japan are probably much more key to our economic success right now. host: scott paul, president of the aam. >> on the next washington journal, david cooper and james sherk discuss our recent increases in the minimum wage at state and local levels have impacted local economies and businesses. and christian weller looks at whether americans are efficiently saving for retirement. you can join the conversation on facebook and twitter. live at 7 a.m. eastern on c-span. next, proposals to eliminate federal student aid programs and to replace them with direct federal funding to the state. with higherscussion education leaders and scholars was hosted by new america.

this is one hour and a half. >> thank you also much for being here today. we appreciate you taking your time on this cold saturday to enjoy this debate with us. ons is actually not focused the paper we released a few months ago. about as wea came were debating the different topics that formed our paper. that is printed within the lobby for anyone interested in having a shiny copy.

actually compared them to the new america proposal. that is also in the lobby. both publications are thought-provoking and this debate is also thought-provoking. so, the proposition of today's dollarss any federal for higher education should go directly to states or institutions rather than student aid. arguing for the proposition are f. king alexander, president of louisiana state university, a bill doyle, a professor at vanderbilt university. arguing against the proposition from the flanagan national association for independent colleges and universities and andrew kelly, an american enterprise institute scholar. is capable moderator today

danielle douglas-gabriel, a reporter for the washington post. see e should be able to our proposition up on the screen pretty quickly. want to explain the voting process. as you can see, the proposition is now on the screen. we want to take the temperature of the audience before and after the debate to see how much our debaters have changed up people perceive this issue. you can vote now by texting new 2333 and one word, to 2 "b" putting in "a" or depending on whether you agree or disagree. >> can we vote? >> the debaters cannot vote. with that, i'm actually going to

turn it over to danielle to continue on with the debate. >> thank you for joining us this morning. we will start with some opening statements so we can kind of firm up the opposition in favor and against. i will start with dr. alexander. >> thank you. i think new america. this is a serious of a discussion we could ever have. we have been working on the hill to get the federal government to use any portion of its funds to shore up what states are doing because they have figured it out. states are disinvesting in their public universities. it is the first state to be out of the higher education affordability. our legislators have told me that i can get reelected. i can get reelected by not raising taxes. i will get free authority to

raise it on your own. or get that money through loan money. and 1972, the great debate was about institutional aid versus direct student aid. it incentivize institutions and or states to enroll the right populations. which of the market route -- we took the market route. 1972ssumption was made in that states would always take care of the public universities. states are banished. now we have a federal market-based tuition and fee based system that has allowed a new sector to emerge that is lucrative, the for-profit sector. of the progress and 47% of all student loan defaults. would you want your system to have the same structure where we

let for-profit universities educate middle schoolers, elementary schoolers and high schoolers? right now, we have no idea that the federal government would be the main supplier of revenue for higher education. 1972, it was to save higher education. chicago saidy of they will be more like the university of illinois and reduce our low income access and keep cost control better. none of that has happened. the university of chicago is just as it was then. feeling difference is the university of illinois, for survival purposes, is trying to become the university of chicago. combined, ivy league the richest institutions with federal direct student aid, the wealthiest institutions have less program students thean l

su. substantially less than i have when i was at cal state long beach. $170 billion to worked? population ranks number one in college degrees. rank 13th34-year-olds and it is dropping. it is time to do something different. it is time to incentivize our states to do the right thing. when our medical center chancellor told our legislators in a special session a couple of weeks ago that for every dollar they accept from him in medical education, he will lose three federal dollars. that changed the entire dialogue of our legislature. in louisiana, we raised taxes to make sure we did not lose the federal money. now, it is time. we know it works.

a federal matching program to encourage states to do the right thing. the stimulus package, the reason it works for education was because we had a provision from the government that said you cannot do like education resources if you cut your budgets below the 2006 budget level. we do it. the time we used new federal dollars, any new federal dollars to encourage and incentivize states to get back into the public affordability game, otherwise we will not have colleges and universities in the next eight years when states drop off the map. >> thank you. in 2013, the new america policy program made a case for the program. the pell grant program is a cornerstone of federal aid which all too often keeps low income students from attending college. prices havers as

soared, it is less effective. today, needs restructuring. we should stop handing out vouchers and give the money directly to state some would argue. on the contrary, they argue for increasing the maximum grant, making it a permanent entitlement. let me say i agree with 22 2013 new america. it would not be an improvement. i give four arguments. first, providing bachelors to students on the basis of income allows us to target dollars who need it most. those who would benefit from college but would not otherwise be able to afford it. this is the real reason the federal government got involved. in contrast, state direct funding of public colleges is quite regressive. subsidizing state tuition disproportionately benefits upper i income families that

are more likely to go to college. once more, state funding formulas shortchange the problems. the project estimates that public research universities receive cement thousand $400 for students in 2012 compared to over $5,000 for community college. in maryland, cuny colleges have 25% of the approved. affluent students that are more likely to attend four-year colleges of the big winners. their own reasons to fund their colleges this way and they have every right. let's not pretend it. -- need-basednt grants is the option where we're likely to succeed. in contrast, the system to public colleges lowers tuition at a subset of institutions. are institutions always the best

fit for students? evidence suggest this may be a costly trade-off. a recent analysis found that 28 states and the district of columbia have no public colleges with four-year graduation rates over 50%. study, some of the adams scholarships in massachusetts which can only be used at public state colleges actually led to less graduation rates. why? because the subsidy was only good at a subset of schools and those schools have lower graduation rates than the schools. third, giving student aid and lenin them choose from a range of options will help drive innovation. my friends at new america have laid out a compelling case for online education, and other things. where did those innovations

emerge? many came from outside the public sector, in private and for-profit organizations. performancend state standards, which innovations are worthhile in the hands of the people, not bureaucrats. last, i believe portable aid is needed. i think i agree of my colleagues. they should demand much more of colleges in terms of performance and affordability. advocates of institutional aid levi getting money directly to theolleges instead of students, they would have more accountability. they have chosen not to. it is not clear why direct funding was changed. the problem is leaving the decision to sanction colleges in

the hands of a few regulators where colleges are hardly ever held accountable. the gao found 1% of colleges lost their accreditation. regulators answer to many members of congress, institutions they approve. the interest of students and taxpayers are one of many. in contrast, a budget driven system in hundreds of thousands of individuals. advocates of direct aid are right to say this market is not worth nearly as much as it should. schools should be held to higher performance standards and regulatory policy should not deter. these are possible when it focuses on students and not education. >> thank you for having me. i thought i would have a little more context and background into president alexander's remarks. the argument is considered of

assumptions that underlie college affordability o no longer hold. financial aid directly to students. they were not the only stakeholders. next, the institutions and the states working together. state governments would do that by providing appropriations, institutions would do that by using those efficiently. financial aid would be mostly need-based. then, for institutions, their commitment was if they were charging prices well above what the financial system covers, may have an obligation to make sure any student can enroll. othergument is the

stakeholders have drifted away from their commitments. presentingitutions, much less than they have in the past. ituition increased by 80%. if you look at the state financial aid, a low income student attending a public institution and compare the amount of aid they got, that did andchange between 1996 2012. the same amount of money for that student. a high income student attending a public institution, the public a they got increased by 154%. the states drifted to giving them more public ai d./ as far as the institutions commitment, look at private institutions. they have increased both tuition and financial aid substantially between 1996 and 2012.

150% increase for low income students. 60%does not compare to the 2 increase that high income student saw at the same time. if your family is making over $125,000, the amount of aid you 230%.ncreased by 3 that is a massive increase. you can see states and institutions drifting away. the solution to me is to give state and institutions every incentive to go back to their original commitment. pointing out that they are not doing so, will not be effective. we have to find a way to give states every incentive. a way to do that effectively is to make sure federal funding can go to the states and the states have to change how much they are spending and how institutions

are behaving. that will benefit from federal funding. >> we will give you the last word. >> i will take a different approach, as it was assumed that some form of what is in the atmosphere right now, giving more federal aid to public institutions via the states, actually come to pass. let us look 10-20 years from now, some assumptions about what it might look like. i think you will the disparity among states. because some states will buy into this, some will not. we have seen that certainly recently with the recent medicaid debate. we will see a variety among institutions. we will have less access for private nonprofits, less access for public. and for wealthy institutions, whether they be public or private wealthy institutions, they will be funding their own student aid.

those institutions that are wealthy are also selected. so, we will have low-income students who are very bright, may be able to have the same options that they had before. the familiar -- this landscape is very familiar. it looks like american higher education, circa 1964. this is exactly what the federal government came into address in 1965, when they set up the higher education act in 1972 with the current framework. so, where are the holes in that framework? i agree. i'm glad that both will and dr. alexander mentioned the original structure. it is not functioning.

the pell grant is not the only one. the whole concept was that they will start with low-income students. but we're also going to incentivize the states to also step in for low-income students. so we set up a program, the federal government completely different in that eight years ago. as soon as they did that, four states stepped out of need-based aid. if you give me $200 increase in pell grants, my low-income students have lost $1000. the same process with ssig. if you make the pell grant go up to one or dollars, and the state takes away $1200, we saw this happen with the stimulus bill.

it did not work well for low-income students. a study by jennifer delaney out of the university of illinois shows that low-income students, whether at public or private colleges, lost in that scenario. now we could fix that. we can fix that scenario. we can simply put the moe that work so well for public colleges into a new ssig with a lot of money. we can add need-based aid, not protecting, not an unintended consequence. then we look at institutions. i'm going to surprise you. we are not against adding whatever those accountability du jour are for institutions. in a well-funded campus aid program. there is no institution that is not getting enough seog.

so let us get real money into it. e house did this in a proposal in 2009 in the purchase loan program. completion rate percentages for pell, and price even, that formula could be worked. so my main argument today is that the federal government in 1972 recognize that institutions are institutions. they have mixed obligations. they have to also survive within the institution of have to balance books. states have mixed obligation. they want to educate the citizenry. but they also want to keep the best and brightest at home because they're competing with the other 49 states. so the federal government, in many ways, they just want to get low-income students who are capable through. let us not throughout the current system. let us work on it together. let us work towards 2064,

instead of 1964. thank you, guys. >> we will start with your team first. >> dr. alexander, if we were to follow additional aid directly to the states, have them make the decisions as to how to disperse that, how would you protect colleges from being subjected to the whims of state legislatures? dr. alexander: well, one thing has been constant. i have been at kentucky, illinois, wisconsin. in virtually every state, state legislatures have told me that i have told them, why do take medicaid money? because we do not want to leave any federal dollars on the table. that is the biggest influence that i can see with legislatures. now somewhat political aspirations have not done that, because they have said i have future political aspirations. but within a couple of years, they go after that money.

and i can just tell you that louisiana did not take the medicaid money until a new governor got in, the first act he did. that we would leave the millions and millions of federal dollars on the table. states, highway funds, why do they invest in highways for higher education? why did they invest in medicaid before higher education? why did the land-grant diversities get created --diversities get created? under a partnership, the greatest public university system in the world that resulted from that. so legislatures, state legislatures, one of their top motivations and incentives is whether or not they will leave federal money on the table. and i will point out one other thing about the 1972 act. in 1972, when pell grant for past but there is also a consensus that following the pell grant students, passed by congress, what was supposed to happen was $2500 what follow those students to the institution. to the institution, provide programming for the low-income

students. the cost of education allowance were passed at the same time pell grants were. they have never been funded a penny. so institutional aid and programming was recognized and needed, but it was never funded by the federal government. >> i think the only thing i would add is that we do need to learn the lessons of the affordable care act. but it is important to learn too much. it was just past, and the accountability are still pretty intense. and a lot of things states and schools are expected to do, there doesn't appear to be a ton of resistance. not a lot of states saying this will not happen. the affordable care act is one act, only look at different policies, the federal government uses its power to leverage state

power, it works. >> i just want to point out a couple of things, just quickly, on these points. one, i think of the medicaid and highway examples are particularly good. vis a vis, the state direct appropriations. the need-based program, they are means-tested. in-state tuition, not means-tested. right? so the federal government has an incentive to ensure that states spend more on a need-based program because it is further targeting more dollars for the low-income people. highways, and keenan would probably disagree, people needed to get around. higher education does not serve everybody in highway does, right? i think these arguments about federal-state partnership that use medicaid and highways in

particular, they're not really great analogies. because higher education is of the same kind of service. >>? i think the original question you asked is so important. because i'm a present private nonprofit colleges. and obviously, there is concern at whatever you look at. but i often say i would be more afraid of i were a public college. because the most proposals out there do not come free for public colleges. they come with incredible controls. that i think will take away the innovation and creativity and the ability of the public colleges. we have a very competitive marketplace out there. private colleges -- most competition is regional private

competing with national private. and national public with national public. that is what students are choosing between. and there are a lot of accountability measures that people expect, even more that's eight legislatures would -- even more that state legislatures would add. or the validity of public higher education to get revenue streams that they will still need to fill in. >> continuing with this thing preserving, how do we tackle investment crisis? sarah: i think the increase in prices is very complex. the whole economy, let me take on something simpler on the investment. i would go back to this ssig program and constant. i think we should consider, what would an effort look like if we had a lot of money out there for the states to partner with the

federal government on grants? but you did have a maintenance in there that did not just include need-based aid, but include public institutions and private institutions, whatever the objective, that part of it institutionally, it didn't work in the stimulus bill. so that is where i would begin. >> i agree with that. i think this is an area, i know the president alexander writes about ssig and testified about it as a working federal-state project. this is an area where i think we could agree that a federal effort to incentivize states that is given to students, a could be a workable arrangement. and again, it allows for targeting the students we want to help the most from a federal perspective. and to point out that that is a

very different model, than giving money to states that they then divvy up to institutions lower prices for everyone in the state. >> would you like to respond? >> i think it is wonderful. i was listening, i think it is amazing. in 2006, 2007 when we propose that, you guys were opposed to it. you did everything to stop it. i think it is wonderful you can the sparkman realize how important it is encouraging states. [laughter] and i love account ability. we are not afraid of accountability. i need a two thirds vote from mine legislature. i am not worried about the federal account ability. i need more regulation to stop corinthian colleges from stealing public money and stealing state aid grants. in california, the program -- the university of united states of america, agenda because there is $13,000. i give it goes to california

state gets $5,500. think about how that works in your own states. these are not your need-based programs. ohio has a program that only goes to private monopolies. we are getting the regulations necessary. i need more help from the federal government on account ability to go to the right places that would remain affordable and committed to the low-income students. and that would include the trinity university in washington, the private universities to have 55% low-income, who cannot raise money. they have nothing but low-income kids, and they cannot charge anything. but they do not get me help through the voucher program. we are very much in line with this maintenance of effort provision. we be more federal health to tie $170 billion in federal assistance in-state behavior. that is the only state behavior.

>> so, i would start out by saying that i agree with expanding state student incentive programs, something like that federal matching aid program is a great place to start. but we cannot keep on trying to figure out how to cover these price increases. it is a spiral we have and try to cover through all different types of eight. whatever is left over goes to debt, we have been trying everything to defeat it. how to defeat it. how do we cover the price increases? we just cannot keep having policies that do that. so a program is great, as long as there is a change in institutional behavior at the same time. the institutions are strongly encouraged and incentivized to fund low-income students, as long as tuition increases are moderate and relative to what families can afford to pay. i do not think tuition should increase with the median family

income. we have to figure out, without that tuition, some, nation of in state funding efficiency, a cannot just keep on assuming that we will figure away to cover these prices every time. that is not going to work. >> affordability and completion, very much tied to each other. i will post the same question to both sides, starting with you first. how would you use state directed a and the quality of education? >> it is not one thing. it is about 100 things. it is campus culture. i have been at two campuses to working on the third now, where the graduation rate was 20 points above what was predicted. at cal state long beach we had 50% pell-eligible students. we had 1000 students undocumented. we got graduation rates up from

40% to 50%. in fact we testified two days ago to the state legislature, do one of two things. reward performance in the institutions that are improving what they're doing with low-income and all populations. or let it go. set us free. let us run can we know the market. we can do neither. we are not allowed to do either. and what happens to we end up that public higher education serves 80% of the students in this country. the scale of the snake of all populations, are the institutions in the current model. >> so, the first place to start, always member that you cannot compete unless you get in. of course need to worry about goals. but we have also learned from the research. if you change the price of higher education by $1000 you will get about 3% more students enrolled. we know that, i'm a researcher, and we have a lot of other

findings. we can say that with a great degree of certainty. what do we know about the impact of redesigning financial aid for student completion? we don't know nearly as much. if we try to do something where you provide incentives with a certain number of credits or restructure it to get students incentivize the right way, i am very skeptical of those efforts. the research is not nearly as clear. so, it seems funny to me. we are hesitant to do what works. we have to start by getting them. and we have to get them on campus, working on improving the exciting research, and restructuring. but we know that works. then from there, we need to do a lot more to figure out how more students can complete. >> i will say two things. one, building on will's point of all we know about financially. i do agree, there is a book on

the evidence not nearly as sick as it needs to be. i will refer people to a paper on the future of children which asks what we know about research? one of the lesson they pullout is that the incentive-based grants on academic benchmarks, they are encouraged to get more funding. but they do tend to have -- they seem to have a positive effect. there are not as many as you would like. for instance, one is the west virginia promise scholarship. this was in the paper. students have a need for benchmarks, and they found that that increased on-time completion rates by scholarship students by 7%. and that it was the incentive, because as soon as they reached the fourth year, at which point the academic did not matter, it went away. i do think that one of the things -- the second point is

that where we have this problem in institutional improvement, and i'm guessing you will agree as well, we are focused on the cost. the upfront cost of doing things to help more students succeed. we are not focused on the cost-effectiveness. and to me, i would much rather see state legislatures and federal legislators be discussing cost-effectiveness. by that, i mean it may cost more up front to government interventions. but it is far more students being successful, and the cost of the degree goes down. think about how can you build that kind of idea into your performance based funding scheme? as opposed to just doing it on the basis of the outcome, try to minimize the cost of from. i do think it's a conversation we should have. very much supportive of that. >> first of all, i don't want to

miss the opportunity to have a moment. i'm not saying you did. but that was part of the background battle. that is why i say was very intentional. if we can protect need-based aid, we might be of the worsening of you. so, but on the completion question, it is very complex. i agree with will and dr. alexander. different students are going to have different issues, too. for some, it might be lack of money. for some it might have this alarm clock, that someone is tracking them to get out of bed and to school. and into class. that can make a huge difference. so there are multiple solutions. we're learning a lot about this as we had a federal focus on completion which i think is been

very positive. whatever we do, i think the biggest mistake that we have had in the policy debate that has gotten more and more dramatic over the last 10 years, is that we have talked too much about penalties and not enough about incentives. when you put out penalties, you instantly start to run into debates about states rights and institutional autonomy. and you are never going to find a positive solution. we need more conversations like this, potentially moving forward. and i do have a long-standing proposal out there, and we see as part of the completion agenda. the idea is that we set some sort of a federal thing. we will give you $35,000 in grants to get through. if you get through faster, good for you. you will get your money sooner. because there is a financial incentive and a pathway to help people stay in and take as many classes as they are capable of to get through, as soon as they

can. >> i get the sense that there are aspects of the current system that both of you would say are flawed. and you have already discussed a couple of them. but in addition to things like improving campus aid, what would you do in order to correct some of the design flaws within the current student aid system? sarah: i would begin by saying they are not design flaws. society continues to evolve and change. and so we always have to constantly update things. we learn lessons as we go. we are going to learn a lot on the completion as more and more schools focus on it. i think that we should have, if we want degree attainment to be a goal, we also set up a certain amount of money, $35,000 to get through. we have put hard targets and there's a people are not spending money slowly.

that was surly be wondering i bring back in this partnership as i mentioned before, i think we do need to bring back states and institutions through incentives. into a positive national conversation. which we all do our part, it is static. i think incentives on students and incentives for institutions, incentives for states, certainly pieces of the federal formula, certainly need analysis needs to be updated. but recent publication, so many issues on the table. >> this is where i think again, there is common ground. i agree with dr. alexander. who suggested we need to hold colleges to higher standards. i think we need to hold all of them to higher standards. to make sure they have incentives to keep tuition low on low-income students. you know, if i were entirely of

favor of preserving the current system, what was originally how the debate was pitched, i would not have much to do all day. right? as anyone who is read my work knows, that is not my position. sarah and i probably disagree on this. frankly, we have to punish some schools were not doing the right thing. some of them need to go out of business. we have written about the notion of setting a stricter performance floor, getting rid of the fall rates, loan rates, and we are putting schools on the hook for some percentage of the loans the students do not repay. and that is something that we can discuss after-the-fact. [laughter] which i'm sure we will have fun with. but we had a similar panel. and on those terms, these are the ways we get incentives right. and institutions thinking about how best they can reach the standards. >> i worked for seven years on the college report card scorecard to get new information

in hands. they want to know what our graduates are doing great not discounted we turned away. which is u.s. news & world report. how are they doing when they graduate? are they getting jobs? are they in debt or not? we have been fighting since 2006, and this was a fight against the for-profits and private partners, but the privates fought us to report student indebtedness. and i can tell you that is when the critical elements and issues that parents raised me talk to me. what are the students doing? we fought to get the college scorecard to put more information marketplace. one of the reasons the higher education market system does not work is that there are no informations for parents and students. we given the same glossy brochures. we do not share what is happening at the end of the day.

we know more about the cars we buy because of a blue book than we do about the colleges and universities that we invest for a lifetime in. and so we are very much in favor of more accountability, showing parents value for the dollar they are investing. but we certainly would like the private sector of higher education in washington not to fight us every step of the way, to make this information available to students. and this is vital, useful, and absolutely essential information for them to make the most important decision in their lives. we are not afraid. that is one reason why corinthian colleges went out of business. because they persuaded people to go to the institution, and ended up with nothing afterwards. that is why many of these insane institutions are milking our veterans blind. the company and say i use of my g.i. bill. they are getting public vouchers

and g.i. bill vouchers for worthless pieces of paper. they have had them milked from them. the voucher system is far out of control. we have to have institutional aid. about her to nowhere does not get you anything. scholarships to nowhere do not get you anything. so, we are not against student aid, the we need to rebalance what we are doing to providing institutions who serve the students. >> one additional to point to make, there is an argument for direct funding to students. if one is edition is not doing what they should, they do not have the right sort of characteristics for the individual, that you take the voucher and go elsewhere. but it is not much of a market for a lot of students. 50% of students travel less than 14 miles to campus. and 80% of students travel less than 100 miles to campus.

there are not that many campuses close to that many people. more students do not have that many choices. so the idea that a student-based funding system is going to help out the market and induce institutional improvement is not borne out. there has to be something in there that forces the institutions available to students in a local area to be better. to push on them to use their own funding better. and to ensure that they can fund the students who need a higher education, and they can enroll that they have access to. >> the idea of account ability keeps coming up. and that was one of the key focuses of some of the presidential proposals around college affordability in this campaign season. what if any proposals have been floated as far would be beneficial to your position of how college aid should be

disbursed, or to your position? i will let team b go first. sarah: sure, well, we have -- i mean, i think if you kind of dig into hillary clinton's proposal, below the headline, she is looking at that. i think that is solid. she does not exclude the private nonprofits from her proposal, that he is not very clear with a fit him. i think the conversation we're having, a very rich conversation about that anyway, some of it is overinflated. the cost of loans is very valid to have. so i think questions around that are good to continue. how should we be having students repay? how long should they be repaying? those are the questions. >> well, it strikes me that most of the plans of the remaining contenders at the very least --

>> there are other plans. >> a plan i helped work on, out there in the ether somewhere, go look it up, mainly focused on the debt question. they are in the forefront of family's minds. but my concern is that they wave their hands mostly at issues of completion and value. and i think you see that in both the sanders and clinton plan. solving that -- mechanically lowering tuition is going to increase rates. i just don't think we have any evidence that that is true. compelling evidence that is necessarily true, i should say. i like to see a lot more on how to we actually think about improving the quality of higher education, and ensuring that the

federal investment, we are getting a return. i just don't think that we have seen enough of that yet. clinton's does say a few things, but bernie sanders, my recollection is that a whole lot. i think that is part of the conversation. >> the clinton plan has our federal partnership as a third leg, to incentivize or whole states accountable. if you remember at the beginning of president obama's administration when he give the state of the union address, he said we are going to hold colleges and universities and states accountable. well, the college or card is about holding them more accountable. what has not happened is the state part of it. and that is part of senator clinton's plan, the state federal partnership which we have had the opportunity to work

on. marco rubio said something interesting. he said when he was running, our accrediting bodies are like a cartel. we are the only country in the world that allows private accrediting bodies to dictate where $140 billion in student aid goes. and you cannot think of an institution that has not been re-accredited or accredited. everybody gets accredited. everybody has access to public money. that is why we cannot control it. we tried to address the issue in the early 90's when bill clinton and secretary long had an opportunity to tackle it. we killed it.

now we have a problem that is so out of control, that we need greater accountability. and the accrediting bodies have fallen flat on their face on this issue. when fasttrack university in fort lauderdale, fasttrack gets millions and millions in pells grants, and they hired exotic dancers in admissions, we need a new system. >> i think they're both recognizing the same issue that really concerns me. the federal government has to start using leverage with the states to ensure there will be changes to how they are behaving. one thing i can pick out is a reservation about either of them, there is a provision about how the institutions have to spend the money -- a certain amount, certain faculty, and so on. i think that is where you get, and i would agree, this kind of overreach and exactly how these institutions are going to accomplish how we set out the

goals. it is better to let them figure out somebody get there. specifying the kind of specific business model for institutions is i think too far in setting up the plan. and the interesting thing with the clinton plan, and this is some in the came up in mid-america as well, how much of an out would you allow states? and the clinton plan includes that, which makes it obvious that a lot of states would just not do that and continue with the federal government to get slack. the federal government said no way you will get this money. you have to participate in the way we restructured this. there are trade-offs. those are the things i would point you. andrew: one of the things i don't think anybody mentioned, and i should have, is making

free the big boilerplate. free college is a big idea. that would surprise anyone in this room that would disagree, it is not a silly goal. but will not lead us to an efficient system, were people who can pay pay what they are able to pay. the clinton plan is much better on this, obviously. but this notion that we are somehow locked into this debate about whether it should be free for everyone, universal free college for everyone or not of the next decade at least, it is now a litmus test for democrats. it is a shame because i think we do have a much more productive debate about who pays what share, what is reasonable? and so, you know, that is i think where politics have made it harder in some sense to have the policy debates you need to have. >> one final question, them to the audience. if a district it to the states, how would private institutions

work in this? i mean, certainly there are other institutions that are not as much of a concern when you think of some minority institutions that are private, have a huge pell population, how we think about them in his overall kind of model? >> i can start. let's go ahead. >> this is one of the reasons i am not in favor, because the privates play a very different role in the division of higher education. this depending on what state you are in. there has to be a substantial account ability for privates because they educate so many students. new york, massachusetts, state like that. in other states, there is a small private sector. relatively well-funded company not need as much. they may not need as much of a relationship with the state.

allowing the possibility is hugely important to me. >> states also have the program from an privates do benefit disproportionately from those. so keep in mind that privates have 26% of the students. but they get about 46% of all student aid. a lot of it is price-sensitive. so if funds went into that program, they would benefit from this type of discussion. more importantly, yesterday in the national academy of sciences, we released the recommendations from the lincoln project. the lincoln project is about saving our public land-grant universities. and many hbcus are part of that. we are on the edge of financial exigency. in illinois, we have chicago state. and we have southern and grambling. we need to focus on saving our private institutions now. our first land-grant

universities have grown from 21,000 to 29,000 per student. that seems good. but private have grown from 31,000 to 61,000. we are becoming and have become many of us, the proving ground. per student expenditures and faculty salaries, we all know this. that was part of the purpose of the lincoln project. so we really need to focus. the states are bowing out. our public universities are getting left, and colleges are getting left, with no resources. talking about financial exigency in louisiana and illinois under the current conditions, and he will see this more and more so in the coming years. so i would say we need to incentivize our states to make the right decisions, like we have in medicaid, where the money will be rewarded to the states for putting them into the institutions, of which are the biggest losers today, compared

to where we were 20 or 30 years ago. >> yeah, i think it is a good question. of course, i am interested in the role of the private nonprofits. we are in seven states, and the district of columbia, more students in the private non-profit sector. a higher percentage of in-state students are pell at private colleges. we have seven other states and the district of colombia, where there are more total moments. and there are many, many private colleges that have very efficient degree production for state taxpayers, for the small investment that the state might make. 3% of the state funding 30% of the degrees, they have those listed.

so, we need both sectors to be part of the solution. i think all of the sectors benefit from each other. it makes a bridge from higher ed. i also want to mention and take up one other point, matthew really pioneered the concept of some sort of a federal consumer piece. easy to access, federal consumer piece that was sort of counter this u.s. news & world report problem we have. it has been out for 10 years. land grants like it so much among the bar of the first pages. we gave it to the. let us try to create a universal system. our problem with the scorecard,

it was a letter grade. we all share that concern. a,b,c,d. it needs more improvement. but it is a good start. we will open us up to audience questions. keep in mind to keep this to 30 seconds. anyone like to ask our panel questions? >> i'm sure some of you have heard of the bennett hypothesis that raising direct student aid essentially allows colleges to raise tuition, because they are sure the federal government will take over part of the cost increase. and recent work by the new york fed found a confirmation on this. that when you raise pell grants by a dollar, you see an increase in $.50. i was wondering if those in support of funding colleges through direct student aid, if you could address how we could design student aid so as to avoid this issue?

>> i actually participated. because -- i don't know why bennett gets credit for it -- it is about institutions making decisions. that was supported, too, through federal loans. private institutions as well as many other institutions who have particularly use the loan programs, the more they could get, the more they can charge. and there is institution in this town that used to brag about that. george washington, i will mention them. [laughter] leading the country in what you charge, you will get more. they will blow the cap off the loans. there is a correlation. but in the public sector, there is not. unless we have our own tuition and autonomy, but we do not.

the government says freeze it for two years. we have a state legislature. and the public sector, we have these controls that do not allow us to roll in the hypothesis. there are many institutions that have taken advantage of that. and many that have not. so it is a mixed bag of who is using it. we have for-profits saying that is exactly how they set policy. so we need better controls. we have to have better controls. >> i would jump in. it is a great question. i do think we are seeing more evidence and more convincing evidence from more rigorous work, that it is actually a real thing.

and to make sense, i think we have studies that line up with it. particular leave the new york one you cited. the literature, the effect for need-based aid are not as large as the effects of student loans. and in some cases for tax credits, dollar for dollar substitutions. i do think it is worth asking, i have written about the need to rein in or eliminate some of the federal aid programs that are the most perverse, the plus programs that have unlimited borrowing. that's and one signal to colleges about what they can do, raise prices. we need to talk about which programs are likely to have this effect on tuition. and which are not. there is not some gamesmanship, we have seen some papers that show -- one out of university of maryland -- that shows private colleges in particular actually substitute money away from students towards other students.

institutional aid they would have given. president alexander is right that the effect on public colleges, it is much smaller in that regard. so your question is a good one. what we need to do, i think, what parts of the federal portfolio are like to rise genetically? and we need to maintain a commitment to need-based student aid. >> yeah, so this has been looked at under the clinton administration, under the obama administration, under the bush administration of congressional instruction. and all thee said they could not find a correlation. so know for those advocates that finally had to draft that study, that was somewhat flawed to use that as proof is to be problematic. we've seen archibald feldman look at it. i think the traditional way colleges set tuition is they're

looking at -- they're a section of the economy. the student aid money is such a small percentage of it. the tuition revenue has so many factors attached to it that it's really a decoupled position. but let me -- beyond the study, i know we have a lot of wonks in this room, but let me look at it from a practical point of view. i'm at college and i'm looking at somebody that walks in with an absolute poverty student. they walk in with a $6,000 pell grant. i know we're not there yet, but we're going to be there soon. that student as far as expected family contribution -- because i'm going to have to make up the rest -- looks more like a family making $60,000 or $70,000, as far as the money they can put on the table. i don't care if they're taking it out of their checkbook, if i'm at college or taking it from uncle sam.

it's how much do i -- how do i fill in that differential between what it actually costs me to educate that student. and it's going to cost me less if the feds put down the money. i think many institutions probably got the exact opposite. and it's going to vary by institutions. but for the publics and the privates it helps. it doesn't hurt. >> keenan, then andrew. >> i've seen so many studies on this. but i think the evidence is when an institution admits it under oath and under testimony, then it seems like it's real. and when they have to admit that they've been doing it that way, and they have, that's pretty good evidence. >> i would just say that i think we -- you know, to me? i believe the studies have found positive effect. i've read them carefully, and i think they're well designed. it's hard to ignore the middle income students act in 1978. that that's when the tuition uptick really started, right? and so, we have to ask the question, what's going on there? and so, it's worth asking, right?

the federal role went from something that was focused and need-based to something that has now grown into this frankenstein that covers the entire income distribution, right? from tax credits to subsidized loans to loans per parent. it's worth asking what that has done to the incentives for institutions and for states, frankly, right? and part of the problem i see is that we don't have a whole lot of proposals that propose to rein that in so much, as just layer more stuff on top of it. which i think is likely to lead us down the path further. >> alright, before we take our second question, a quick update on our poll. right now, we have 42% of you who agree that extra federal dollars in higher education should go directly to the state. but we have 58% that actually disagree. let's see if that changes by the end of this conversation. next question.

art: hi, art hoffman. as one person who has dealt with these issues on the tuition and aid, it's not accurate to say there's no correlation. there's obviously a correlation. there's been no causal relationship proved, but there's obviously a correlation between the increase in aid and the increase in prices. here, just to say state disinvestment, the decrease in federal funding and atapement are all things that really require more discussion. and they are missed, to some extent. three quick questions. one is, what is the topic of this session? is it additional money, or is it substituting for the vouchers that exist? because i would vote for one on the additional aid, to provide institutional incentives. i wouldn't vote to replace vouchers with it. two -- anyhow, so that's one. i forgot. then, the second is, states have

it within their power to do these things now. why are they not doing it? i mean, what is it that's preventing them. and why do we think the feds, given all the problems with the federal aid, would make the state programs better? sarah: so, it is additional aid. that is the proposition. but whoever would like to take that part. >> it changed. it evolved over time. [laughter] >> i like that. >> in the prep, we all disagreed with the premise. >> yes. >> we didn't have to charge. dr. alexander: art, on the state thing, why don't they do it? because they don't have to raise taxes. they get re-elected. and that's -- that's been told many to me by a speaker of a state senate in the university of louisville parking lot.

and in addition to that, the incentives, the point that was just made, is a very good one. when esea title i schools was approved in 1965, esea, which was just reauthorized -- which let me point out, is an institutional program to reward low-income schools that have a certain percentage of low-income students -- which would be wonderful, if we had title i at the federal level. but when title i was authorized, the first thing that happened, states pulled their money out of the poor schools. they pulled their money out of the poor schools, leading to a maintenance of effort provision that was put into law in 1967, two years later. the federal government had to sue the states to not supplant their money, to not take their money out. and won that case, in a kentucky case in the supreme court. forcing states to put their money back in the poor schools. the same thing is happening here in higher ed. states have incentives to get out of the funding of higher ed, and force it onto the backs of tuition policies at the federal level.

that's what they're doing nationwide. but we don't have the same 1967 law. we only had it during the stimulus package. and those are the only three years in the last ten years where pell grant increases have exceeded tuition increases in our public and state universities. because states were halted in order to collect federal money. >> would anyone else like to take that? >> i think it's a great -- if you want to learn about it, it's been valuable to me. i would say this is one of the oddities i find in all these plans. is that they almost always start by saying these greedy state legislators, they're shortsighted. and they don't know what they're talking about, don't know what they're doing. so, we want to give them even more power, in term of divvying up the money. and in terms of having to continue to fund at a particular rate, just because the feds come in and offer a carrot. that to me just seems like it's a very strange way to think

about this. and it suggests that the politics of this would change overnight, based on some federal incentives, which i just don't think is true. and the other thing to also point out, one thing that worries me most about some of these proposals, especially the free college proposal, higher ed enrollments are countercyclical, right? and so, what happens in the next recession? when the states say, we have to balance our budget. we can't maintain the commitment that we pledge to you, under this hypothetical free college plan. what happens then? do the feds then say you're out of this program, and nobody gets any aid anymore? or do the feds come in and give an influx of cash? right? in which case, it's worth asking whether the fed has a commitment problem, right? vis-a-vis its incentive -- its partnership and its incentive program. these are eventualities that are not hypotheses. these are where we will end up, at some point in the future. >> so, i actually don't see the general trend of higher education financing at the state level as being one of intentional disinvestment over the time.

>> right. >> state legislators say we're going get out of this because we're done with it. we don't want to fund these colleges anymore. they're reacting in the short term. the reason higher education gets cut disproportionately in down times is it's the only category that has it alternative source. schools, prisons, all the rest do not have an alternative revenue source. but higher education has tuition. it's very appealing place to cut. because they can raise the money through tuition, which is exactly what they've done. and so, what you see over time is this boom and bust cycle, with the general downward trend. and we're back on the increase, not in louisiana. but in many states, we are actually -- state legislators are again spending more on higher education than they have in the past. it's not a steady downward trend. but the role of the federal government is to step in and change that exact pro-cyclical that you're talking about. that the states have to be pro-cyclical by the virtue of the structure of their budget.

the federal government can help with that. and you know, the game theory, we can talk about it and model it. as an academic, i love that. but i don't worry about the commitment problem that much. i think a given year, if you have to make a match, you make a match. as the target moves little bit, it just doesn't concern me as as much. >> a question in the audience? amy: hi, amy from new america. thanks for being here. this is maybe to tee off on will's point about whether or not states would or wouldn't pony it up, right? and so, you talked about two different examples. the state highways and the medicaid. and saying well, you know, state highways are for everybody, and the other program is really just for a few. so, we have seen states opt out. but i wonder if the politics are different for a program that affects poor people, versus a program that affects everyone. middle class, upper middle class families who are very powerful. i was wondering if you could

address that. >> it sounds like you're talking to a state that puts 95% of its student aid money in merit-based programs. you have to realize -- we had this conversation yesterday with the presidents of the land grant. when states have reduced their budgets like they have, college tuition has gone up. at some point, the middle class population starts screaming and yelling. they can't afford it, because they're left out of the student aid equation. that's resulted in zell miller getting elected in georgia, and 14 other states adopting merit-based programs. it's a middle class backlash. it's a middle class backlash. because states have increasingly made their institutions less affordable, by reducing their role in all this. and it's such a middle class backlash that president obama and secretary clinton got in a big debate over how high they're going to raise the aotc. and they raised it from $60,000 to $180,000, of which $22 billion in federal expenditures

go to. now, 55% of our parents take this. i bet that's going to get increased. i bet that's going up for 2,500. because the politics of hitting that middle class voter, that i'm still waiting to see states tackle that issue. it's the number one issue in louisiana. we may not get funded, but that merit-based scholarship program probably will. and so, that's a big challenge for us. because we're dealing with the politics of a middle class that feels disenfranchised. because they weren't a part of the federal aid equation. and all they could turn to is loans. sarah: so, i think amy raises a good question. there's the level at which states have -- there are a lot of programs where states have sort of bought in. and that's been the history. we've seen a more recent turn recently, especially over the health care issue. and probably at least one factor in that is because it was so strongly identified with one political party.

so, you see a backlash on those other states. i am not so sure that the free public college debate doesn't suffer from the same politics. but i think that we have to, you know, ensure whatever we do, that we would work on something. that we just try to gauge against those consequences, as much as we do. my concern with the states is a little bit different. my concern is that the states are so committed, the state legislators are so committed to i'm never going to vote for increased taxes. but i think one of the things i haven't seen much, what have all the balanced budget amendments done to the states? this was a big trend 20 years what ends up is education is

almost in that counter circle of where higher ed is. when the unemployment rate goes up, people go back to school. colleges are flooded with students, and the states run out of money. so, when the federal government -- i'm sorry -- when colleges need the money, the most the states have the least. and i don't know how you get out of that cycle because politically, i don't see any movement among the states. i can't imagine that states would go back to being willing to borrow in the lean times. and so, i think they won't have the money. back to will's point, they won't potentially have the money to do this. >> any -- >> yeah, i would just say to be clear, my point about medicaid and highways was just to suggest that's an instance where the federal government's goals are more directly aligned with the way the policy functions. and that's because i'm defining the federal goals, in something like medicaid, is to provide health care to people who couldn't afford it otherwise,

right? and so, what i'm suggesting is that in the case of higher education, that states often have different goals than the feds. and some of the state goals are exactly this, to make sure that middle and upper income families' kids stay in the state, right? and so, they fund the flagships really well and provide a lot of merit aid and those goals to me are not actually what the federal government should be pursuing. the federal government should be pursuing the other side of the spectrum, so that's the broader point i'm trying to make. and so, part of what i worry about is, yes, middle class families would likely clamor in some places to be part of your plan, let's say, right? but at that point, the federal government is delivering a bunch of subsidies to middle class families, in order to also reduce the prices for lowering. and to me, that's not as efficient as providing the money for families. >> we're giving everyone a two-minute closing remark.

since we ended with sarah, we will start with sarah. sarah: ok, i think we should not throw out a system that has incredibly deep and broad political support. that probably is the most significant thing we have with the current structure of student aid. this incredible pell grant program has the bipartisan support it has. the federal investment in it is bigger than many cabinet agencies. that is not nothing. and the thought that a new system that funds colleges, i wish colleges were as popular as we might think. that funds colleges or states i think politically is going to be very, very hard to sustain. i think it's a hard time to put in new programs. i think that we need to work on incentives and not beating each other up. and that we can work within the

framework. back to king alexander's point about 1972, i think there are frameworks there of a federal partnership. where the felds are not alone, but are also working to kind of lure states and institutions into a national goal that might not be exactly 100% their own goals, while recognizing that they have to survive as institutions. and that states want to keep the best and brightest at home. and recognizing all those things, renewing that partnership, and looking at what it should look like today is the best way to go. >> let's just go down the line. >> ok, down the line. i was trying to think of mine as we were going, but i'll just shoot from the hip. to me, this is actually a debate about first principles, and why the federal government's involved in the first place. that's where i started my comments. and i think it's worth asking. and i think there's a sense in

washington among advocacy groups and that state investment is unambiguously a good thing, for low-income families in particular. and to me, that's not necessarily borne out. it differs by different states, but is not necessarily borne out by the funding formulas that states use, and by the distribution of who actually attends college. one thing i was reading last night, a piece from "washington monthly" about the situation in louisiana. and there's sort of this throw-away line of scrimmage, about how at the last minute the legislature was able to save the universities, right? >> it was the last minute. literally, the last three minutes. >> yeah, but the throw-away line is by increasing the sales tax, right? in that the sales tax is a regressive tax. it taxes low-income people the most. they spend their money on -- they spend far more of their money on goods and services than

do rich people, right? so, it's worth thinking about distributional consequences of all this. and not just wave our hands and saying, no, no, no. by definition, more dollars to state. more dollars to state institutions, to lower the price of tuition for everyone, regardless of their income, is an unambiguously good. we have to start asking whether that's true, and think about how a federal role could help the students we want to help. without necessarily spending in such an inefficient way. >> king? >> the greatest public universities on this planet were created by federal intentions to tell states they needed to to it. in 1862 and 1890, we need that intervention. we need the federal government to step to the plate. our states are getting out of the business. the greatest example i know is in 2006, we had 48 governors against us in the nga. completely against us, when we put the maintenance of effort provision in the economic

stimulus packages. they said it wouldn't work. the federal government has no business doing that. and that provision said that you could only take education stimulus dollars, if you do not cut your higher education and education budgets below the 2006 funding level. well, within six months, most states cut it to that level, and left it there. lamar alexander, who fought us tooth and nail on this, tennessee had a $1.1 billion higher ed budget that year. they cut their budget within $13. colorado and oregon cut their budgets within $1. federal intervention is necessary. federal incentives are necessary. if we do not do this, and we continue this course by simply putting more money, the new money, into the current programs that we're doing, we will have nothing but a federal system of higher education in 20 years. we're out of business in 2027.

the current trend shows colorado, 2025. that's before the cut i just took. arizona, 2030. iowa, 2029. do we want to have a federal system of higher education that's solely based on tuition and loans and grants? or do we want to keep and incentivize our states? so, my fight, which is an every day fight, i said we have to cut 4,000 classes. they didn't budge. i told them, i'm going to take the "s" off the football helmet. that got their attention. [laughter] the state and our name is what we're fighting to keep. to be those institutions that our mission says we were founded to be. >> you get the last word. >> i started talking about a set of assumptions that were in place in the early states. what i worry a lot about is, we're going to build policies assuming the way things are now, that the way they'll have to be. that tuition has to go up a certain rate every year, that states have to spend money on a lot of high-income students. that the institutions, too, are

going to continue their shift away from funding need-based aid towards funding, you know, highly academically capable students. none of those have to be the way the system works. if the federal government can use its leverage to change the way states and institutions are behaving, that's why i think the federal government must change the way it's investing in higher education. thank you. >> thank you, guys. we will open up the polling again, one last time, for a few minutes to get a final conclusion. i'm still going to stick to the structure. [laughter] >> live or die thing. >> competition of ideas, what's it's about. >> wait. >> we are getting crushed. [laughter]

>> isn't data fun? >> yeah. >> it actually is all one vote. >> people can vote strategically. let us point that out, too. it probably helps the side you agree with. i have been part of this before. >> in our first conversation with the trouble with all of this is that it is not an either or. we have to do both. the states need help. the state players in this vital enterprise for our country. >> and also within each other.

>> the panel's plan. >> thank you, guys. you made my job very easy. >> thank you to all of you working in these areas and don't be afraid of new ideas. >> alright. thank you guys so much for joining us today. [applause]

announcer: tonight on c-span, the supreme court cases that shaped our history with the c-span's series "supreme court -- "landmark cases." >> this is a story and a case about presidential power and limits during times of war and themes when central a president can do things which

may not be expressed in the u.s. constitution and the limits that the congress and courts can place on him. said is you did in your opening that the case has come to be accepted by the culture. how many cases can we say about that? >> it also made the u.s. one of the globetions across that it would have liability and get it has not settled the issue at all. roeuncer: and tonight it is discussion of privacy, however it allowed the states to restrict that right safety of the fetus. watch it tonight at 10:00 p.m. eastern on c-span and c-span.org. "american history tv on c-span3. on "lectures in history:" >> there are all kinds of

obstacles going by the wayside with a result that by august if not earlier of 1862, lincoln has decided that when the time is right, he will announce a new war effort that would add to the union of human freedom. wheaton college professor tracy mckenzie on the civil war and then it 10:00 on america:" >> how possible can it be that america can build such ships and such an army. 20% of american industrial manpower was woman power. legions of american women were taking jobs from a man across the world. this 1944 war

department film documents how women in world war ii helped the war effort, indicating that the hidden army of women were the major reason that germany lost the war. we also visit the daughters of american revolution museum marking the 125th anniversary of the foundation founded in 1890. >> one thing we have learned is thehis time period apotheosis. the apotheosis is an old concept that goes back to agent times god-likearrior is made by lifting him up and announcer: celebrating him. -- and celebrating him. announcer: on "the presidency" at 8:00 -- especiallyed slaves,

while they occupied the white house. over 100ison owned slaves, holding a large percentage while he occupied the white house. he is responsible for proposing and expanding the 3/5 compromise that guaranteed the south's disproportionate control on congress to uphold slave-owning interests. this professor will discuss on a 12 american slaveowning presidents. for the complete schedule, go to c-span.org. next, a discussion about the united states's policy towards the middle east. indiana university recently held a conference on the united states's role in the world.