As Democratic presidential candidates continue to introduce proposals addressing rising student loan debt, a group of economists gathered in Washington, D.C. Monday to debate the merits and drawbacks of instituting student loan limits, and to discuss whether loan defaults are due to flaws in the current repayment system or a lack of accountability in higher education.
During the discussion — hosted by the Brookings Institution — Adam Looney, a senior fellow at the Brookings Institution, and Dubravka Ritter, a senior research fellow at the Consumer Finance Institute at the Federal Reserve Bank of Philadelphia, discussed the consequences of instituting loan limits for students at poorly performing institutions.
Looney argued that both students and taxpayers would serve to benefit “if the federal government had stronger rules for how financial aid can be used,” adding that that the reasons borrowers are struggling today to afford higher education and repay their debt “stem from an erosion in the quality” of the education they are receiving.
Looney said because students at for-profit institutions tend to borrow more and are also “less likely to complete a degree, [and] less likely to get a job,” he suggested that students attending poor-quality institutions should be limited in how they much can borrow or be blocked from borrowing. Instead, he said, the government should focus its funds on high-quality institutions, and “prioritize those institutions in our aid formula.”