Dive Brief:
- As the industry places greater attention on accreditation and with President Donald Trump's latest budget proposal calling for greater institutional accountability for student outcomes, experts at an event hosted by Third Way, an education advocacy organization, explained that finding the right risk-sharing model will not be easy and requires discussion around students' and institutions' unique characteristics, among other factors, to be effective.
- The panelists said there are several factors that educators, servicers and policymakers have to be accountable for, which include the severity and probability of risks in student loan repayment, how much control institutions have in whether students make payments, the quality of available data on student outcomes, how institutions accept loan money, and what types of outcomes should be measured.
- Tiffany Jones, director of higher education policy at the Education Trust, said stakeholders also have to consider whether the development of a risk-sharing policy will disproportionately impact institutions that have underserved students and favor ones that have the resources to succeed — which would be counterproductive to the goals of a risk-sharing system.
Dive Insight:
Risk-sharing is complicated and nuanced for all stakeholders involved. With debates about the Higher Education Act circulating around limiting the costs of education and boosting student outcomes, the focus has moved toward institutional accountability. But as another panelist, Matthew Chingos, director of the Urban Institute’s education policy program, explained, it's not entirely fair to punish institutions for students who don't repay loans using generic repayment metrics.
"If you want institutions to take actions that improve, for instance, the three-year [loan] default rate for their students, they can do something about that. And then maybe their students will graduate in four to eight years and enter repayment," said Chingos. "This is really just an incentive for universities to invent time machines."
Chingos suggested that perhaps the debate should center around measuring the actual economic outcomes of students based on a minimum threshold.
"I don't think anyone is expecting to go into poverty after going into college, so I think we can agree there are some outcomes that are so poor, that if we see them so consistently for an institution or a program of study, we can think about not sharing that risk but eliminating that risk by not having that institution be available for aid," he said.