| 摘要 | Editor’s note: The next president is in for a rough welcome to the Oval Office given the list of immediate crises and slow-burning policy challenges, both foreign and domestic. What should Washington do? Why should the average American care? We’ve set out to clearly define US strategic interests and provide actionable policy solutions to help the new administration build a 2017 agenda that strengthens American leadership abroad while bolstering prosperity at home.
What to Do: Policy Recommendations for 2017 is an ongoing project from AEI. Click here for access to the complete series, which addresses a wide range of issues from rebuilding America’s military to higher education reform to helping people find work.
Key Points
The emergence in recent years of a range of promising, nontraditional higher education programs—including competency-based education programs and workforce-oriented “boot camps”—has led to a growing interest in ways to facilitate innovation in higher education.
This interest has led to numerous proposals to provide taxpayer support for innovative offerings. Given the risks of expanding access to taxpayer funding, however, reformers should consider how private financing options can also help foster a more dynamic and high-quality higher education system.
There are several recent examples, including both private lenders and income-share agreement providers, which show how private funders can help innovative programs develop and grow.
To help foster additional private financing options, policymakers should create data systems to enable transparent and validated institutional outcomes and should provide legal and regulatory clarity for ISAs and private student loans. Institutions looking to bring in additional financial-aid dollars should consider private financing options to fund their innovative models and should be amenable to risk-sharing arrangements with those funders.
Executive Summary
The emergence in recent years of a range of promising, nontraditional higher education programs—including competency-based education programs, workforce-oriented boot camp programs, and unbundled course providers—has led to a growing interest in ways to facilitate innovation in higher education. This interest has typically taken the form of proposals to provide taxpayer support for innovative new offerings. However, private financing options can also help achieve the same goal of achieving a more dynamic and high-quality higher education system, especially given the risks associated with expanding access to taxpayer funding.
More specifically, the policy conversation on innovation has centered around ideas to create new pathways to federal-aid eligibility for nontraditional programs. After all, the fact that a program is innovative does not mean it is inexpensive, and because many nontraditional programs lack access to federal aid, their growth may be limited if potential students cannot cover the costs out-of-pocket. Furthermore, restricted access to financial aid may limit the types of students who can benefit from these programs, a significant shortcoming for those concerned with equal access to educational opportunities. At the same time, several researchers have raised alarm at the potential for new pathways to become avenues for low-quality programs to expand via access to federal programs—harming both students and taxpayers.
A larger and more diverse market of private financing options for students could contribute significantly to innovation in the higher education system. This includes not only traditional private student loans but also income share agreements (ISAs), in which a student agrees to pay a fixed percentage of his or her after-school income for a set time period in exchange for funds to pay for school. Private funders bring additional money to the table and have built-in incentives to ensure that a program actually lives up to its promise. Several private funders have also entered into risk-sharing arrangements with their institutional partners, helping to further align incentives among student, school, and funder.
There are compelling examples of how private financing options are currently expanding the array of innovative offerings for students. A diverse set of startup lenders has arisen to help fund the expansion of new and seemingly high-quality boot camp programs, built around highly relevant workforce skills, as well as other innovative programs. On a more limited scale, some institutions and funders have begun using an ISA financing model to expand access and demonstrate a commitment to student success through risk-sharing. As a result, institutions and programs in these nontraditional spaces have been able to increase the number of students they serve.
These ideas and examples offer a road map for both institutions and policymakers interested in innovation. An institution considering a nontraditional program—that is, one that might not be eligible for federal aid—could look to other, potentially more nimble sources of financial aid in the private sector.
For their part, policymakers can take steps to foster a wider array of beneficial private financing options, which can in turn contribute innovation to the system as a whole. To accomplish this, policymakers should consider creating voluntary data systems for postsecondary programs interested in validating their student outcomes. Policymakers can also take steps to clarify several legal and regulatory issues, surrounding ISAs in particular but also affecting private student loans, which would help provide needed clarity for lenders and ISA providers.
Introduction
Few topics in higher education policy have sparked as much bipartisan interest as the need for innovation in higher education. Policymakers and researchers of all stripes have praised new models emerging in the postsecondary marketplace—ones that appear to offer students the ability to earn a credential more quickly, at a lower cost, and with greater confidence that their efforts will bear fruit after graduation. These models include nimble boot camp programs built around highly relevant workforce skills, competency-based education (CBE) programs designed to break free from the traditional credit hour, and unbundled online courses such as those offered by StraighterLine and other similar providers.[1]
However, these new institutions and programs have been fairly limited in terms of scale. As a result, there is a lively debate about ways to expand their reach to more students, potentially through access to federal-aid programs.[2] After all, many innovative programs—while employing promising new delivery models—are still too expensive for many students to pay for out-of-pocket. For example, tuition for programs at General Assembly, a provider focused on short-term, highly relevant skills training, can range from close to $10,000 to more than $20,000 for programs lasting less than a year.[3]
Providing access to federal aid could therefore allow a much wider range of students to benefit from these programs—particularly low-income students. At the same time, several researchers have expressed reservations about efforts to open federal programs in these ways out of fear that it could lead to an expansion of low-quality programs or even diminish the incentives of existing high-quality actors to serve students well.[4]
While finding the right balance of access to federal-aid programs is important, reform-minded policymakers and institutional leaders interested in promoting innovation need not focus exclusively on expanding access to the federal purse. Expanding the universe of private financing options available to students is another way to foster innovation—and importantly, one that is free of many of the risks of taxpayer-funded approaches. In particular, private financing tools—including private student loans and income share agreements (ISAs), in which students pay a percentage of their income for a set time period—can bring additional funding to the table for these types of nontraditional programs.[5] In addition, because private funders, rather than taxpayers, would be on the hook if the investments are low-quality, they have a strong incentive to ensure potentially innovative programs are actually worthwhile.
This is not to say that policymakers should not continue to experiment with reforms designed to make federal-aid programs more conducive to innovation. Structured soundly, such proposals could potentially offer students a wider array of high-quality, lower-cost educational options.[6] Rather, policymakers can take other steps in parallel with these efforts, which will help achieve the same goals. By not putting all their innovation eggs in the single basket of expanded access to taxpayer dollars, policymakers can be more conservative in their approach to those reforms, helping protect against unintended consequences and abuse.
The paper is organized as follows: the first section elaborates more fully how private financing options could help foster innovation in higher education. The next section spotlights some areas in which private financing tools are helping to expand innovative programs, or at least offering a model of how they might do so in the future. The final section outlines several recommendations for policymakers seeking to maximize the value private financing has to offer in terms of an overall innovation agenda, as well as for institutions in need of financial-aid options for innovative programs not eligible for federal aid.
Read the full report.
Notes |
