Dive Brief:
- College degrees have documented returns in future earnings, and while new data shows the benefit is less significant for the poorest students, there is a way to reduce the investment risk and increase social mobility.
- Beth Akers, a Brookings Institution fellow, writes for Real Clear Markets that college choices should be approached as investment decisions, where students can get help figuring out which school and major will help them earn back their investment.
- Income-based loan repayment, income-share loan agreements, and money-back guarantees from certain programs have all worked to minimize the risk of investing in higher education, especially among students who have a hard time affording it.
Dive Insight:
The American Enterprise Institute recently produced a report about income-share agreements as a solution to the student debt crisis. The agreements reduce risk to students by pegging their loan payments to their success in the labor market after graduation. While still relatively rare, these could catch on — including among colleges that decide to offer revolving loan funds for their own students.
The Obama administration’s College Scorecard has been celebrated for providing more information for college students to help them make smart decisions about college. It has also been criticized as a data dump that doesn’t provide enough context. Schools that may do very well supporting disadvantaged students are listed with lower-than-average graduation rates, for example, with no supporting information about why. The focus on mid-career salary information is problematic because it is based on the average among an institution’s graduates, and salary varies greatly across fields.