’t transfer their credits somewhere else, those students could lose years of effort and tuition payments, while the government could be on the hook for millions in discharged student loans. We can only expect such closures to become more common as college enrollment declines. It could be time to revisit my proposal from 2022 to require colleges to insure themselves against closure risks, rather than passing the bag to students and taxpayers.

• New student debt relief rule goes further than you think. (OppBlog) I submitted my public comment on the Biden administration’s latest student loan cancellation proposal. The new scheme is more limited than the version the Supreme Court struck down last year, but still significant, as the summary of my comment up on OppBlog details. The comment raises three major issues with the regulation: the plan is likely illegal, it could unduly benefit wealthy borrowers, and the Education Department’s cost estimate of $147 billion could be too low.

What I’m reading

• Why don’t American medical schools produce more doctors? In a report for the Heritage Foundation, Jay Greene argues that monopoly control over the American medical school accreditation system is to blame. Medical schools are accepting and graduating fewer students relative to the population, even though there is no shortage of qualified applicants or residency slots. The solution, according to Greene: “Congress must break up the accreditation cartel.”

• D.C. passed a regulation requiring child care workers to earn college degrees, and it’s making the child care crisis worse. As Justin Zuckerman of Reason explains, the regulation may force veteran teachers out of their jobs and reduce the supply of child care—making it even more expensive. Day care for toddlers in D.C. now costs more than $24,000 per year.

• The FAFSA debacle may push some small colleges over the brink, warn Charles Ambrose and Michael Nietzel in Inside Higher Ed. The botched rollout of the new financial-aid application could reduce the ranks of college freshmen by 10 to 20 percent, the authors figure, though we won’t know the true impact until September. Some colleges will not survive a blow like that.

• Credentials below the bachelor’s degree level can help students prepare for a good job—if they’re in the right field of study. But a new report from Georgetown University suggests colleges are granting so-called subbaccalaureate credentials in all the wrong fields. In fact, 28 percent of these credential “have no direct occupational match” whatsoever.

What I’m doing

Check out my conversation with Michael Horn, who hosts The Future of Education podcast. We discuss the latest student loan cancellation news, attempts at higher education reform from left and right, and the best way forward on accountability for colleges.

One more reminder to subscribe here if you want to keep receiving this newsletter in July and beyond.

At the end of May, I visited the Galapagos Islands with my mother. What I love about this place is that its historic lack of land predators—including humans—means the animals are fearless. It’s possible to observe them up close; most are completely unbothered. I was fortunate enough to see this pair of blue-footed boobies engaged in a courtship ritual.

FREOPP’s work is made possible by people like you, who share our belief that equal opportunity is central to the American Dream. Please join them by making a donation today.

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IMPORTANT UPDATE: Starting in July, I will transition this newsletter over to my personal Substack page. If you want to continue receiving updates from me, make sure you’re subscribed here.

These days, fewer Americans have confidence that a college degree will be worth the cost. While higher education’s boosters insist that the benefits of college outweigh the expense, young people look askance at high student debt burdens. Is college worth it or not?

My latest report for the Foundation for Research on Equal Opportunity argues that the framing of the question is wrong. “College” is not one thing, but rather many different programs and pathways. Depending on their choices, students get a lot of value from college, or none at all. Making responsible choices about college starts with having good data on the financial value of the various pathways available.

Measuring the value of college: return on investment (ROI)

The new report presents estimates of return on investment (ROI) for over 53,000 degree and certificate programs, ranging from trade schools to medical schools and everything in between. I define ROI as the increase in lifetime earnings that a student can expect from a particular college degree, after subtracting the cost of college and (critically) adjusting for the risk that she will not finish on time.

If ROI is positive, then students who enroll in that degree program can expect to gain financially. If ROI is negative, then the program is unlikely to fully compensate students for the cost and risk of pursuing higher education.

Overall, 69 percent of degree and certificate programs with available data have positive ROI, meaning they usually leave students better off. Bachelor’s degrees are usually a good bet, with 77 percent having positive ROI, though there are exceptions. Two-year degrees and master’s degrees are the riskiest sorts of programs—almost half of these degrees leave students worse off.

Perhaps the most important factor associated with ROI is field of study. Among bachelor’s degree programs, typical ROI is above $500,000 for engineering, computer science, nursing, and economics programs. Other majors including political science, business, and mathematics have a decent return as well. But ROI is typically below $100,000 for majors such as psychology, English, education, and fine arts—and a significant share of these degrees have no return at all.

What if you don’t want to get a bachelor’s degree? Fortunately, there are still some good options. A vocational certificate in the technical trades—including HVAC technology, auto repair, welding, and other fields—has a higher ROI than the median bachelor’s degree. Another good option is a two-year degree in registered nursing. But field of study matters a lot below the bachelor's degree level: a two-year degree in liberal arts or a certificate in cosmetology usually leaves students worse off.

Introducing FREOPP’s ROI dashboard

If you want to dive deeper into the data, FREOPP has also published a brand-new dashboard where you can look up data for your own degree. Simply select your institution from the dropdown list at the top, and the dashboard will automatically display our ROI estimates for the credentials offered there. You can also filter the data by state, institution control, credential type, and field of study.

We calculate ROI in multiple ways: one measure assumes you complete on time, and another accounts for the risk of dropping out. You can also see our estimates of median earnings during the early career and mid-career.

Here’s what the dashboard looks like for my own alma mater, Swarthmore College.

Over the coming weeks, I’ll publish some more analyses of the ROI database at FREOPP.org and various other places. For now, if you’d like to dig deeper, check out the full report.

What I’m writing

• Nothing predicts college completion like high school GPA. (OppBlog) Speaking of ROI, one of the most important reasons students frequently fail to see a return from college is non-completion. Starting college but not finishing often leaves students with debt they can’t repay. So what causes non-completion? Academic preparation is arguably the most important factor. Among students with an “A” average in high school, nearly 90 percent of those who start college finish within eight years. But among students with a “C” average, the completion rate is just 33 percent.

• Biden’s latest student loan cancellation plan doesn’t fix the underlying problem. (Forbes) The Education Department is out with a brand-new student loan cancellation plan, this one for a relatively modest price tag of $147 billion. (Yes, “relatively” is doing a lot of work there.) One of its principal components: canceling accrued interest for borrowers who owe more now than they did upon entering repayment. About 25 million people fall into this category. I argue that the student loan system offers far too many opportunities to avoid paying down principal on your loans. It’s a direct result of misguided government policy that hands out loans with few safeguards, then creates plenty of options to avoid paying.

• The federal student loan program is unraveling. (CNN Opinion) Both parties seem to agree that the federal student loan program is broken, though there’s disagreement over what to do about it. Democrats want to forgive past debts, while Republicans want to get the government out of the student loan business entirely. Beth Akers, Joe Pitts and I argue it’s time to take the latter argument seriously. Privatizing student loans would curb the worst excesses of government meddling in higher education and save taxpayers a bundle—but there are serious pitfalls privatization advocates need to wrestle with.

What I’m reading

• Grade inflation is rampant in higher ed, but colleges aren’t talking about it, write a group of scholars for the Chronicle of Higher Education. Thanks to higher GPAs, college completion rates are on the upswing. But that’s not because students are learning more: “students with the same demonstrated proficiency got higher GPAs as time went on,” the authors conclude based on new research.

• The chaos around the new FAFSA form continues, and it’s wrecking some students’ lives, write Alia Wong and Zach Schermele at USA Today. Their profiles of students affected by the disastrous FAFSA rollout include students who have missed out on scholarship aid or taken extra jobs to cover cost. Some are skipping college altogether.

• A new law in Colorado aims to improve transfer of credit between institutions, writes Jessica Blake at Inside Higher Ed. Students typically lose almost half their credits when they transfer between colleges, and sometimes they can’t apply most of their old credits to their new major. The bill standardizes credit transfer pathways for popular majors and requires schools to disclose how many transfer credits they reject.

• The Biden administration wants to ban colleges from packaging textbooks with the cost of tuition, writes Alex Tabarrok at Marginal Revolution. The campaign against such “Inclusive Access” programs—which the Obama administration promoted in the past—seems to be at odds with the Biden administration’s war on “junk fees.”

• When are anti-Israel campus protests protected free expression, and when do they cross a line? Greg Lukianoff of the Foundation for Individual Rights and Expression has a great compendium of recent anti-Israel campus protests and schools’ reactions. College presidents have done a poor job both protecting free speech and punishing clear violations of campus rules.

What I’m doing

Check out my conversation on CSPAN Washington Journal with Jared Bass of the Center for American Progress. We discuss/debate the Biden administration’s latest student loan cancellation plans.

No recent travel photos to share, so I’ll just reminisce about my trip this time last year to my aunt’s bison ranch in Illinois. I took this photo right after I told this bison the ROI of her master’s degree.

One more reminder to subscribe here if you want to keep receiving the Tassel in July and beyond.

FREOPP’s work is made possible by people like you, who share our belief that equal opportunity is central to the American Dream. Please join them by making a donation today.

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Welcome to The Tassel, FREOPP’s newsletter on higher education policy, written by senior fellow Preston Cooper. Each month, The Tassel dives into our latest work on higher education, along with a handpicked selection of research and articles from around the web that we think are worth your time. To manage your subscription preferences, visit your Substack settings.

I get readers from all parts of the political spectrum, but it probably won’t be controversial to say this: the federal student loan program is a mess. Administrative chaos, high delinquency rates, subsidies for low-quality institutions, and enormous fiscal costs are just some of the problems with federal student lending.

Many people, particularly those on the right, think the government should give up and let the private sector take over the responsibility for making student loans. Those arguments are gaining more currency as the problems with federal student loans reach something of a climax. Millions of borrowers missed their first payments in October, and new loan-relief plans threaten to drain the Treasury of hundreds of billions of dollars.

It's time to start taking student loan privatization seriously. That’s the subject of a new report I coauthored with Beth Akers and Joe Pitts of the American Enterprise Institute. We explore the current state of the private student loan market, weigh the benefits and drawbacks of privatization, and outline a policy agenda to make privatization work.

Privatization could improve higher education—but there are drawbacks

Just 10 percent of college students use private student loans, since the federal student loan program is so heavily subsidized that private lenders cannot compete. But the federal government will make a loan to almost any student to attend almost any accredited college, even if that college has an abysmal track record of helping students graduate and find jobs that enable them to repay their debts. Federal bureaucrats lend taxpayer dollars rather than their own, so there’s little incentive to ensure those funds actually go to good programs.

Private financial institutions, by contrast, won’t lend to students unless they expect to be paid back. Beth, Joe, and I find that the delinquency rate on private student loans is just one-third the rate on federal loans. Lenders have an incentive to steer prospective college students towards programs where graduates typically earn enough to repay their debts. If the private sector assumed a greater role in higher education finance, colleges would need to shape up or risk losing access to loans for their students.

That would hold colleges accountable for their outcomes in a way that the government seems incapable of doing. We’ll see far fewer horror stories of students mired in education debt they can’t repay. Privatization would also save taxpayers around a quarter trillion dollars over ten years.

But privatization comes with stumbling blocks that its proponents need to address. There are practical and regulatory barriers to expanding private student loans, particularly to student borrowers without a satisfactory credit record or a creditworthy cosigner. Mortgage borrowers can use their house as collateral, but students can’t exactly borrow against the value of their degree. Moreover, regulators are hostile towards new methods of underwriting based on students’ expected return on investment. Private lenders face loads of regulatory uncertainty.

The right way to end federal student loans

All this may lead the private sector to underinvest in higher education—that is, deny loans to many students who could nonetheless benefit from college. While some degree of market failure is inevitable—and may pale in comparison to the government failure that plagues the federal student loan program right now—reformers should still think about how to mitigate the drawbacks of privatization.

Regulatory reform is an obvious candidate. The Equal Credit Opportunity Act discourages lenders from using students’ expected return on investment (ROI) from higher education to make lending decisions, so they instead fall back on FICO scores. Lawmakers should create regulatory “safe harbors” to allow lenders to use ROI-related measures.

Policymakers should also consider a modest expansion of scholarship aid for low-income students and others who might have trouble securing a private loan. Just a fraction of the estimated $249 billion savings from student loan privatization could enable a significant increase in the Pell Grant, which would reduce low-income students’ need to borrow. Privatization advocates typically want to get the federal government out of higher education, but considering that federal student loans do far more damage than Pell Grants, swapping the former for the latter is still a worthwhile trade.

With the federal student loan program going off the rails (if it was ever really on them), the time is right for a serious conversation about privatization. A sensible privatization agenda—combined with regulatory reform and better grant aid—would help ensure students come out ahead when they pursue college.

What I’m writing

• The Education Department has failed its obligations to America’s students. (National Review) The bungled launch of the new FAFSA—that’s the form prospective college students use to apply for federal aid—just keeps getting worse. Every day seems to bring news of a new oversight or error that will delay financial aid decisions for millions of students; there will probably be a new one by the time you finish reading this sentence. Among the more farcical issues: after the Department directed some students to submit some of their information by email, it never assigned anyone to check the inbox—meaning 70,000 emails from frustrated students went unread. The chaos is a predictable consequence of the Department prioritizing high-profile initiatives like student loan cancellation over the humdrum work of actually governing.

• The student loan cancellation cheat sheet. (OppBlog) Speaking of student loan cancellation, FREOPP held a Hill event earlier this month that walked attendees through the myriad loan-relief initiatives that the Biden administration has advanced without Congressional approval. I compiled information about those various initiatives into a “cheat sheet” to help observers make sense of everything. The list includes high-profile plans as well as those that have flown below the radar (the one-time IDR payment count adjustment, anyone?). If implemented, the total cost of these plans could reach one trillion dollars.

• Why your college tour should include a technical school. (Forbes) I was in Texas last month, which gave me the opportunity to visit one of the nation’s foremost technical schools: Texas State Technical College (TSTC). The school’s appropriation from the state depends entirely on what students earn after graduation, which means economic mobility is baked into its mission. Though the school only offers two-year programs, starting salaries for alumni are comparable to those of four-year college graduates. Technical schools are becoming a more popular choice, with enrollment up even as fewer students attend college overall.

What I’m reading

• Standards in American high schools are falling, according to an analysis by the Economist that compares high school graduation rates to average SAT scores. Holding SAT scores constant, students are far likelier to graduate today than in 2007—suggesting declining standards, not real improvement, are the reason behind rising graduation rates. The findings have serious implications for college readiness.

• Many jobs that “require” a master’s degree don’t pay enough, according to a new issue brief from Urban Institute scholar Molly Scott. Half of jobs where the typical minimum qualification is a master’s degree pay less than the median wage for people with only a bachelor's degree. The findings suggest we need to reduce degree requirements for these professions.

• AI could help rebuild the middle class, writes economist David Autor for Noema. AI is not a substitute for human labor, but a tool to augment existing expertise. Autor argues AI could enable workers “possessing complementary knowledge to perform… higher-stakes decision-making tasks.” This could result in more opportunities for workers without advanced degrees.

• Kansas sued the Biden administration over its "SAVE" loan repayment plan, writes Michael Brickman of AEI. More than half of borrowers enrolled in SAVE pay nothing towards their loans, effectively making the plan backdoor student loan forgiveness at a half-trillion-dollar fiscal cost. If courts side with the states, it would deal a significant blow to the administration’s loan-cancellation agenda.

• Gen Z is becoming the toolbelt generation, writes Te-Ping Chen at the Wall Street Journal. Despite comfortable wages, the skilled trades suffer from a shortage of workers. But younger Americans, raising an eyebrow at the value of traditional colleges, are powering a rebound in the ranks of skilled tradespeople.

What I’m doing

Last weekend, I visited Niagara Falls to enjoy the total solar eclipse. No photos of the event itself—my iPhone camera didn’t cooperate, and I didn’t want to waste three minutes of totality getting things in focus—but I took plenty of shots around the falls. This one is from the Cave of the Winds on the American side of the river.

FREOPP’s work is made possible by people like you, who share our belief that equal opportunity is central to the American Dream. Please join them by making a donation today.

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Welcome to The Tassel, FREOPP’s newsletter on higher education policy, written by senior fellow Preston Cooper. Each month, The Tassel dives into our latest work on higher education, along with a handpicked selection of research and articles from around the web that we think are worth your time. To manage your subscription preferences, visit your Substack settings.

About this time nine years ago, I was a college senior sending out applications for my first full-time job. Fortunately, I found a research assistant position at the Manhattan Institute that aligned with the field of my degree (economics) and allowed me to use some of the skills I had developed in college. But many college seniors sending out résumés today will not be so lucky, according to a fascinating new report from the Burning Glass Institute and the Strada Education Foundation.

Over half of recent college graduates are underemployed

The report, which I covered in my Forbes column last week, finds that 52 percent of recent college graduates are working in jobs where they don’t use their degrees. The authors reach this conclusion by analyzing the work histories of millions of college graduates. A recent graduate is classified as “underemployed” if she works in a job where a college degree is not usually necessary, as measured by the share of workers with a degree in that occupation currently (among other factors).

The authors find that most underemployed college graduates work in jobs that typically require “only a high school education or less, such as jobs in office support, retail sales, food service, and blue-collar roles in construction, transportation, and manufacturing.” My own research finds that the share of secretaries—traditionally a high school-level job—with a bachelor’s degree or higher rose from 9 percent to 33 percent over the past three decades.

There’s nothing inherently wrong with these jobs, and we shouldn’t look down on them as “beneath” college graduates. But underemployment is troubling nonetheless. The report finds that underemployed recent college graduates earn just $40,000 per year—only a few thousand dollars more than someone with only a high school diploma. At those salary levels, an underemployed college graduate is less likely to recoup the considerable costs of higher education. (By contrast, the typical college graduate in a traditionally college-level job earns $60,000 per year.)

The new report adds to previous research on the subject by looking at underemployed college graduates’ career trajectories over a long time horizon. The vast majority of graduates who are underemployed in their first job out of college remain so ten years later. Persistent underemployment appears to be a key reason why many college graduates fail to receive a return on their investment in higher education.

Fortunately, students have some agency to improve their prospects. Those who choose majors with a heavier quantitative component are less likely to be underemployed after graduation. Students who complete an internship while in college are half as likely to be underemployed, after accounting for other factors.

But hiring practices are also fueling underemployment

The report on underemployment completements another paper that caught my eye this past month. Employers and state governments have made noise over the past few years for (rightly) dropping bachelor’s degree requirements from jobs where a degree is not strictly necessary. The second report, also from Burning Glass and Harvard Business School, looks at whether the “skills-based hiring” movement has led to an actual change in hiring practices.

The results are somewhat disappointing. After a firm removes a degree requirement from a job posting, hiring of workers without degrees for that role increases by just 3.5 percentage points. That’s not insignificant—it translates to around 97,000 new hires without degrees per year—but it’s far less progress than advocates of skills-based hiring, including myself, had hoped for.

The second report suggests we can’t ignore the role of employers in fueling underemployment. Employers have a strong preference for candidates with bachelor’s degrees, even for jobs where a bachelor’s degree is not required. If employers hire college graduates into these noncollege roles, the mechanical result is higher underemployment.

That’s not a great situation for anyone. College graduates are stuck in jobs where they don’t use the skills they (and taxpayers) paid for. People with only a high school diploma are shut out of job opportunities that they’re qualified for. Even employers lose out: the Burning Glass/Harvard report finds that college graduates have higher turnover than high school graduates in the same roles. The only winners seem to be colleges, as the average American worker needs to stay in school for longer just to qualify for the same jobs.

There are no easy fixes here, but policymakers ought to rethink the blanket, unconditional subsidies that higher education currently enjoys. College funding should be tied to outcomes, so schools with a track record of placing their graduates in noncollege jobs face incentives to improve. More equal funding for noncollege pathways into the labor force is also a good idea. Most importantly, these disappointing results should not stop policymakers and advocates from pushing employers to adopt skills-based hiring. It’s a promising concept, but there’s much more work to do.

What I’m writing

• Student loan cancellation enters its crystal ball era. (OppBlog) The Department of Education’s effort to cancel federal student loans through executive action took a farcical turn last month, as the Department advanced a proposal that would allow the Secretary of Education to cancel debt for borrowers in “hardship.” What qualifies as hardship? Whether the Secretary, relying on a black-box model, determines that the borrower is likely to default in the next two years. The likeliest outcome is that ED will look into its crystal ball and declare that tens of millions of borrowers are at risk of default, and therefore tens of millions of borrowers must have their debts cancelled. The proposal could be costlier than the one-time loan forgiveness plan the Supreme Court struck down last year.

• How the student loan safety net backfired. (Forbes) Income-driven repayment (IDR) plans allow federal student borrowers to tie loan payments to their incomes—and allows many to set their payments at $0. But new research from two economists affiliated with the Department of Education finds there’s a hidden cost to those $0 payments. Zero-payment borrowers become disengaged from the student loan system and are less likely to enroll in auto debit or recertify their participation in IDR each year. As a result, zero-payment borrowers are more likely to become delinquent on their loans after a year (when their IDR enrollment expires), relative to borrowers with a small but nonzero payment. The problem is likely to get worse thanks to the Biden administration’s expansion of IDR, under which more than half of participants “enjoy” a $0 payment.

What I’m reading

• The disastrous launch of the revised FAFSA will delay financial aid awards for millions of college students, and could stop some from attending altogether. An Inside Higher Ed investigation looks at what went wrong. The reporting paints a picture of an Education Department distracted by political priorities such as loan cancellation: “A source familiar with the project said they thought the department underestimated the work involved in the FAFSA overhaul from the get-go and viewed the project primarily as a system issue—one that wasn’t as high-profile as their other ambitious plans.”

• A new high school in New York City will train students to jump directly into health care jobs, the New York Daily News reports. The school, operated in partnership with a major health care provider, will open in 2025 and enroll 900 students. It’s a great example of investment into college alternatives. “Just graduating kids who are not college-bound with no skills is doing them a tremendous disservice,” says one of the school’s funders.

• Kansas will sue the Department of Education over its new income-driven repayment plan, writes Sunflower State attorney general Kris Kobach in the Washington Free Beacon. The new loan repayment plan, which will set loan payments at $0 for millions of borrowers and cost $475 billion over ten years, has already begun enrolling borrowers—and some have already seen loan cancellations. A case to keep an eye on.

• Speaking of loan cancellation, there’s a great explainer of the Biden administration’s various cancellation initiatives over at the Dispatch. Former Education Department official Dan Currell walks us through some loan cancellation programs you might have heard about—and quite a few you haven’t.

• A House bill would ban large employers from automatically screening out job applicants without a bachelor’s degree. The bipartisan proposal would require employers to consider these applicants’ alternative experience and qualifications, but wouldn’t ban bachelor’s degree preferences entirely.

What I’m doing

I enjoyed a brief long weekend in London last month. As any self-respecting higher education scholar would, I took a day trip to Cambridge, one of the world’s original college towns. The place is beautiful, but I was disappointed that most of the university’s colleges are fenced off. You have to pay to enter some, and others don’t allow visitors at all. Here’s a photo I took on the grounds of King’s College Cambridge (after paying £12).

I have no shortage of criticisms of American universities, but I do appreciate that most allow visitors to stroll their campuses unimpeded. I’m not sure if that benefit is worth the massive property tax exemptions we give them. But it is a nice perk.

FREOPP’s work is made possible by people like you, who share our belief that equal opportunity is central to the American Dream. Please join them by making a donation today.

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Welcome to The Tassel, FREOPP’s newsletter on higher education policy, written by senior fellow Preston Cooper. Each month, The Tassel dives into our latest work on higher education, along with a handpicked selection of research and articles from around the web that we think are worth your time. To manage your subscription preferences, visit your Substack settings.

It’s a tough time to be a community college. According to the latest numbers from the National Student Clearinghouse, in fall 2023 4.5 million students enrolled in community colleges, down 13 percent from fall 2019. Enrollment in four-year colleges is also down, but at community colleges things have really collapsed. And while the Covid-19 pandemic made matters worse, community college enrollment was already trending south before 2020.

Pretty much every member of Congress has a community college in their district, so policymakers are naturally worried. Democrats haven’t given up on making community college free, even though President Biden’s $109 billion scheme failed to gain much traction in an era of trillion-dollar fiscal deficits. Aside from cost, however, free-tuition plans are flawed for another reason: they fundamentally misconstrue the problems facing the community college sector.

Low tuition, but low completion rates too

Students aren’t turning away from community colleges because the price is too high. (Community college is already free for most students after financial aid, and the vast majority don’t need to take out loans.) As I argue in RealClearEducation this week, the problem isn’t price, but quality.

Just 43 percent of students who begin their studies at a community college complete any degree or certificate, and a paltry 16 percent successfully transfer to a four-year university and earn a bachelor’s degree. Economic outcomes aren’t great either. According to the College Scorecard, community college students earn just $33,000 six years after first enrolling, compared to $45,000 for students who choose public four-year colleges.

Unfortunately, there’s little sign things are getting better. A long-term study released this week found little improvement in community college completion rates over the past seven years. Another analysis found that community colleges tend not to increase their capacity to provide instruction in high-need fields, even when those fields experience a surge of labor market demand. Given this backdrop, it’s unsurprising that students are losing faith in the power of community college to unlock a better life.

Changing the incentives

One group of community colleges is an instructive exception to the rule, as I point out in a blog post at FREOPP. Two-year schools with a vocational focus have fully recovered their enrollment losses since the pandemic. Enrollment at these schools is 4 percent above 2019 levels—a better performance than any other group of two-year or four-year schools.

Students are increasingly interested in programs at community colleges that will help them get jobs. These include computer science (which has added 23,000 students since 2019), vehicle maintenance and repair (9,000), electrical and power transmission installation (8,000), licensed practical nursing (4,000), and precision metal working (2,000).

Policymakers have started to realize it’s not enough simply to increase funding for higher education and hope that solves its problems. Governments need to change incentives. Funding formulas should encourage colleges to add programs in fields with a strong return on investment. Policymakers’ duty to set up the right incentives is especially acute at community colleges, as three-quarters of their revenue comes from the government.

Several states are making moves. Texas is moving ahead with a plan to link appropriations for the state’s community colleges to the number of graduates who find good middle-class jobs, among other metrics. Pennsylvania’s Democratic governor also wants to tie college funding to performance. In North Carolina, the impetus for an incentives-based funding structure is coming from community colleges themselves. At the federal level, the House Education and Workforce Committee approved a bill to create a national performance funding scheme for colleges (paid for by trimming student loan subsidies).

Community colleges face a pivotal moment. Schools which don’t make changes could see their student numbers continue to slide. But those that successfully build up career training programs in high-demand fields may turn their enrollment crisis into an opportunity.

What I’m writing

• A glitchy government form throws college admissions into chaos (OppBlog). The 2020 FAFSA Simplification Act, a longtime priority of Sen. Lamar Alexander (R-Tenn.), directed the Education Department to create a shorter form for college students to use when applying for federal aid. Three years later, the launch of the new FAFSA is a disaster, with experts calling the form “practically unusable.” There are several outstanding issues with the new FAFSA, including some that leave students unable to complete the form at all. The number of completed FAFSAs is less than half of where it should be, given past patterns, and college financial aid decisions are likely to be delayed by weeks or months. The Government Accountability Office has opened a probe into the chaos. One possible culprit: the Education Department’s capacity is overstretched thanks to its adventures into partisan policymaking, such as forgiving student debt by executive fiat.

What I’m reading

• Dartmouth College is again requiring applicants to submit SAT or ACT scores, after going test-optional during the pandemic, writes David Leonhardt of the New York Times. Dartmouth’s internal analysis suggested going test-optional was hurting its ability to recruit qualified low-income students. Disadvantaged students with SAT scores “in the 1400 range” (i.e., great but not perfect) don’t submit their scores under test-optional policies. This leads the admissions office to miss low-income applicants who are nevertheless “excelling in their environment.” A return to requiring standardized tests will, Dartmouth hopes, improve its socioeconomic diversity.

• Virginia is set to ban legacy preferences at public universities, in other college admissions news. A bill to block public institutions in the Old Dominion from giving preferences to the children of alumni unanimously passed the Virginia state legislature, and Governor Glenn Youngkin is expected to sign it. The effort marks a rare area of bipartisan agreement in higher education policy.

• Why have Americans lost faith in the value of college? Longtime Wall Street Journal reporter Doug Belkin writes a longform essay on how the “college for all” promise fell apart. Fierce resistance to change in the academy is a reason that colleges have not adapted to the demands of the 21st century. "Many university presidents who pushed for new programs, the faster adoption of technology or the removal of undersubscribed majors faced no-confidence votes from their faculty,” Belkin writes. Students, who largely want college to prepare them for the jobs of tomorrow, have become disillusioned.

• The real student loan crisis is in graduate education, writes Emma Camp for Reason. In 2006, Congress removed all effective caps on federal lending to graduate students, which caused tuition to balloon and universities to set up a number of flashy but low-quality master’s degree programs. Camp profiles Heather Lowe, whom the University of Southern California aggressively recruited into its online Master of Social Work program. After borrowing $90,000 from the federal government to finish a degree she hoped would lead to a better life, Lowe is earning the same salary she did before enrolling.

• Politicians misperceive ordinary Americans’ access to higher education, but not in the way you’d think, says political scientist Adam Thal in an interview with the Niskanen Center. Politicians “overestimated how difficult it was for people in the state to access higher education,” says Thal. Moreover, “they thought that people were going into more debt to get into college than they actually were. So they overestimated the scale of the problem.”

What I’m doing

I claimed a new state highpoint in January—the Aloha State! I bet many of you didn’t realize that it snows in Hawaii, but 13,800-foot mountains tend not to play by the rules. Here’s a view from a spot near the summit of Mauna Kea, looking out over a snow-covered cinder cone. (Don’t worry, though—on this vacation I spent much more time on the beach than I did in the snow.)

FREOPP’s work is made possible by people like you, who share our belief that equal opportunity is central to the American Dream. Please join them by making a donation today.

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Welcome to The Tassel, FREOPP’s newsletter on higher education policy, written by senior fellow Preston Cooper. Each month, The Tassel dives into our latest work on higher education, along with a handpicked selection of research and articles from around the web that we think are worth your time. To manage your subscription preferences, visit your Substack settings.

It’s the first election-year edition of The Tassel, and I’m expecting higher education to feature as a campaign issue in a way it never has before. Politico reports that President Biden intends to run for reelection on a platform of student loan forgiveness. Biden is sure to tout his $475 billion expansion of student loan repayment plans, as well as ongoing administrative efforts to cancel student debt outright.

What will be Republicans’ response? Widespread discontent with elite universities is sure to fuel demand for accountability to ensure these institutions live up to their promises to students and taxpayers. But Republicans on the House Education and Workforce Committee have now translated those feelings into a concrete policy proposal.

How Republicans would remake higher education

This week, Rep. Virginia Foxx (R-NC), chairwoman of the House Education and Workforce Committee, introduced the College Cost Reduction Act. This far-reaching piece of legislation is the most ambitious conservative higher education reform proposal we’ve seen in years.

At the heart of their proposed changes are new incentives for colleges and universities to keep prices low and improve student outcomes. The legislation requires colleges to shoulder part of the cost to taxpayers when students do not earn enough to pay down their loans. Schools where students graduate with high debt burdens relative to their incomes could be on the hook for significant liabilities. But the legislation is generous in some respects as well. It repurposes some of those savings for a new direct grant to institutions that enroll lots of low-income students, keep tuition down, and generate strong labor-market outcomes.

FREOPP has an exclusive first look at how the legislation would affect colleges and universities nationwide. I find that public community colleges, particularly those with strong vocational programs, will receive nearly $2 billion per year in direct aid if the legislation passes. The bill rewards these schools for their low prices and socioeconomic diversity, as well as the fact that they largely don’t rely on federal student loans.

The story is very different for elite private universities. Despite their vaunted reputations, many graduates of these schools do not earn enough to pay back the loans they took out to afford the schools’ exorbitant tuition prices. This is especially true for top schools that rely on pricey master’s degree programs of questionable economic value for revenue. I estimate that elite private nonprofits would pay almost $2 billion per year in penalties under the Republicans’ plan. The biggest loser? The University of Southern California, which could have to pay nearly $170 million annually if it continues with business as usual.

Creating a more competitive higher education market

But the hope is that universities will not continue with business as usual. The incentives built into the carrot-and-stick framework Republicans have proposed will, ideally, encourage schools to cut tuition and close degree programs that charge students too much for too little return. The lawmakers also hope that competitive pressure will light a fire under incumbent universities to improve.

Perhaps the legislation’s most interesting section deals with reforms to accreditation. The federal government relies on private agencies called accreditors to decide which schools can access taxpayer funding. But as we’ve previously explored in this newsletter, accreditation is also a steep barrier to entry for new institutions. And there’s not much evidence accreditors are effective at the quality-assurance task we’ve assigned them.

The College Cost Reduction Act aims to open up the accreditation system by allowing state governments to designate new “quality assurance entities” that could provisionally allow new colleges and trades schools to access federal aid. Those new schools would still have to comply with existing federal laws, of course, and they’d be subject to the same penalties as incumbent institutions. But creating alternate paths to accreditation could allow new colleges to enter the market and drive prices down. Even if dinosaurs like USC don’t respond to carrots and sticks, they’ll certainly have to make some changes if they see startup colleges snaffle up students that used to be Trojans.

You can read my full analysis of the College Cost Reduction Act at Forbes. For a deep dive into how the bill could affect different schools, check out my issue brief at FREOPP.

What I’m writing

• The bipartisan plan to expand workforce training. (Forbes) The top Republican and Democrat on the House Education and Workforce Committee reached a deal to expand funding for short-term training programs that lead to good jobs. Under current law, students can only use Pell Grants for programs with at least 600 hours of classroom time; the bill would drop that to 150 hours. But don’t hold your breath: many existing workforce training programs would not comply with the proposal’s strict requirements. More interesting is the offset for the program’s $160 million cost: cutting off federal student loans to around three dozen of the nation’s wealthiest universities. “Expand workforce training, and make Harvard pay for it” is certainly a political winner in our populist age.

What I’m reading

• Another bipartisan deal could reauthorize a major law governing workforce training, reports Elyse Ashburn in WorkShift. Experts generally think the fragmented and underfunded Workforce Investment and Opportunity Act (WIOA) does a poor job achieving its goals, though it’s doubtful that the bipartisan deal would turn things around in a significant way. One welcome change: the reauthorization would require states to use at least half of their WIOA funds on actual worker training, rather than administration.

• The launch of the new FAFSA is a “fiasco,” writes Andrew Gillen at Minding the Campus. In 2020, Congress passed a law mandating a simpler FAFSA, the form all college students seeking federal grants or loans must submit. The Biden administration had three years to get the new form ready. But the form, despite being theoretically “launched,” has been available for as little as half an hour each day. Students report constant errors and lockouts. Financial aid expert Mark Kantrowitz calls the site “practically unusable.” One bright spot? At least the memes have been good.

• More than 40 percent of borrowers with student loan payments due have missed them, the Education Department reports. This is despite the Biden administration’s new income-driven repayment plan, which slashed payments to zero for millions of borrowers (at considerable cost to taxpayers). Some of those missed payments might be due to the administrative forbearance into which the Department unilaterally placed millions of borrowers in October. But the data still doesn’t augur well for the return to repayment, which I warned in September could be chaotic.

• Transferring from a community college to a four-year institution may not always help students, according to fascinating new research from economist Lois Miller. She finds that “academically marginal” students who transfer tend to earn less during their early careers than similar students who did not transfer. One possible reason for the effect? Students who transfer out of community colleges are less likely to choose a high-paying field of study, especially business or a vocational program.

What I’m doing

I’m working on a couple of exciting new projects looking at barriers to entry in higher education. I’m especially focused on how well-intentioned rules around state authorization—that’s the permission all colleges need from their state government in order to operate—may protect incumbent schools at the expense of innovation. Do you have an experience with state authorization you’d like to share? Shoot me a message.

I stayed in town for the holidays, so I don’t have any travel updates for this edition. So please enjoy this picture of guanacos I snapped last December in Chile’s Torres del Paine National Park.

FREOPP’s work is made possible by people like you, who share our belief that equal opportunity is central to the American Dream. Please join them by making a donation today.

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Welcome to The Tassel, FREOPP’s newsletter on higher education policy, written by senior fellow Preston Cooper. Each month, The Tassel dives into our latest work on higher education, along with a handpicked selection of research and articles from around the web that we think are worth your time. To manage your subscription preferences, visit your Substack settings.

If your interests involve hot dogs and road trips, rejoice. You can now apply to be the “Oscar Mayer Wienermobile Spokesperson,” a position which involves driving across the country in a “27-foot-long hot dog on wheels” representing the Oscar Mayer brand. The base salary is $35,600 per year. But there’s a catch: you’ll need a bachelor’s degree.

Perhaps $35,600 is an appropriate salary for a hot dog driver, perhaps not. I won’t pass judgement on that question. Historically, however, positions which pay at such a rate have rarely required college degrees. The Wienermobile job is emblematic of a worrying trend: the slow creep of bachelor’s degree requirements into lower-paid occupations.

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Degree requirements creep into lower income brackets

I documented some of these trends in a recent article for Forbes. In 2000, only 16 percent of prime-age workers earning approximately $35,000 per year (in today’s dollars) had a bachelor’s degree or higher. But in 2022, that proportion had risen to 24 percent, an increase of roughly half. The Wienermobile driver is not alone: more and more jobs in this salary range are demanding college degrees.

Earlier this year, I published a report on the phenomenon of “degree inflation”—the slow creep of college degree requirements into jobs that have not formerly demanded them. In 1990, for instance, just 9 percent of secretaries and administrative professionals held a bachelor’s degree. The role of a secretary has historically been a classic “learn by experience” job that functioned as a key career path for individuals with no education beyond high school. But now, 33 percent of secretaries have four-year degrees degrees, and an even greater share of job postings for this position request one.

Degree inflation has affected workers up and down the income ladder. Last year, 51 percent of prime-age workers earning approximately $65,000 per year held a bachelor’s degree or higher, up from 35 percent in 2000. Workers without a degree were once the majority among people enjoying this middle-class standard of living. Now, they are the exception.

Degree inflation hurts people with and without college degrees

In theory, going to college should make an individual more productive in the labor market, enabling her to command a higher salary. Thus, in a perfect world, rising college attainment moves workers from lower to higher income brackets, but the share of workers with a degree within each income bracket remains constant. But in the real world, more students going to college seems to have increased the education levels of lower-paid occupations.

The most obvious consequence of degree inflation is that it closes off job opportunities for the 62 percent of Americans who lack a four-year degree. But degree inflation also hurts those who finish college. Because the supply of college graduates grows faster than the availability of college-level jobs, many graduates end up “underemployed,” or working in jobs that have not traditionally required a college degree. Research shows that underemployed graduates face a large and persistent wage penalty.

The college graduate who ends up driving about in the Wienermobile for $35,600 per year may be able to relate. Graduates who earn salaries at that level will find it far more difficult to recoup the cost of their education—or repay their student loans. FREOPP’s analysis of college return on investment suggests that most students who finish bachelor’s degrees leading to Wienermobile-level starting salaries will be financially worse off for having attended college.

That’s one of many reasons to give colleges stronger incentives to ensure their students can earn back the cost of their education, and to invest in alternative pathways into the labor force that might serve Americans better—whether they aspire to drive a hot dog or not.

What I’m writing

• Degree inflation is happening at the graduate level, too. (Forbes) In 2000, 11 percent of workers earning approximately $60,000 per year in today’s dollars held graduate degrees; now, the share is 17 percent. Given the hefty costs of graduate school, many of those workers won’t earn back the cost of their education. This problem is down in large part to federal student loan subsidies, which encourage colleges to offer expensive master’s degrees of dubious value. Sadly, a loan program meant to advance economic mobility has wound up enriching universities instead.

• Should the government write off uncollectible student loans? (OppBlog) Nearly one million federal student borrowers have been in and out of default for more than two decades. There’s a strong case that these loans are uncollectible. One element of the Biden administration’s backup loan-cancellation scheme is a proposal that would cancel debt for most borrowers whose loans entered repayment more than 20 years ago, which would write off the loans of these long-term defaulters. But the administration’s proposal is far too broad, and will also discharge the loans of richer borrowers who don’t need the help.

What I’m reading

• Students could soon receive federal aid for workforce training, under a bipartisan bill introduced last week by the Republican and Democratic leaders of the House Education and Workforce Committee. The proposal would allow students enrolled in short-term workforce preparation programs to access Pell Grants. To qualify, workforce training programs must increase their students’ earnings by at least the cost of tuition—a bar that most existing ones do not meet.

• A new “workforce almanac” catalogs nearly 17,000 workforce training opportunities, defined as post-high school training options of less than two years. The project reveals the diversity of workforce training options in the United States, which include community colleges, trade schools, registered apprenticeships, federally-recognized training programs, and more. It’s the most comprehensive database of training providers released to date—which should say something about how seriously policymakers have taken workforce training in the past.

• The college graduation rate ticked down slightly after years of improvements, according to the National Student Clearinghouse. Sixty-two percent of students who first enrolled in college during fall 2017 had earned a degree or certificate within six years. Completion rates are lowest at community colleges (43 percent) and highest at private four-year schools (78 percent).

What I’m doing

I was thrilled to join Wall Street Journal editorial board member Mene Ukueberuwa for a wide-ranging conversation on the value of college. Watch below:

A couple weekends ago I made a quick trip to San Francisco to visit an old friend. I also got to spend a few minutes at one of my favorite spots in the country: Pier 39, which is home to a boisterous colony of dog mermaids sea lions. The photo doesn’t do it justice, but there was a gorgeous sunset just beyond the Golden Gate Bridge. Watching sea lions bark at one another for extended periods is surprisingly entertaining, so I recommend stopping by if you’re in the Bay Area.

FREOPP’s work is made possible by people like you, who share our belief that equal opportunity is central to the American Dream. Please join them by making a donation today.

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Welcome to The Tassel, FREOPP’s newsletter on higher education policy, written by senior fellow Preston Cooper. Each month, The Tassel dives into our latest work on higher education, along with a handpicked selection of research and articles from around the web that we think are worth your time. To manage your subscription preferences, visit your Substack settings.

Politicians of both parties are in love with apprenticeships. The cross-ideological appeal is easy to see: hiring an inexperienced young person, training them on the job, and transforming them into a highly-skilled professional earning six figures is the essence of the American dream. The right also likes apprenticeships as an alternative to college, while the left sees them as a way to boost union membership.

Both parties face a challenge, however, in turning these warm feelings into policy. America is making progress on expanding apprenticeships: according to the Department of Labor, the number of registered apprentices has doubled over the last ten years. However, America lags behind peer nations such as Britain, which has eight times as many apprentices as a share of the labor force. Germany has fifteen times as many. Moreover, apprenticeship has struggled to gain a foothold in America’s fast-growing digital-economy jobs, where employers still depend on the traditional college degree.

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Apprentice Nation

Apprenticeship expert Ryan Craig’s new book, which I reviewed for Forbes this week, couldn’t be more timely. “Apprentice Nation: How the Earn and Learn Alternative to Higher Education Will Create a Stronger and Fairer America” examines successful models of apprenticeship at home and abroad, and meditates on policy changes that could allow the model to reach its full potential.

Skilled blue-collar occupations such as electricians, plumbers, and carpenters still dominate the apprenticeship landscape in America. But Ryan profiles many apprenticeship providers starting up apprenticeships in new fields, such as cybersecurity. While there are traditional college degrees available in this field, they are typically expensive, and curricula don’t keep up with the latest developments in the space. Instead, cybersecurity firm Ultraviolet offers a twelve-week apprenticeship: six weeks in the classroom, and six weeks training on the job. Full-time positions await completers.

Why don’t more companies embrace the model, particularly with the job vacancy rate near record highs and constant complaints from bosses about shortages of talent? Simply put, the cost of setting up an apprenticeship is high; companies must not only pay new apprentices while they are unproductive, but cover the costs of designing an apprenticeship and pay for training components that take place in a classroom.

In other countries, firms typically don’t design apprenticeships from scratch. Instead, they rely on third-party organizations known as intermediaries to establish and operate the apprenticeship on behalf of many different companies. Intermediaries can spread the fixed costs of apprenticeship program across many more participants. Intermediaries are also typically the beneficiaries of government subsidies for apprenticeship, rather than firms themselves.

A thumb on the scales

In America, it’s impossible to understand the relative paucity of apprenticeships without considering government subsidies for traditional colleges. Young people who want to attend college can qualify for Pell Grants, subsidized student loans, Federal Work-Study, and tuition tax credits; the institutions they attend enjoy direct government appropriations and massive tax exemptions. Most of these funding streams operate as entitlements, meaning they are available to any eligible student.

Contrast this with the funding structure for apprenticeships. While there is some money available for apprenticeship through the Department of Labor, providers must go to the trouble of registering their apprenticeship, which involves several months of hoop-jumping and complying with a long list of requirements. At the end, federal funding is not guaranteed, and usually goes to incumbent players who know how to navigate the system. Many of America’s most successful apprenticeship models, such as the Kentucky FAME program, don’t bother seeking federal funding at all.

The federal government has its thumb on the scales in favor of traditional college. By Ryan’s reckoning, traditional colleges and universities receive $1,000 for every $1 that flows to apprenticeship providers. Fortunately, he has ideas to change that.

A blueprint for expanding apprenticeships

Ryan proposes funding apprenticeships by formula: any apprenticeship program that meets certain conditions should receive funding. His specific proposal is to reward apprenticeship providers with a $4,000 payment for each apprentice they successfully train and place in an upwardly-mobile job paying at least $40,000 per year. The federal government should also pick up the cost of classroom training for apprentices, within certain limits.

The idea would help level the playing field between college and apprenticeship. A big new government program, however, might be a tough sell in an era of thirteen-figure budget deficits and still-elevated inflation. I wonder whether we might be able to achieve the same effect by modifying existing programs to make them friendlier to apprenticeships, as I discussed in more detail in a statement for the record for the House Committee on Oversight. Pell Grants and Federal Work-Study could support apprenticeships, but contain arbitrary restrictions that steer those dollars toward traditional colleges instead.

I also like some of Ryan’s smaller-potatoes ideas, such as public-sector apprenticeship programs to fill government jobs (currently, governments are among the worst offenders when it comes to unnecessary bachelor’s degree requirements). Stripping degree requirements from occupational licenses, as we discussed in this newsletter last month, could also boost the apprenticeship pathway for more occupations.

Widespread dissatisfaction with higher education means apprenticeship boosters have a unique opportunity to advance their cause. Anyone interested in the model should check out Ryan’s book to learn about a promising path forward.

What I’m writing

• The Supreme Court may have blocked student loan cancellation, but President Biden’s “Plan B” is alive and well. The Education Department is considering a supposedly more targeted version of student debt cancellation using a novel legal authority; only borrowers who meet certain conditions would be eligible for relief. Among those eligibility criteria? Receiving a Pell Grant or not finishing college—two categories which, together, cover 71 percent of college students. Adding other criteria will bump that number even higher. The “targeted” branding of the new debt-forgiveness plan is just a fig leaf for mass cancellation, I argue at OppBlog.

• The House of Representatives may have finally chosen a speaker, but comprehensive higher education reform is unlikely anytime soon. Fortunately, there are plenty of options for states interested in fixing the sector’s many problems, Annie Bowers and I write in the Washington Examiner. These include tying state funding for colleges to student outcomes, lowering barriers to entry for innovative new schools, and removing degree requirements from government jobs and occupational licenses.

What I’m reading

• Five and a half million borrowers enrolled in the Biden administration’s new income-driven repayment plan, and most of them have $0 monthly payments. The generosity of the plan is one reason for its immense cost—half a trillion dollars by some estimates—and why many analysts think it will induce colleges to raise tuition and push more loans onto students.

• Daily payments to the Department of Education are back up to pre-pandemic levels, say researchers at the Philadelphia Fed. While the data are still early, they are an encouraging sign that the transition back into student loan repayment may go smoother than expected. Survey work from the New York Fed also finds no reason to suspect a major coming spike in delinquencies, nor a substantial drop in consumer spending.

• A judge blocked the Department’s attempt to recoup $24 million in borrower-defense discharges from DeVry University. The borrower defense regulation empowers the Department to cancel loans for students who were allegedly defrauded by their universities—and recoup the costs from schools. Earlier this year, another court blocked the administration’s changes to borrower-defense, which relaxed the standards for a successful discharge.

• Waiving certain licensing requirements for teachers in Massachusetts due to the pandemic, unsurprisingly, increased the supply of teachers, find researchers at Boston University. The (temporary) changes also helped diversify the profession.

• The share of student debt held by the top two quintiles increased between 2019 and 2022, according to new data from the Survey of Consumer Finances. If the case for student debt cancellation before was weak, it’s even weaker now.

What I’m doing

The fall color is coming in hot in the DC area. Here’s a snap from a couple weeks ago near Mary’s Rock in Shenandoah National Park:

FREOPP concluded its annual Freedom and Progress conference this week. We’ll get some recaps up on the website in the coming days, but you can watch a recording of a couple plenary sessions here.

FREOPP’s work is made possible by people like you, who share our belief that equal opportunity is central to the American Dream. Please join them by making a donation today.

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Welcome to The Tassel, FREOPP’s newsletter on higher education policy, written by senior fellow Preston Cooper. Each month, The Tassel dives into our latest work on higher education, along with a handpicked selection of research and articles from around the web that we think are worth your time. To manage your subscription preferences, visit your Substack settings.

This newsletter devotes a fair amount of ink to higher education reform at the federal level. Student loans, accreditation reform, and many other issues are Washington’s responsibility. You’d be forgiven, however, for looking at the level of dysfunction on the Potomac and holding out little hope for comprehensive higher education reform anytime soon.

Fortunately, reform-minded state governments don’t need to wait for Congress to get its act together. In a new issue brief for FREOPP, visiting fellow Annie Bowers and I highlight three areas where state governments can take action to improve higher education for students, taxpayers, and society.

Rising costs and declining value

College tuition has soared over the past thirty years (though it’s come down modestly since 2020). But as costs rise, the financial value of higher education is no longer as secure as it once was: the college earnings premium is starting to fall. My research at FREOPP shows a large proportion of college degrees do not justify their costs.

Unfortunately, incentives for most colleges and universities are structured such that few schools have an incentive to change this state of affairs. Federal and state funding streams are usually dependent on enrollment and operating costs, not performance. But states can realign the incentives for public colleges by restructuring funding to reward good outcomes.

One Texas community college has already adopted “outcomes based funding” (OBF). The school’s appropriation from the state government is based on how much alumni earn relative to a minimum-wage worker; when former students earn more, the college receives more funding. Since the school adopted OBF, graduates have enjoyed a 42 percent increase in earnings.

More states should consider tying public funding for higher education to metrics that students care about: return on investment and learning outcomes. States can also improve higher education through good old-fashioned competition, something the higher education system desperately lacks.

To start up a new college, entrepreneurs must first seek approval from the relevant state agency, known as a state authorizer. However, the requirements that state governments impose on new schools can be substantial, and are often not directly related to the quality of education on offer. Institutions complain that state authorizers are understaffed and it’s often impossible to decode the processes and rules around setting up a new college.

Since 1990, the number of students seeking degrees in public and private nonprofit institutions has increased by a third, yet the number of degree-granting nonprofit schools has remained essentially constant. In a well-functioning market, a surge in demand should lead to more entrants. But because of higher education’s significant barriers to entry, incumbent schools have exploited their protected position by hiking prices and allowing educational quality to stagnate.

State regulations fuel degree inflation

By linking colleges’ funding to outcomes and breaking down barriers to entry, state governments can create a more dynamic higher education marketplace within their borders. But states can also take steps to expand opportunity for people who don’t have a traditional four-year college degree.

State governments are far more likely than private firms to demand college degrees from job applicants, even for jobs paying similar salaries. In the private sector, 28 percent of workers earning between $40,000 and $60,000 have a bachelor’s degree or higher. Among workers earning the same salary but employed by state governments, the proportion is 63 percent.

Governors of both parties have dropped college degree requirements for thousands of state jobs, a welcome development. But states’ impact on degree inflation extends beyond the executive branch. In particular, the occupational licensing system imposes unnecessary and superfluous degree requirements on many licensed professions, even if the license already requires workers to demonstrate their capacity for the job in other ways.

For example, New York recently passed a law requiring registered nurses to earn a bachelor’s degree–even though, as a condition of licensure, nurses must already complete at least a two-year program of study, accrue clinical hours, and pass a standardized exam. The bachelor’s degree requirement on top of the others may be superfluous, and could lead to nursing shortages at a time of rising demand for healthcare.

States are the laboratories of democracy, and forward-thinking state leaders should seize the opportunity to pioneer market-based reforms to higher education. Our full issue brief offers some ideas for change.

What I’m writing

• The Biden administration surrenders to the higher-education lobby on transparency. The Gainful Employment rule, finalized last month, originally required public and private nonprofit colleges to disclose when their undergraduate degree programs lead graduates to accumulate excessive student debt burdens relative to expected income. But after intense pushback from higher education trade associations, the Education Department quietly dropped that provision, claiming that high-debt-burden programs are “relatively rare” in the nonprofit sector. I take issue with the Department’s logic in an op-ed for the Chronicle of Higher Education. Such programs enroll nearly 250,000 students, including at prestigious institutions like Boston University and Oberlin College.

• College-rankings outfits are focusing more on student outcomes, but they’re missing something big. Publications like US News and the Wall Street Journal are ditching traditional ranking metrics like endowments and alumni giving in favor of a greater emphasis on typical salaries after graduation. That’s a welcome change, but it’s still misleading to focus on “typical” salaries—because there is no typical graduate. Graduates’ salaries vary widely by field of study, even within the same college. At CUNY-Baruch College, a darling of the overhauled rankings, graduates’ typical salaries range from $41,000 in sociology to $88,000 in management sciences. In Forbes, I argue that journalists should consider ranking individual majors rather than entire colleges.

What I’m reading

• The legal profession is heavily licensed, which raises the cost of legal services and keeps lower-income people from accessing justice. A team of scholars led by Shoshana Weissmann proposes some reforms. One that caught my attention for its relevance to higher ed: allow individuals who have apprenticed to a practicing lawyer to sit for the bar exam, even if they haven’t gone to law school.

• As student loan payments restart, millions of borrowers are on hold with their servicers, reports Cory Turner at NPR. The end of the three-year pause means up to 40 million borrowers are entering repayment all at once. It’s too early to tell whether the crunch will meaningfully reduce loan repayment rates.

• In the Washington Examiner, Sen. Bill Cassidy makes the case for transparency and accountability in higher education. Earlier this year, Cassidy and four colleagues introduced a middle-of-the-road overhaul of federal higher education policy, which emphasizes better data on student outcomes, requirements that colleges disclose this information to students, and sanctions for poorly-performing programs. (Read my analysis of Cassidy’s proposal here.)

• After initial resistance, some college accreditors have begun to approve three-year bachelor’s degree programs, reports Josh Moody in Inside Higher Ed. Seven programs at two colleges in Idaho and Utah got the green light from their accreditor to grant degrees after three years of study. Three-year degrees are still the most promising idea to cut the cost of college by 25 percent.

What I’m doing

Over Columbus Day/Indigenous People’s Day weekend, I visited New Mexico for a quick family trip. In addition to completing the state highpoint (Wheeler Peak), I managed to take in the Albuquerque International Balloon Fiesta, which sees a “mass ascension” of hundreds of hot air balloons every morning for a week.

It’s something you have to see in person if you happen to be in New Mexico in mid-October; my iPhone photos can’t quite do justice to the panorama of colorful balloons gently floating into the sky as the first rays of sunlight streak over the mountains. The picture above captures just a narrow angle; imagine hundreds more balloons extending off either side of your computer screen.

FREOPP’s work is made possible by people like you, who share our belief that equal opportunity is central to the American Dream. Please join them by making a donation today.

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Welcome to The Tassel, FREOPP’s newsletter on higher education policy, written by senior fellow Preston Cooper. Each month, The Tassel dives into our latest work on higher education, along with a handpicked selection of research and articles from around the web that we think are worth your time. To manage your subscription preferences, visit your Substack settings.

As millions of college students begin classes, a small sliver of them are set up for success better than most. The twelve most prestigious private schools—the Ivy League plus Duke, Stanford, Chicago, and MIT—account for just 0.8 percent of college graduates. But these schools’ alumni are wildly overrepresented in positions of wealth (Fortune 500 CEOs), power (US Senators), and influence (New York Times journalists).

The admissions policies of the twelve “Ivy-Plus” colleges therefore have ramifications far beyond their own campuses. Unfortunately, new research from economists Raj Chetty, David Deming, and John Friedman shows that elite-college admissions is biased in favor of applicants from wealthy families.

Among middle-class high school students who score at the 99th percentile on a standardized test (a 1510 on the SAT or a 34 on the ACT), roughly 10 percent attend an Ivy-Plus college. But among students from ultrarich families with identical test scores, nearly half attend one of the twelve most elite schools.

While some contend that standardized tests are the reason wealthy students enjoy an advantage in the admissions process, the Chetty research shows the opposite: even after controlling for academic preparation, rich kids have a big leg up. So what does explain their advantage?

The impact of legacy admissions

The authors decompose rich students’ nonacademic advantage in elite-college attendance rates into three stages: application, admission, and matriculation. Application rates (rich students are more likely to apply to elite colleges) explain about one-fifth of the attendance gap. Matriculation rates (rich students, once admitted, are more likely to accept) explain another tenth or so.

The bulk of rich students’ advantage, however, comes down to differences in admissions rates not explained by academic factors. In other words, elite-college admissions offices consider several nonacademic factors that decidedly favor students from wealthier families. Most important are preferences for athletes and students whose parents attended the college.

Holding other applicant characteristics constant, the children of alumni are three times as likely to receive admission as nonlegacy applicants. Legacy applicants from the top of the income distribution are even likelier to receive an acceptance letter, suggesting the policy may be a tool to extract donations from well-heeled alumni. Legacy preferences are the largest single factor behind rich students’ advantage in the elite-college admissions game.

Elite colleges unlock elite jobs

All this matters because elite colleges are gateways to positions of wealth and influence in society. Students who attend an Ivy-Plus college are 44 percent more likely to reach the top of the income distribution, compared to similar students who attended a flagship public university. Ivy-Plus alumni are twice as likely to work at a prestigious firm or attend a top graduate school.

Ivy-Plus colleges could democratize access to such positions if their admissions processes placed more, not less, emphasis on standardized test scores. At the extreme, low- and middle-income students would enjoy more representation at top colleges if they randomly selected their entering classes from all applicants with an SAT score above 1500. It’s no coincidence that the Ivy-Plus school most friendly to standardized tests—MIT—also performs best on measures of socioeconomic diversity.

The rest of us, however, should also reconsider the value we attach to degrees from Ivy-Plus colleges. Ivy-Plus alumni are overrepresented in prestige jobs because hiring decisionmakers across society prefer them over people with degrees from less-prestigious schools, or no degrees at all. But the schools’ emphasis on nonacademic factors such as parental wealth and legacy status suggests that an Ivy-Plus degree may not be the reliable indicator of academic excellence we assume. Elite colleges serve the elite, and that will be difficult to change. But the rest of us don’t have to play along.

Read my full writeup of the new research on elite college admissions in Forbes.

What I’m writing

• The return to student loan repayment will be rocky, and the Biden administration isn’t helping. Turning student loan payments back on after three and a half years will be a monumental challenge. In National Review, I argue that the Biden administration’s own actions have undermined the return to repayment. Its false promises of student loan cancellation have given borrowers a disincentive to repay their loans. Moreover, politicizing the student loan program through myriad cancellation schemes has poisoned the relationship between the administration and appropriators on Capitol Hill. Extra funding to smooth the transition back into repayment did not pass Congress because Republicans feared—rightly—that the money would be used for loan forgiveness.

What I’m reading

• Is credentialism driving lower fertility rates? The higher education arms race (documented here at FREOPP) means young people are staying in school for longer. At the Washington Examiner, Jay Greene and Lindsey Burke argue this is delaying family formation and leading Millennials to have fewer children.

• The Education Department is making mergers between colleges more difficult, reports Katherine Knott at Inside Higher Ed. The regulation could have unintended consequences, if it leads troubled colleges to close rather than find partners to stay open.

• A survey of tenured faculty asks about declining academic standards in higher education. Among the findings: 49 percent of faculty think the “college for all” mentality has contributed to declining standards, and 38 percent think many students admitted to college today are not academically prepared.

• Lots of employers claim they’re not requiring college degrees anymore, but most aren’t following through, writes Greg Lewis of LinkedIn. While the share of LinkedIn job postings without college degree requirements jumped 36 percent between 2019 and 2022, the share of new hires without degrees increased only modestly.

• The college earnings premium is now falling, say researchers at the San Francisco Fed. Once consistently rising, the wage premium enjoyed by college graduates has been stagnant since the Great Recession, and has been dropping since the Covid-19 pandemic.

What I’m doing

While descending the Mount Massive trail in Colorado, I stepped off to let a mountain goat pass. This gorgeous female then stopped to see if I would offer her snacks (I didn’t - don’t feed the wildlife, people!), which allowed me to snap this photo. I still don’t think I’ve used the iPhone’s Portrait Mode feature on a human, but my portrait library is full of dogs, sea lions, penguins, bison, marmots, and now mountain goats.

FREOPP’s work is made possible by people like you, who share our belief that equal opportunity is central to the American Dream. Please join them by making a donation today.

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Welcome to The Tassel, FREOPP’s newsletter on higher education policy, written by senior fellow Preston Cooper. Each month, The Tassel dives into our latest work on higher education, along with a handpicked selection of research and articles from around the web that we think are worth your time. To manage your subscription preferences, visit your Substack settings.

The role of a secretary or administrative professional was once a key starting point on the career ladder for workers with only a high school diploma. In 1990, just 9 percent of secretaries held a bachelor’s degree or higher. But that share has since risen to 33 percent, and is set to rise. An even greater proportion of job advertisements for secretaries require four-year degrees, and some quick calculations show that more than 750,000 secretarial positions could close to workers without degrees over the coming years.

This phenomenon—degree inflation—is the focus of my latest report for FREOPP. Degree inflation occurs when employers increase education requirements for given jobs, such as requiring bachelor's degrees for occupations that were previously open to high school graduates. The result is that positions which were once open to workers without a four-year college education are now closed to the majority of the population (62 percent of adult Americans lack a bachelor’s degree).

This phenomenon might be benign if workers' higher levels of education made them more productive on the job, translating into higher earnings. But that is not always true. Rather than helping people in lower income brackets rise up the income ladder, degree inflation causes the education levels of those lower income brackets to rise. The share of workers earning between $40,000 and $60,000 who hold a bachelor’s degree or higher increased from 26 percent in 1980 to 38 percent today.

My report quantifies degree inflation by examining the increase in the share of workers in each occupation with a bachelor’s degree or higher between 1990 and 2021. I combine this measure with each job’s overall importance to the economy in 2021 to identify the occupations which are most responsible for overall degree inflation.

The exercise shows that the five occupations driving degree inflation to the greatest extent are: managers and administrators, registered nurses, computer software developers, salespersons, and secretaries. While degree inflation has affected white-collar jobs the most, few sectors of the economy are immune from the phenomenon.

Fortunately, employers have begun to recognize the problem. Companies such as AT&T, IBM, and Accenture have made a concerted effort to remove the bachelor’s degree as a requirement for many roles. Thirteen states (and counting!) have removed degree requirements for most jobs in the state executive branch.

But public policy can play a greater role. States should repeal laws and regulations that require workers in certain occupations to hold degrees. (Why do you need a college degree to be a home interior designer in Virginia, but not North Carolina?) The federal government should ensure that funding streams such as Pell Grants do not unduly privilege traditional colleges and universities over alternative postsecondary pathways that could prepare students for the workforce faster and at a lower cost.

A college degree should not be a requirement to enjoy a middle-class standard of living. But private-sector initiative combined with smart policy changes can begin to turn degree inflation around.

To learn more, check out my full report at FREOPP.org. You can also read my interview on the subject with Ben Wilterdink at Profectus Magazine.

What I’m writing

• Making sense of the latest student loan cancellation announcements. The Biden administration’s signature loan-cancellation policy did not survive Supreme Court scrutiny, but there are several other initiatives in the works to cancel loans by executive fiat. I walk you through four of the most important over in Forbes, including the new income-driven repayment plan that will slash monthly payments, a one-time waiver that resulted in the immediate cancellation of $39 billion in debts, and a second attempt at mass loan forgiveness using a different legal authority.

• The Biden administration’s student loan agenda suffered another legal defeat, as a federal court issued a nationwide injunction against the Borrower Defense to Repayment (BDR) rule. Congress authorized the Department of Education to write a BDR rule, which allows students defrauded by their colleges to seek loan forgiveness. However, plaintiffs in this new case argued that the BDR rule which the Biden administration actually wrote goes well beyond what Congress intended, and could lead to far more loan cancellation than is necessary. Observers should keep an eye on the case, which could signal how the courts will treat the other planks of the administration’s student loan agenda.

What I’m reading

• Few students pay the “sticker price” of college, notes Dan Currell in National Affairs, because most get large discounts marketed as financial aid or scholarships. While this is welcome news for students worried about how to pay a $60,000 tuition bill, it creates an opaque pricing dynamic that creates anxiety for families and distorts the functioning of the higher education market.

• The Gainful Employment rule is meant to save taxpayers money by kicking degree programs with low student loan repayment rates off the federal dole. But the savings will be minimal, estimate Jason Delisle and Jason Cohn of the Urban Institute. Even after the rule is implemented, the median student in 40 percent of undergraduate programs will still have debt forgiven due to low repayment rates.

• A new Idaho law will give students grants of up to $8,000 for workforce training, writes Steve Taylor in the Idaho Statesman. The policy is a major step towards reorienting postsecondary education around learning skills rather than acquiring credentials, Taylor argues.

• Flagship state universities have hiked spending by tremendous amounts over the past two decades, report Melissa Korn, Andrea Fuller, and Jennifer Forsyth in the Wall Street Journal. The increase is far more than was necessary to keep up with inflation and rising numbers of students. Institutions have—predictably—raised tuition to pay for the new spending.

• On a related note, public confidence in higher education is down 20 percentage points since 2015, according to a new Gallup poll. Faith in higher ed is down among all demographic groups, including young people.

What I’m doing

Hiking season is in full swing, and I was thrilled to claim my 26th state highpoint—Colorado’s Mount Elbert! Fun fact: at 14,440 feet above sea level, the summit of Mount Elbert is the highest point in the United States where dogs are allowed to go. That makes it the true national highpoint in my mind (sorry, Denali!).

FREOPP’s work is made possible by people like you, who share our belief that equal opportunity is central to the American Dream. Please join them by making a donation today.

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