The idea that colleges should face penalties when their former students aren’t able to repay their federal loans has caught on in Washington.
Across the political spectrum, policy makers are increasingly calling for colleges to have more "skin in the game" when it comes to federal loans. Institutions, the thinking goes, need to share in the risk of loaning money to students so they’ll be more invested in student outcomes.
But for all that agreement, few politicians have delved into the fraught task of proposing, in detail, a new accountability system based on risk sharing, as the idea is known.
A policy paper released Wednesday by Robert Kelchen, an assistant professor of leadership, management and policy at Seton Hall University, offers one path toward a federal risk-sharing system.
The paper, funded by Lumina Foundation, calls for a system that involves rewards and penalties for colleges based on the academic outcomes of their Pell Grant recipients and, separately, how well their former students are able to repay their loans. On both counts, the government would judge a college’s performance compared to that of its peer institutions.
Read more at Inside Higher Ed: https://www.insidehighered.com/news/2015/09/09/lumina-funded-paper-proposes-federal-%E2%80%98risk-sharing%E2%80%99-accountability-system