Testimony: Innovations in College Affordability

Senator Tom Harkin (D-IA), chairman of the Senate Health, Education, Labor and Pensions Committee, convened a hearing on February 2, 2012, to explore innovative strategies to make college affordable for students and families. Education Sector Policy Director Kevin Carey testified before the committee.

Summary of Carey's Testimony

The price of higher education in America is spiraling out of control. Student loan debt is at an all-time high and many students and families can no longer pay the college bill. Neither can the American taxpayer—annual federal aid has ballooned by over $100 billion in the last decade. Innovation is needed, and quickly.

There are two elements of college affordability: cost and price. Costs are what colleges spend to educate students. Prices are what students pay to attend college. We need innovation in both cost and price to fix the affordability problem.

We know that colleges can reduce costs because some are doing so right now. Virginia Tech used technology to revamp its math courses over a decade ago, dramatically reducing costs while improving student learning at the same time. Hundreds of other colleges are using similar methods to redesign courses. The newest University of Minnesota branch campus has a lean, student-focused cost structure. The University of Maryland system collaborated to cut costs system-wide. Carnegie Mellon and MIT are developing next-generation online courses that will be offered to students around the world, free of charge. These and other examples show that colleges can be more efficient without sacrificing student learning.

Yet these innovations are not widespread, and other cost-cutting measures, like the increased use of adjunct and part-time faculty, have not resulted in lower prices for students. That’s because while costs are a function of practice, prices are a function of policy. In recent years, state tax and budget policies have led to slashed higher education budgets and resulting tuition hikes. But the price problem is not merely cyclical: for thirty years, colleges have raised prices beyond inflation in good times and bad. Colleges do this because they want to, and because, in the current policy environment, they can.

We can’t change colleges’ desire for money from tuition increases, which is useful for buying prestige and other things they covet. We can change their ability to raise tuition, by implementing three policies focused on price innovation:

1. Bypass the existing accreditation system, which is stacked against innovation, and allow high-quality, low-cost entrepreneurs who are willing to be transparent about and accountable for quality access to the federal financial aid system.  
2. Create more transparency in the higher education market by actively providing students, parents, and guidance counselors with consumer information about college prices, learning results, graduation rates, and employment outcomes.
3. Reward states that implement a comprehensive higher education reform agenda that encourages greater college completion, innovation, and investment in higher learning....

Read Carey's full testimony.