One key way to expand equal opportunity in education
Plus: Evaluating Biden administration proposals to increase federal student loan subsidies and nationalize housing policy; and what health care has to do with economic opportunity
Education Savings Accounts pass in Utah and Iowa: In late January, Utah enacted landmark K-12 education reform when the state legislature passed a new Education Savings Account (ESA) program giving students $8,000 scholarships to pay for tuition, home-schooling expenses, and tutoring. This lifeline for families, which prioritizes low-income students and is capped at $42 million, overcame opposition from teachers’ unions that were willing to sacrifice $200 million in pay raises for their members to kill the new program. The Utah program passed just days after Iowa enacted $7,500 ESAs, and The Wall Street Journal reports that about a dozen other state legislatures have introduced new ESA bills, with several more seeking to expand the ones they already have. As FREOPP Senior Fellow and ESA architect Dan Lips writes in FREOPP’s OPPBlog, ESAs give states an opportunity to do what funding increases alone have not accomplished: close the achievement gap for underprivileged children. Meanwhile, programs like Utah’s offer real educational options to thousands of families, regardless of their wealth or ZIP code.
Curious about the history of ESAs? Check out Dan’s 2005 paper for the Goldwater Institute proposing that Arizona policymakers create the nation’s first statewide ESA. This is the vision that is becoming a reality for students across the country.
Biden’s quiet student loan cancellation: The Biden administration’s new proposal to revise and expand income-driven repayment (IDR) for student loans would slash monthly payments for most borrowers. But, as FREOPP Senior Fellow Preston Cooper describes in Forbes, the plan does a lot more than that. The proposal contains positive changes like auto-enrollment for low-balance borrowers. It is too bad, then, that its central provisions—a higher income exemption, a lower assessment rate for borrowers, and interest cancellation—will explode costs and drive tuition even higher. The administration’s plan also lacks an honest assessment of costs, as well as provisions to hold public and private nonprofit institutions accountable for programs that leave students with earnings too low to pay back their loans. Fixing the IDR system does not require a massive infusion of taxpayer dollars—low-cost interventions would make an important difference for some of the neediest students without cementing the role of debt in America’s higher education system.
→ Hear Preston talk about Biden’s income-driven repayment expansion on The Lars Larson Show. He recaps the key provisions of the program and discusses the way the proposal serves as backdoor student loan forgiveness.
Biden follows Elizabeth Warren’s lead toward federalizing rules for rental housing: Even though rents are currently flat and falling across the country, Senator Elizabeth Warren and more than 40 other congressional Democrats are urging President Biden to intervene in the housing market. Biden has indicated his willingness to comply, announcing executive actions instructing the Federal Trade Commission to define and prohibit “excessive rent increases” and ordering the Federal Housing Finance Agency to impose what amounts to rent control and limits on the eviction powers of providers it backs. Unfortunately, as FREOPP Research Fellow Roger Valdez describes in The American Conservative, adding more rules will limit new housing construction and ultimately decrease the supply of affordable options. He breaks down each of the administration’s proposed changes—and their likely effects—at Forbes. The bottom line? The proposal means expanded federal control of housing that still fails to help Americans struggling to pay their rent next month.
Economic opportunity and health care: FREOPP President Avik Roy appeared on the Ethics and Public Policy Center’s Searching for Medicine’s Soul podcast to discuss how the increasing cost of health care poses a growing threat to Americans’ living standards—and what the government should do about it. He points to countries like Switzerland, which offer universal coverage at a low cost through fiscally efficient systems that subsidize care only for those who need it. He and host Dr. Aaron Rothstein also cover the strengths and weaknesses of the Medicare program, the role pharmaceutical companies play in health care innovation and price increases, and the urgent need for broad, structural health care reform.
Want more details about how the U.S. stacks up against other wealthy countries when it comes to health care? In FREOPP’s World Index of Healthcare Innovation, countries with both universal coverage and private insurance earned the top five spots for providing excellent results across dimensions including quality, choice, science and technology, and fiscal sustainability.
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