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Manhattan Institute

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There’s Too Much Emphasis on Reducing Student Loans and Not Enough on Reducing Risk

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There’s Too Much Emphasis on Reducing Student Loans and Not Enough on Reducing Risk

The Washington Post July 17, 2019
EducationHigher Ed

Much of the debate about college today focuses on tuition and mounting student debt, with Democratic presidential candidates even raising the possibility of forgiving all student loans. Not enough attention is paid to risk. Spending tens of thousands of dollars annually on four years of college (or more), with little promise that it will pay off in the form of a good job, is a big gamble.

If higher education is ever going to break the cycle of endless tuition increases matched by ever-increasing student debt, an essential step will be to find innovative alternatives that reduce the risks involved and give colleges an incentive to send graduates into the world with educations that make them coveted by employers. Over the past decade, dozens of colleges across the country — most of them smaller institutions, which are especially vulnerable to declining enrollment and falling revenue — have begun trying alternatives that could help point the way.

Taking a page from the retailing playbook, colleges including Pacific Lutheran University in Washington, Keystone College in Pennsylvania and Houghton College in New York offer their student-customers financial assistance in paying back loans after graduation if a borrower doesn’t land solid employment.

Continue reading the entire piece here at The Washington Post (paywall)

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Beth Akers is a senior fellow at the Manhattan Institute and a former Council of Economic Advisors economist. This piece is based on her new report, “Should College Come With a Money-Back Guarantee?” Follow her on Twitter here.

Photo by zimmytws/iStock

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