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In the Nation's Interest

Congress Should Make Higher Education Affordable for All Ages

As the holiday season begins, all through the house, not a creature is stirring…except for college-bound high school seniors agonizing over their college application essays. So it is fitting that in Congress, the House Education and Workforce Committee has introduced the Prosper Act for reauthorizing the Higher Education Act, which would make it easier and less confusing to choose and pay for college.

Overall, the House bill contains many good solutions, including streamlining student aid into one grant program and one loan program with reasonable limits. But it could go further. Two key recommendations that the bill currently lacks are creating lifetime learning accounts for every American, and moving management of federal student aid from the Education Department to the Treasury Department.

Lifetime learning accounts would be one-stop “bank accounts” for all student aid, including grants, scholarships, and student loan lines of credit, much like health savings accounts, but for postsecondary education and training. Each American would have a personal account. In it would go any college savings, Pell grants or other grants, tuition assistance from employers or the military, plus lines of credit from student loans.

Think of them like online banking accounts. You see all the funds you have on deposit, plus your available line of credit, and your total balance if you took out loans, all in one place. Compare this to the current system, where different loans are listed by different servicers, making it easier to overborrow. Funds in the lifetime learning accounts would belong to the individual, could be used for education or training at any accredited provider, would grow at a tax-free rate, and could be rolled over to other family members, thereby encouraging their cost-conscious use.

As for the “lifetime” aspect of this plan, we are already well past the era of “one and done” with regard to education and training after high school. The dizzying speed of change in the job market means most of us will be reskilling and upskilling throughout our lives. Americans should be able to use funds in the proposed lifetime learning accounts for a wide range of higher learning, including coding boot camps, badges, credentials, and other relatively short education and training opportunities. To ensure accountability, providers of such training should be accredited by some appropriate group before they are eligible to receive funds from lifetime learning accounts.

As for the second recommendation, moving management of the federal student loan portfolio from the Education Department to the Treasury Department may seem odd, until you realize that the federal government’s student loan portfolio now exceeds $1.3 trillion, which is bigger than the portfolio of many banks. The Treasury Department, with its expertise in managing U.S. government debt and collecting government revenue, would be better able to manage this vast portfolio.

Plus, moving the portfolio to the Treasury Department opens the door to other innovations. Since the IRS sits under the Treasury Department, it should be easier to institute a data-sharing agreement that would simplify, if not eliminate, the Free Application for Federal Student Aid. Imagine a world where all that families who have filed a federal tax return need to do is give the IRS permission, and they would get an immediate calculation of the federal student aid their college-age student qualifies for.

But why stop with college-age children? When households with a middle schooler file a federal tax return, it could trigger a message describing the amount of federal student aid the child is likely to qualify for five years later, how that compares to average cost of attendance at two-year and four-year public institutions, and the tax advantages of saving in a 529 or lifetime learning account. This will help address multiple issues, including low income families not realizing how much aid they qualify for and higher income families not saving early enough for the high cost of college.

So Congress, don’t be a grinch this holiday season. See if you can put something in the stockings of Americans to make college, along with other postsecondary education and training, more affordable. It’s the gift that will keep giving.

 

This column was originally featured in The Hill.