Honorable Secretary of Education Arne Duncan,

According to College Board, since 1990 college tuition and fees have ballooned nearly
160% (after adjusting for inflation) and have doubled yet again since 2007, amassing more than
$1 trillion in debt [1] [2]. The average college graduate now completes a Bachelors Degree
encumbered with $26,000 in student debt. Additionally, U.S. is experiencing a swelling of
student loan defaults, wage garnishments, credit score impairments and higher fees associated
with failure to repay loans.
Higher costs are the culmination of three primary conditions. Firstly, the recent
economic downturn has squeezed funding to colleges creating budget shortfalls. These shortfalls
have been mitigated by shifting the burden onto the students, thus resulting in tuition rates
increasing at 8% per year and doubling every nine! [3] Figures 1-4 reveal the decrease in federal
funding during post-recessionary years compared with the increases in tuition costs. Figure 5
reveals how recessionary pressures force governments to reduce their spending and increasingly
shift the burden to students.

Furthermore, colleges have experienced the Third-Party Payer Problem where users of a
service arent directly paying the bills. Since guaranteed federal student loans and grants are not
capped at logical rates, but instead, based on any price set by universities, the institutions have
little incentive to cut costs or curb excessive spending. Aware that students will just borrow
more, colleges solve budgetary issues by increasing tuition perpetually. Demonstrating a similar
abuse is the example where a university was incentivized to pay homeless individuals a small
$2,000 stipend in order to receive a guaranteed $20,000 from government coffers.
Finally, the higher education sector suffers from administrative bloat. As budgets
expanded in prosperous times, universities invested in greater infrastructure and expansive
services to attract new students. Equally, the pace of associated administrators and nonprofessorial staff has exponentially outpaced actual educators, and in some cases, educators
having actually diminished. This administrative expansion creates greater bureaucratic
complexity and requires more funding spent on wages, benefits and pensions. [6]
President Obama outlined a plan in his 2016 Budget to provide matching federal grants to
states that waive the cost of tuition for students seeking an Associates Degree. This renewed
national focus on the increased cost of postsecondary education and associated political will to
curb costs has created an environment ripe for policy change.
A Massively Open Online Course (MOOC) is a model seeking to augment educational
institutions by using simple widespread-technology such as smartphones. These courses consist

of lectures that have been prerecorded for convenient offline viewing along with forum
discussions, assignments and quizzes taking place online. There are currently over 4,000 courses
from hundreds of prestigious universities (even University of Dayton!) that offer free MOOC
classes. In 2013, the University of Maryland was among the first wave of schools to begin
accepting these transferrable credits toward a degree. With companies like Udacity and
StraighterLine already producing accredited courses, high scalability has been proven as costs of
course development are quickly returned by iterating the courseware to class sizes of upwards to
225,000 registrants. [7]
DOE has the unique ability to solve this issue. This policy recommendation simply
advances that DOE reprogram a small cadre of educators with the mission of aggregating and
accrediting the full spectrum of free and near-free courses which comprise a standard Associate
of Arts/Science degree. Students are then provided variety of which ENGL 1302 or which HIST
1301 they enroll in and therefore bypass the monopolistic relationship that befalls a student
enrolling in a traditional university. Additionally, free-market principles would force
universities and course providers to keep costs low while also demanding greater innovation in
delivery and content. At a time when more students than ever must maintain full-time
employment while attending school, this added flexibility is exceedingly valuable.
Costs associated with this policy would be offset by federal Pell Grant savings not being
paid out during the students first two educational years. Pell money was initially created to
ensure poorer citizens had equal opportunity to afford higher education, however it has ballooned
into much, much more. The Congressional Pell expansion of 2007 expanded eligibility and
funding for the program, which resulted in a doubling of the number of Pell recipients since
2008.[8] Consequently, Pell spending now eclipses $33 billion amongst all undergraduates,
easily the largest share of DOEs budget. Significant savings can be achieved when two of a
students four-to-five years of undergraduate education require no subsidization at all. Shifting
Pell funding from mandatory to discretionary would furthermore allow greater Congressional
oversight on a year-to-year basis.
We are currently in a unique education pre-bubble phase where decisive action can
provide the flexibility the higher education industry and its budgets need. Millions of Americans
can complete their Associate's Degree without the ill redistributive effects of taxes, subsidies or
increased bureaucracies.