Rubio proposes a free-market solution for higher education

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The financial aid website for Texas Christian University says the estimated direct cost to an undergraduate for the fall 2015 and spring 2016 semesters is $53,480. If that number doesn’t cause your stomach to flip, you must be a member of what was known during the “Occupy Wall Street”movement as the vaunted 1 percent.

The financial aid website for Texas Christian University says the estimated direct cost to an undergraduate for the fall 2015 and spring 2016 semesters is $53,480.

If that number doesn’t cause your stomach to flip, you must be a member of what was known during the “Occupy Wall Street” movement as the vaunted 1 percent.

But if you’re like most Americans, the cost of higher education can keep you up at night, especially if you have children nearing college age.

TCU’s tuition rate isn’t an anomaly.

According to the College Board, the average cost of tuition and fees for the 2015-2016 school year was $32,405 at private colleges, although somewhat less at public institutions, particularly if the student has in-state status.

Whether college costs total in the tens of thousands or the hundreds of thousands, the reality is that most become student debt.

In fact, college graduates in the U.S. have more than $1 trillion in student debt combined.

Unfortunately, many policymakers and presidential candidates have offered only narrow, impractical plans to tackle this problem.

Making tuition “free” or simply forgiving all student loan debt (as if more government intervention is the best solution to the problem) both sound wonderful.

But both are costly, and neither addresses the underlying causes of skyrocketing costs or seeks to address the quality of the system.

One presidential candidate has offered a more holistic approach that relies on market forces to help control costs while expanding access to more students.

In February 2014, Republican Sen. Marco Rubio of Florida laid out the principles of what has become his campaign plan to fix our “outdated higher education system.”

It begins with some relatively simple but important fixes. They include simplifying higher education tax incentives into a single provision, reducing the complexity of the federal financial aid application to make it more user-friendly and creating a database of higher education information (including costs, transfer and graduation rates, as well as average income of students graduating with given degrees) to help guide students and parents in making their decisions about college.

Rubio has also called for an overhaul of the accreditation system that he believes “favors established institutions while blocking out new, innovative and more affordable competitors,” thus leaving many students behind.

These fixes would be useful, but what about those pesky student loans that leave so many young people cash-strapped in the months and years after graduation?

Under Rubio’s plan, a universal income-based repayment system would tie repayment rates to a person’s income, ensuring that students are never forced to pay more than their financial situation would allow.

But the most novel element of Rubio’s proposal is his “student-investment plans” which rely on free-market forces to help students pay tuition.

This innovative mechanism would invite private investors to get involved, allowing them to pay a student’s tuition in exchange for a share of that students’ income over a fixed period of time.

The benefits for the student are obvious: no loans, no debt.

Depending on the student’s eventual income, an investor could actually receive less than the tuition they paid for.

But given the nature of risk, savvy investors are more likely to sink their money into students who will ensure a solid return on their investment.

Investors could seek out dedicated students who intend to graduate in four years, are attending reasonably priced schools and majoring in specialties that will all but guarantee securing a good job after graduation.

In other words, science and math majors are encouraged. If your major is medieval European poetry, you might be paying your own way; unless there’s a market for that major. That’s the beauty of the system.

And because Rubio believes there is dignity and value in all kinds of work — even that which does not require a college degree — he’s also called for an expansion of vocational and apprenticeship training.

Unlike some of his rivals, Rubio has offered a viable approach to higher education reform, one that might make that $53,480 tuition bill less daunting.

It’s worth considering, as is his candidacy.


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