The Past and Future of Higher Education Finance

Executive Summary

For over a century policymakers have sought to assist students in attaining a college education.  However, 150 years after the federal government began higher education financial assistance, the taxpayers find themselves paying too much for too little results.  In particular:

• Federal spending on education grants and loans grew from $18.3 billion to $45.6 billion over the last 10 years; but
• College completion rates have hovered around 50 percent for the last 10 years and more students are dropping out; and
• The Administration eliminated private sector involvement in the financing of student loans and relied exclusively on taxpayer-provided capital as part of a budget gimmick to finance the Patient Protection and Affordable Care Act.

In addition to the bleak outlook for taxpayers, the average undergraduate student takes on debt of over $25,000 to pay for school and works at least part time.  And the grim reality is that college costs show no signs of slowing as tuition increases far outpace the rate of inflation.

Four years ago, the President urged the country to make higher education a priority and improve the number of Americans with postsecondary credentials.  In the past four years, despite billions of dollars spent, the percentage of Americans with a postsecondary degree has barely ticked upward. Instead, the nation is no closer to solving the original problem of college cost than it was at the enactment of the Higher Education Act in 1965.

Read the full paper here.