Spellings-Tucker on Financial Aid

By Richard Vedder

The Department of Education is not an organization people tend to love. No one is writing poems about it, singing hymns of praise to it, or even saying many nice things about it. Over most of its existence, I have favored its abolition. America's education system ran better before the Feds got seriously in the act.

Nonetheless, I think the current Secretary of Education Margaret Spellings and her sidekick Sara Martinez Tucker are doing a pretty good job. I admire their grit and determination in trying, unsuccessfully to be sure, to radically reform the broke accreditation system. The forces of Evil have triumphed over Good, but I give the folks on Maryland Avenue high marks for trying hard. Whenever it looked like Spellings would succeed, the accreditation people and/or the colleges would run to their chief apologists on the Hill, people like Senator Lamar Alexander or others of his ilk, and demand legislative protection, and they largely succeeded.

Yet, Spellings-Tucker are not lying dead and waiting for their term to end so that they can return to the Real World outside the Beltway. Sara Tucker outlined a bold plan in Chicago to reform financial aid, and discussions are continuing in Washington and beyond on the specifics of a proposal to Congress --lame duck administration or not. Good for them.

I am worried that the educrats will trump the visionaries during these discussions. The educrats worry about offending the "stakeholders" like the colleges and universities, ignoring the fact that there is only ONE stakeholder (I hate that word), the students themselves, or, possibly two, the students and the taxpayers. Universities are a means to an end, not an end in itself.

Specifically, if you are going to propose FAFSA simplification, either propose total elimination of FAFSA or an EXTREMELY SIMPLE postcard form that just asks basics: name, family income, and family size --and permission to mine other federal records for any more needed data. The single biggest obstacle for many poor people for applying for financial aid is the complexity of the process.

Second, use this as an opportunity to chuck a dozen or so tangential federal aid programs and go to a super voucher system, which, if you insist, we can still call a Pell Grant. Take the universities out of the process of administering that aid, which, to my mind represents a fundamental conflict of interest and in many other economic endeavors would be considered unethical or illegal. Colleges use information they become privy to to negate the impact of federal aid and to mold it to their institutional purposes. They should lose that right --period. Recent financial aid scandals should have been mightily exposed on Capitol Hill and formed the basis for a restructuring of financial aid, and a decoupling of the financial and educational functions.
In a perfect world, of course, we would start to get the feds getting out of the student federal financial aid business, perhaps eliminating federal loan programs over a five year period, In a perfect world, we would realize we send too many, not too few, students to college. In a perfect world, we would have colleges that measure what they teach and report on it to the public if they want public support. In a perfect world, we would not allow colleges to choose students and faculty on the basis of skin color or gender.

Alas, the world is not perfect, and the efforts of Spellings-Tucker is to be commended, and even if it proves futile in the short run, it may inspire longer term reform.