A panel of finance experts met Thursday at an event sponsored by the American Enterprise Institute – called “Which way out? Confronting the problems of student loans” – to discuss increasing federal, institutional and student responsibility to combat massive student loan debt and high rates of default.
The panel comprised Richard George, chairman, president and CEO of the Great Lakes Higher Education Corporation, Art Hauptman, an independent public policy consultant specializing in higher education finance, and Edward Pinto and Alex Pollock, two AEI scholars focusing on housing and financial policies. Richard Vedder, an economics professor at Ohio University, moderated the event, and Bill Bennett, who was secretary of education under President Reagan, delivered an opening presentation.
The refrain of the discussion – that higher education institutions need to have “skin in the game” by paying a penalty when their students default on loans – is a familiar one in discussions of how to keep colleges from reaping all of the benefits and none of the costs of high tuition rates.
George also proposed that “vulnerable cohorts,” students more likely to drop out of college and default on their student loans, should not be allowed to borrow until they have demonstrated academic persistence toward finishing a degree; until that point, colleges should carry the cost burden for students. He said if colleges participated in this campaign that their “skin in the game” would carry less risk, as students more likely to default on their loans would have been weeded out before being allowed to borrow.
Bennett said it’s time to subject higher education to the same level of scrutiny given to K-12 education: “It’s time to look at the whole enterprise of higher education,” he said. “I expect resistance to that, but the questions are there, and more are coming.”