Breaking Down Jeb Bush’s Education Plan

Election 2016
Posted By Derek Johnson on January 22, 2016 at 5:22 pm
Breaking Down Jeb Bush’s Education Plan
Republican presidential candidate Jeb Bush speaks at Souhegan High School in Amherst, New Hampshire, on Saturday, Jan. 16, 2016. Jim Cole, AP Images.

Republican presidential candidate Jeb Bush released an education plan last week that promises to change the way future students pay for their college education.

Bush’s plan was released on Medium.com, a communications and blogging platform that has been used in the past by the Obama administration and presidential candidates to unveil new policy proposals. The plan pushes a number of higher education policy reforms that have been embraced by experts and think tanks across the political spectrum.

Among his major recommendations:

  • No more FASFA: Replace the current student aid system with an income-share system that provides all high school graduates with a $50,000 line of credit for college and career training in exchange for a percentage of their future income.
  • Child Savings Accounts: Consolidate federal programs serving low-income students into a $2,500 scholarship savings account for each student under five.
  • More data, please: Creation of state databases to improve the way we collect data about student and school outcomes, including the average unemployment rate, earnings, graduation rate and debt repayment rate of individual college programs and majors.
  • Skin in the game: Make colleges responsible for paying off a portion of delinquent student debt.
  • Chapter 11, 101: Eliminate some of the current barriers that prevent students from discharging their student debt through bankruptcy.
  • Transforming the higher ed landscape

By far, the biggest change to the status quo is the potential elimination of federal student aid. Though the plan is light on specifics, it effectively calls for an end to the system of borrowing from the federal government that has existed since World War II veterans returned home from overseas and spurred creation of the GI Bill.

“[My plan] ensures affordable repayment, removes risk of default and protects students during periods of unemployment, while [giving] students flexibility and the incentive to be cost-conscious,” wrote Bush.

In its place, Bush’s plan would provide a $50,000 line of credit for students to borrow for college and career training. Instead of students paying back, it’s paid back through Income Share Agreements (ISA’s). Income Share Agreements have been touted by higher education policy experts from across the political spectrum, including the conservative American Enterprise Institute and left-leaning institutions like New America Foundation and The Brookings Institute.

Perhaps, the main difference between Bush’s plan and their version is where the money is coming from. Most ISA plans envision private companies loaning the credit or creating in-house programs to train and groom their own future workforce in exchange for a percentage of their income. Bush’s plan would (presumably) repurpose federal student aid and low-income grant monies into a higher education credit card available to every high school graduate. In exchange, graduates would pay back one percent of their income for every $10,000 borrowed for the next 25 years.

If Bush does plan to leave state governments in charge of lending, it would sidestep one of the biggest criticisms put forth previously about ISA’s, namely that putting private companies and corporations in charge of the lending and repayment process could be a political disaster. Andrew Kelly, who co-authored a paper on ISA’s, cautioned that they are still nascent in the marketplace and that policymakers may be wise to let the market figure out a sustainable model before fully going “whole hog” on implementing the idea.

“[P]olicymakers might also choose to wait for the market to mature on its own and let consumer demand and competition drive innovation. Market pressure, not government, may better facilitate the emergence of a high-quality unbundled market,” wrote Kelly and co-author Michael Horn.

In a piece for National Review, Kelly and New America’s Jason Delisle acknowledged their roles as “informal advisors” to the Bush campaign while they were crafting the plan, and endorsed the shift from student aid to portable savings accounts and ISA’s.

“Under the new system, then, a college student would start with a set amount of federal aid in an account that follows him through his career. Students will have incentives to spend wisely and more power to chart their own path,” wrote Kelly and Delisle.

A reform-minded agenda

Bush’s plan reads like a laundry list of proposed policy reforms that have been pushed in the lead up to reauthorization of the Higher Education Act. Numerous studies have shown that establishing a Child Savings Account (CSA) early in life can have dramatic impacts on a person’s saving and spending habits for college. On average, children who had a CSA tend to score better on socioeconomic indicators, save more money for college, display higher rates of financial literacy and save more money as adults than students without them.

Experts like Kansas University associate professor William Elliott III have argued that even students who make enough money to pay their monthly student loan bills are being harmed by the status quo debt-centric system.

“If student debt is making us delay 401(k) and delay buying a house, that’s extremely problematic,” said Elliott at a panel discussion on student debt.

For years, reformers have been clamoring for a student and college information system that better tracks outcomes. Bush’s plan creates a state-based system that promises to track outcomes. By handing responsibility for the system over to the states, it may sidestep current federal laws that have hamstrung similar efforts in the past.

“We will require states to ensure every citizen receives a complete picture of student achievement, system progress and finances in their schools. Parents, teachers and taxpayers need information to evaluate their schools because transparency yields better results,” wrote Bush.

A survey conducted last year by the Education Advisory Board found that improving efforts to track graduates career outcomes was the number-one priority for higher education leaders and administrators.

“Many [people] want to know are students getting jobs when they graduate,” said Michael Smith, an administrator for the University of Texas, El Paso. “Because funding — for public higher education, anyway — has been declining for seven years now, this is of keen interest to universities around the country to be able to demonstrate to those who hold the purse strings that they’re providing value to their students who are able to graduate and get a job.”

One thing Bush’s plan promises not to do is spend more money. “Achieving these goals doesn’t require additional money or programs designed by Washington. That’s why my plan is budget neutral and returns power to states, local school districts and parents,” wrote Bush.

For more political coverage, see our special Election 2016 section.

Derek Johnson
Derek Johnson is a writer, journalist and editor based out of Virginia. He received a Master’s degree in Public Policy at George Mason University and a bachelor’s degree in Communication from Hofstra University.

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