Student Loans

STUDENT LOANS….In an uninspiring move, House Democrats have voted in favor of only a small reduction in interest rates for loans to college students. I wish they’d done more, but over at Tapped Janna Goodrich notes the inherent paradox of subsidizing a university education, even for the poor:

Education is one of the best engines for upward mobility and poor students cannot afford to pay for higher education on their own. Their families don’t have the physical collateral to borrow money in the private financial markets nor the savings to pay for the tuition outright….But if we gave poorer students mostly grant-based aid we’d be asking for the rest of the society to subsidize those who are one day going to be wealthier than the average citizen. Two different concepts of fairness or equality are at play here and I’m not sure if both of them could be achieved at the same time.

There’s no question that this contradiction is real, but I come down pretty firmly on the side of making college education more affordable for poor and middle class families. Not only do I find the social mobility argument overwhelmingly persuasive, but it makes sense for society as well. We need as many educated workers as we can get, and at all levels we should be trying to get as many qualified students as possible to start and finish a university education.

In fact, I’d combine this with something else to make it even better. A few years ago I read a Century Foundation study that made a very compelling case that we ought to replace all (or most) race-based affirmative action with income-based affirmative action. (Full report here.) The study found that if it’s implemented well, (a) income-based affirmative action produces nearly as much racial diversity as race-based affirmative action, (b) it promotes economic diversity as well, and (c) it actually produces higher graduation rates than either a pure merit-based system (test scores and high school GPAs) or a traditional affirmative action program. What’s more, it’s an approach that most of the public finds inherently fair.

So: I’d favor increased financial aid to poor and middle-class students and income-based affirmative action to help them gain admission to the best university they’re likely to do well at. It’s good for the kids, it’s good for the country, it would increase graduation rates, and if it’s done right it might even allow us to make more sensible choices about just how many students ought to attempt a university degree vs. a community college degree. And it provides an effective substitute (i.e., one that genuinely helps minority students) for race-based affirmative action, a program that’s overwhelmingly unpopular among the American public and therefore, in the long run, probably not sustainable. This would be a pretty good alternative.