2019

Only two weeks into 2019, and already Capitol insiders are buzzing about new higher education laws, presidential hopefuls are heading to Iowa, and governors across the country are rolling out new ideas. To make sense of it all, I polished my Magic Eight Ball to hazard four predictions about the next 12 months.

1. Congress will advance higher education legislation.

Congressional efforts to rewrite the Higher Education Act are gaining steam. Sen. Lamar Alexander, who leads the Senate education committee, announced his retirement, leaving higher education as his only major piece of unfinished business. Newly re-elected House Speaker Nancy Pelosi noted the effort in her recent statement on higher education. Think tanks are polishing their position papers, and congressional staffers are drawing up lists of policy options.

Sen. Alexander and his Democratic partner, Sen. Patty Murray, are effective legislators with a track record of working together. Most recently, they produced a bipartisan bill on one of the most controversial questions in Washington: how to stabilize the Affordable Care Act. Now, with Rep. Bobby Scott taking the helm of the House Education and Labor Committee, we have the best chance yet at a new higher education law.

2. States will invest more in college affordability.

With improving revenues, states are in a better position to spend more on need-based aid and keeping tuition low. A growing national conversation about free college has put pressure on policymakers to introduce bold affordability ideas, and a spate of newly elected Democratic governors takes office this month eager to make a splash.

In his first days in office, California Governor Gavin Newsom proposed substantial investments in Cal Grants, keeping tuition low at community colleges and public universities, and steps to help more students graduate. Even better, Newsom described these steps as a "down payment" on greater resources to come.

Look for more states to join California in investing in college affordability in the coming months. The investment is sorely needed: State spending on higher education is lower than it was 10 years ago, adjusted for inflation and enrollment growth.

3. Student debt for graduates will grow slowly, though millions will continue to struggle

Last September, in their annual report on student debt, TICAS researchers Diane Cheng and Veronica Gonzalez found that average debt of graduating seniors is growing more slowly than in years past. After growing by about 6 percent per year between 2008 and 2012, it grew by less than 0.5 percent between 2012 and 2016. I expect the slower growth will continue into 2019.

We don't know for sure why student debt is slowing down, but there are likely several factors. Greater state spending and scholarships may have helped make a dent. Increased media focus on college costs may have made students more careful consumers.

While slower growth in student loans is welcome news, costs remain high and many borrowers continue to struggle. More than 1 million students default each year, and low-income students and students of color are particularly likely to struggle to get out from under their college debt.

4. The bloom will come off income-share agreements.

Income-share agreements have entered the higher education hype cycle. The idea is to replace traditional loans and allow students to repay their tuition as a share of their future earnings. The hype reached its highest point last week when New York Times columnist Andrew Ross Sorkin described them as "a fundamental shift that could finally lift the crippling debt load we routinely push onto students."

Of course, because students are obligated to make future payments, income-share agreements are merely a different form of debt. For almost all students, federal student loans offer lower rates and a similar option to repay as a share of income. Income-share agreements may make sense for some students, but they are niche products that complement federal loans, not a solution to college affordability.

Not that long ago, policymakers often left higher education on the back burner. No longer. More and more Americans are looking to college as the best bet to join the middle class and enjoy a better life. Student debt is now a kitchen table issue that immediately impacts families' lives, the very reason we may see change in 2019. Time will tell.

 

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After the pomp and pageantry of today’s inauguration, one of new California Governor Gavin Newsom’s first acts will be to release a proposed state budget for 2019-20. News accounts suggest that his first budget will embrace the fact that investing more in education – from preschool through adulthood – must be a priority for California to retain its economic strength and standing. Reclaiming the state’s mantle as a pioneer in affordable, quality higher education will require new investments in need-based financial aid to ensure that the cost of a degree is within reach for all Californians.

Currently, low-income students at the vast majority of public colleges in California would have to work more than 20 hours per week to afford college costs, after accounting for grants and scholarships. This is true even when tuition is free because other costs like living expenses, textbooks, and transportation make up the majority of students’ college costs.

While California has the largest state grant program in the country – the Cal Grant – most eligible grant applicants do not receive grants because too few are available. Many of those who do receive grants have seen their award amounts stagnate, though the 5 percent of community college students who receive Cal Grants can access supplemental programs that make up for some of the lost ground. 

Yet while the extent of the problem is substantial, there is reason to be optimistic. More than ever before, there is agreement about the existence of a problem, how it manifests, and how to solve it.

  • There is a strong consensus in California that college is unaffordable. The majority of Californians – including more than six in ten Democrats and Republicans alike – believe college affordability is a big problem.
  • Experts generally agree that the state’s affordability challenges contribute to equity gaps in who gets to and through college, hold students back from completing degrees, and can leave graduates with burdensome levels of student loan debt to repay. The experts’ near universal recommendation: to provide more support to students who need help paying for nontuition costs of college.
  • Since 2016, there have been several proposals, including two at the request of the Legislature, to reform California’s financial aid. Each of the proposals envisioned a new approach: taking students’ total college costs into account and expecting that students and families would make financial contributions that were reasonable given their own financial circumstances. Federal, college, and state grant aid would cover the rest.
  • While student groups and student-focused advocates have long called for increased investments in Cal Grants, colleges have now joined the charge. The California Community Colleges Board of Governors recently requested an additional $1.5 billion in financial aid support their students, “given evidence that additional financial aid improves the likelihood of retention and completion.” University of California president Janet Napolitano and California State University president Tim White recently said that financial aid reform “can be a cornerstone of further student achievement,” and called upon the state to “expand the reach of Cal Grants” and increase “the availability and size of what is currently known as the Cal Grant B Access Award [which helps students cover nontuition college costs].” And at its last meeting of 2018, the California Student Aid Commission voted to recommend reducing Cal Grant eligibility barriers and to focus more on students’ total college costs than has been done historically.

The level of attention paid to financial aid reform in recent years is unprecedented, as is the level of consensus around where new investments need to be made. Governor Newsom has also demonstrated a keen understanding of these issues, and he committed to ensuring that state financial aid expands to serve more students and to a greater extent. We look forward to working with the governor and Legislature as they chart a new course for California that restores its role as a national leader in quality, affordable higher education. 

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