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America’s colleges and universities face two massive challenges. Might a single solution solve both problems at once?

The first challenge is adjusting to COVID-19, which has hit the higher education sector like a financial bomb. Every college and university, from Harvard to your local community college, is running in the red right now, as revenue from tuition and housing income plummets, summer programs are canceled, international student enrollments disappear, and technology costs explode. This problem will accelerate in fall, as enrollments decline and state governments, facing massive tax shortfalls, cut higher education funding. Across the country, colleges and universities are cutting wages, laying off tens of thousands of employees and canceling construction projects. If they do not receive significant financial assistance from the federal government, hundreds of institutions will close over the next three years, and thousands more will suffer academic and research program cuts that will take years to restore. Though the CARES Act provided $14 billion to pay for COVID-19 response costs, much of that aid will be passed on to students, not used to fund university operations, and it falls well short of a projected $50 billion needed to stabilize the sector.

The second challenge is the slow but inexorable rise in college tuition costs, which has made college unaffordable for the overwhelming majority of American families. College tuition costs have been rising at a rate higher than inflation since the 1980s. This trend is driven by unbridled competition, which forces schools to invest in costly programs, services and amenities to attract students. The result? Today, a college education is beyond the means of most Americans unless they take out massive loans, leaving 45 million Americans owing some $1.6 trillion in student debt.

The solution to these problems might be linked. The United States cannot let its higher education system implode due to a short-term financial crisis. America’s colleges and universities are recognized around the globe as the best in the world. Our university research labs fuel economic innovation and growth, and they provide basic and applied research that makes the United States military the most advanced and powerful in the world. Our colleges and universities employ some 3.6 million Americans and educate over 20 million, making them integral to any plan for economic recovery in the post-COVID-19 world. Congress needs to move quickly to stabilize this essential economic sector, just like they have in other crises with banks, car manufacturers and airlines.

But will Congress provide more aid? Probably not, in part because many congressional leaders believe our education institutions are grossly inefficient, with bloated administrations and frivolous academic programs driving tuition costs beyond the means of most Americans. They don’t want to prop up what they see as a grossly inefficient system.

The solution to these two problems -- a short-term financial crisis and long-term concern over tuition costs -- is a grand bargain for higher education. Under this plan, Congress would provide $40 billion in grants to colleges and universities over the next two years to stabilize finances, and then triple the size of the Pell Grant for economically disadvantaged students, to support robust enrollment and affordability. In return, colleges and universities wanting this assistance would agree to cap tuition costs. We might, for example, cap tuition at $7,000 per year for public institutions and $20,000 per year for private schools, with future tuition growth limited to the rate of the inflation. To guarantee quality, only colleges that met acceptable standards for graduation rates, posteducation employment and loan repayment would be eligible. To avoid wasting money on failing institutions, those colleges and universities that failed financial stress tests prior to the current crisis would be precluded. Rich universities could, if they wished, ignore the offer and continue to operate free from federal price constraints.

The United States cannot let its higher education sector fall apart, but neither can we ignore the fact that college is no longer affordable. This grand bargain, if enacted, would prevent our higher education system from imploding, expand access to higher education, reduce student debt and provide a serious incentive for colleges and universities to adopt more cost-efficient models. A grand bargain for higher education will put our colleges and universities on a better long-term trajectory to meet the challenges of the post-COVID-19 world.

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