Washington, D.C. — The federal government should consider implementing affordability standards for higher education, and the health care and housing sectors offer lessons for how such standards might be put in place, says a new report from the Center for American Progress.
CAP’s report illustrates the case for structuring federal postsecondary assistance to focus on what it buys instead of the current system’s emphasis on how much it pays. Both health care reform and federal housing affordability programs take an approach to affordability that centers around guaranteeing that program recipients do not pay more than a set percentage of their income in order to purchase health care or to afford rent or a mortgage payment. This ensures that participants in these programs can afford the goods and services they need. There are no similar affordability standards in place for higher education—meaning that schools, state legislatures, and governors play an outsized role in determining exactly how far federal programs such as Pell Grants and Stafford Loans will go.
“Other federal benefit programs address affordability by focusing on what the benefits are supposed to purchase rather than their exact dollar amount,” said Ben Miller, Senior Director for Postsecondary Education at CAP and a co-author of the report. “Federal higher education benefits don’t do that. As a result, someone who gets a Pell Grant or student loan has no assurance that it will be enough to cover their expenses, even at a public college in their state. We must refocus our federal higher education programs to incorporate lessons from other sectors so that federal benefits provide stronger affordability guarantees and certainty for recipients.”
“Higher education affordability is a crucial issue for families,” said Antoinette Flores, a Policy Analyst at CAP and co-author of the report. “Building on lessons learned from other sectors would make it harder for states and institutions to undermine federal benefits by decreasing funding or inequitably distributing their own financial aid. By first guaranteeing that recipients of federal benefits get the support they need, we can introduce desperately needed shared responsibility in making college affordable.”
CAP’s report analyzes how the federal government addresses the question of affordability in Medicaid and the Affordable Care Act in health care and rental housing assistance and mortgages in housing. It found the following lessons:
- Areas such as health care set distinct affordability policies for the most vulnerable individuals that result in minimal to no expectations for out-of-pocket spending.
- The federal government limits which products within a market it will make affordable, refusing to subsidize the priciest options.
- Related to this sense of limits, the federal government also creates affordability standards—specifically, when it deals with debt in areas related to housing—to protect consumers from unaffordable payments.
- Finally, the federal government does not always pursue affordability on its own. For crucial items such as health insurance, it enlists the help of states and employers to achieve its aims.
The report also notes that these other federal programs have their own challenges that would need to be taken into account when making changes to the federal student aid system. These include:
- Available resources must be sufficient to avoid rationing support or tying goals to outdated standards that do not reflect the amount of help needed in today’s world.
- Affordability often matters on multiple dimensions in a given sector that must be addressed. For example, making monthly premiums affordable in health insurance may not be enough if the copays are too expensive for people to visit the doctor.
- Expectations for out-of-pocket spending must feel reasonable to recipients.
Building on these lessons, the report outlines a new framework for postsecondary affordability. It centers around guaranteeing a low- to no-cost education for the most vulnerable individuals and ensuring that students with higher-income backgrounds can afford at least an in-state public option. Under such a framework, states and institutions should also provide assistance to fill in any gaps that exist between family contributions and federal funds, and colleges should be held accountable for excessive loan burdens.
Click here to read “The Case for Federal Higher Education Affordability Standards: Lessons From Other Sectors” by Ben Miller and Antoinette Flores.
For more information or to speak with an expert, contact Allison Preiss at firstname.lastname@example.org or 202.478.6331.