College as an Investment: Costs, Payoffs, and Financing

AUSTAN GOOLSBEE: Good morning. I'm Austan Goolsbee, President of the Federal Reserve Bank of Chicago. Thank you for joining us for this session, College as an Investment, Cost, Payoffs, and Financing. Two facts about college are indisputable. One, a college education is a key factor determining people's earnings over their entire careers. But two, the rising costs of higher education in America have made paying for college much more challenging in recent decades.

Today, you will hear two important research presentations from our economists. In the first one, Lisa Barrows, Senior Economist and Economic Advisor, will show that college remains a worthwhile investment on average and for many groups of potential students. Then in the second one, you will hear from Gene Amromin, Vice President and Director of Financial Research, who will talk about how declines in access to home equity caused households to shift the costs of financing school onto the students themselves, especially in the form of student loans, and the impact this has had on students and parents.

After Lisa and Jeanne share their research, we'll have a roundtable discussion featuring them and other experts in the fields of higher education and higher education financing. We are very pleased that you have joined us this morning. And now I will hand it over to the one and only Dr. Lisa Barrow.

LISA BARROW: Thank you, Austin. Sorry about that technology glitch. I can't believe I'm still doing this on Zoom. In any case, I'm here to talk about Is College a Worthwhile Investment? And this is based on some of the work I have done with coauthors in the past, Ofer Malamud and Cecilia Elena Rouse.

So investing in post-secondary education, there are a few things we know. We know that there are well-documented advantages to additional schooling, that published tuition and fees have been rising over time, faster than inflation. But the earnings advantage has not been rising over time. And so the question is, is higher education still a worthwhile investment?

So here is a picture of what average income looks like by years of completed schooling. And basically, there aren't a whole lot of people down in this less than a high school graduate range, but once we get beyond around 11 years of schooling, average annual income goes up with every year of schooling. So definitely, an earnings advantage associated with more schooling.

It's also true that educational attainment is protective. So unemployment rates decline with educational attainment. And here, I'm showing two different periods, June 2020, right in the heart of the pandemic, and June 2023, which was last month. And in both the tight labor market that we're currently in, and the midst of the pandemic, when we were in a recession, we saw this strong relationship between unemployment rates and education with more highly educated individuals having lower rates of unemployment than individuals who have only a high school diploma or less.

At the same time, we know that there is this earnings advantage associated with income, but it has not-- or with education-- but it has not been growing as much as it has historically. So this figure is showing average hourly earnings for individuals relative to a high school graduate. So by definition, a high school graduate is the zero line. And when we look at individuals with less than a high school education, they have a negative earnings advantage because they earn almost $5 less on average in the current period than individuals who have a high school diploma.

Individuals that have at least some college have an earnings advantage over high school graduates of somewhere in the $2.50 to $3 range per hour. And individuals with a bachelor's degree or higher have a $15 roughly advantage over-- earnings advantage over high school graduates. But what we see is that early in the period, these differences were either larger, in the case of the some college students, or rising in the case of bachelor's degree and higher recipients. But that has flattened out over time. So the earnings advantage has not continued to rise throughout the 2000s.

At the same time, there have been these sticker shock rises in published tuition rates at colleges, particularly the private, not-for-profit colleges, which post these average net prices-- average sticker prices in the 40-some thousand collar range per year. But these dashed lines represent that published price, which has been rising pretty much for all the groups. While the solid versions are showing what the net price is. So this is net of grant aid.

And what we see is that even for these not-for-profit schools, these private colleges, the net price of tuition and fees has been falling. And when we look at public two-year or community colleges, the level of grant aid that individuals are receiving from like the Pell Grant means that there is a negative net price in terms of tuition and fees.

So we try to put this information together to think about is college a worthwhile investment. So there are costs of college to the individual. And the biggest cost is the foregone earnings while in school. So we often assume that students won't have any earnings while they're in school, but in general, they cannot work at a full-time rate that they would if they weren't students. There are the direct costs paid, in terms of tuition and fees.

And then their potential non-financial costs to the individual, which, as an economist it's hard to capture and quantify what that is. But if an individual has a distaste for school relative to work, that would be a cost, but not one that I can take account of in my financial accounting. At the same time, there are many benefits of college for the individual. In fact, most of the benefits accrue to the individual in terms of higher earnings and lower unemployment rates. And then there are other non-financial benefits that, once again, are hard to quantify, but we know that more education is associated with better health outcomes, both for the individuals and in the case of mothers for the next generation, their children have better health outcomes.

But what I'm going to do is try to put together this evidence in terms of the expected financial value of college. So we do that by taking some simple assumptions. And one of them is that the relationship between age and earnings, by race or ethnicity and education level, are the-- and sex-- are the same as what we currently observe. So 64-year-olds who have an associate's degree and are Black or African-American and female, that is going to represent what earnings-- what I think that future would look like for a Black or African-American female with an associate's degree in the future.

I'm also going to assume that tuition and fees at two-year and four-year institutions remain constant in inflation adjusted terms. So essentially, 2021, what was the average published tuition and fees. I'm going to use published tuition and fees. That is what you pay every year you go to college. I'm going to sum up this income over a lifetime with a college education in present discounted value terms, meaning I value earnings in the future less than I value earnings today. I'm going to do the same thing over a lifetime for someone with only a high school diploma.

I'm going to calculate the present discounted value of the tuition and fees costs. And then we put that together and say that the expected net benefit of college is the present discounted value of college income less the present discounted value of high school graduate income. So the counter-- the counterfactual or opportunity cost, what I would have earned had I not gone to college, less the present discounted value of the tuition and fees directly paid.

And so when I look at the age earnings profiles of these individuals, it's important to remember that-- so in this picture, I'm showing the age earning profiles of Black adults with high school-- high school graduates and those with associate's degrees. And here you see that men with high school diplomas, Black men with high school diplomas, earn roughly the same amount as women with associate's degrees. That does not mean-- but I'm not comparing these two. I'm comparing Black or African-American women with associate's degrees to Black or African-American women that are high school graduates alone.

And so when I'm comparing these lines, this what I don't earn while I'm in college assumption, is going to make up-- that's going to be a big chunk of cost right up front. Similarly, for individuals with bachelor's degrees, again it's an even bigger cost up front because I'm not earning anything for four years relative to what I could have been earning as a high school graduate. And so, once again, I'm comparing the solid line to the dashed line for these individuals for the earning streams going forward.

So when I put this all together, we find that, yes, indeed, the value of college in expected terms today is greater than zero. So, yes, college is a worthwhile investment. So women overall earn a little bit-- the net value today is about $82,000 more or so. It's a little bit higher for men. And there's some variation across race and ethnicity, which is worthy of exploration, but not something I'm going to talk about today. This is for an associate's degree.

When we look at a four-year bachelor's degree, the value is even higher, a little over $200,000 for women overall, and nearly $300,000 for men overall. Once again, there is even more variation across the groups of individuals. And men generally have a higher expected value than women, but not so much in the BA framework, depending on the group.

So is college a worthwhile investment? Yes, on average, college is a good investment. The average value does vary. And like I mentioned, this is certainly worth more investigation. But post-secondary education remains one of the best investments for individuals, even when we consider some of the risks. But it is important-- from a policy standpoint, insuring individuals against the risks is important for getting optimal investment levels in education. And it's going to be important for solving our student debt crisis, which I am now going to turn over to Gene Amromin to talk a little bit more about student debt. Thank you.

GENE AMROMIN: Thank you so much, Lisa. So let me pull up my slides and talk about that.

Is it there? All right. So thank you, again. So this event is billed as a discussion of costs, payoffs, and financing of college education. And my lot is to talk about financing. In particular, I'll be talking about a working paper co-written with Jan Eberly at Northwestern and John Mondragon at the San Francisco Fed that asks the question of who pays for college-- is it the parents or is it their children? And whether it matters for one or the other of the generations, or perhaps for the economy as a whole.

And what we want to do is we want to study whether a macroeconomic shock, or at least a shock on the scale of the Great Recession, can affect the allocation of education within households and across generations. And once again, whether that has macroeconomic significance. But let me start with painting a bit of a broader picture and just establish some empirical facts.

So this one you've already seen on Lisa's slides. And it's a simple statement of the fact that college is expensive. And even the little downward blip at the end is mostly due to inflation, being high in the last few years. And partly because college is expensive, it really takes a village to pay for college. It's very much a collective effort. There are state and federal grants. There's scholarships from colleges themselves. And then there are parents and students.

And so you'll see that they actually make up the majority of payments for college. Parents typically carry a larger share. Although once again, from the data here, that tends to vary over time. So here's another way to illustrate this. If you look at the share of families that actually contributed-- actively contributed to their children's college expenses, you'll see that share varies a lot.

So in the boom years, 2005-2007, we had more-- over half of all families contributing to college education. And that declines substantially during the recession years, 2009 to 2011. And even more than just helping out, the extent to which parents are able to help out varies a lot. Once again, during the recession, you'll see that in 2011, according to this survey data, at least, the share of expenses paid for by parents had fallen to 28%, from being in the mid-40s just before-- before the recession, and then when the economy recovered.

So what happens when parents are not able to pay anymore? Well, let me show you a picture that I think is going to be suggestive of the mechanism that we're investigating in this paper. And this is just an illustration. It's not meant to explain every wiggle in the data or posit something that's causal. But what you see here, depicted by the black line, is the value of houses-- house prices, in particular. They take a big hit during the Great Recession, losing about 25% of their value over the course of just two years. That's an obvious hit to parents' wealth. And in particular to an asset against which families could borrow, relatively inexpensively, to pay for their children's education.

More or less concurrently, which is shown by the blue line, there is an increase in the amount of student debt that's been taken out. It goes from $60 billion a year to nearly $100 billion pretty quickly. And while all of this is taking place, there isn't a whole lot that's happening as far as parents loans go themselves. That's the very bottom line here. So student debt, that shows the aggregate values. But sometimes it's useful to also illustrate the-- I guess the extent to which the acquisition of student debt has been taking place recently. So these are just maps, simple maps of Cook County-- Cook County, Illinois. It's a big county. It has the city of Chicago. It has a number of-- quite a few suburbs surrounding Chicago. And what you see here is a color code that for each zip code represents the largest category of non-mortgage debt.

So when you look in 2000, you see lots and lots of bright yellow. And that basically represents credit card debt. So for most of the zip codes in Cook County, credit card debt, once you set aside mortgages, was the prevalent form of indebtedness. You see auto loans as well, primarily concentrated on the Southeast side. But that's what the picture looked like.

You move forward to 2006, this is an unfortunate set of colors, but there's the light yellow now, which represents home equity. And so you see that much of this suburban Cook County has now really taken out equity from their highly appreciated houses. Whereas, there's also now a bit of orange. And these are-- well, that's student debt, first of all. And you see it appearing in places where-- for those of you who are from Chicago and know Chicago-- this is where many young people live, the students themselves or recent graduates. Well, by 2015, there's no distinction. it's orange everywhere. Student loan is the prevalent form of debt pretty much throughout Cook County.

OK, so what questions do we want to ask? The first one is simply whether there is substitution in terms of forms of financing at a household level. So once home equity disappears during the Great Financial Crisis, do students borrow to finance college instead? That's fine, but it's kind of a self-contained question. What we really want to is whether this relocation of financial responsibility has real effects, either on students or their parents. In particular, does it affect where or whether students go to college? Whether it affects other aspects of college attendance, whether students work part time, whether they worry about finances, whether they're able to stay in college, et cetera.

And also, from the parents' standpoint, does it affect the way in which parents consume? Are they able to afford the same things? Do they shift from one form of expenditure to another? And perhaps of most interest, and obviously the most speculative part of this investigation, is whether this shift from parents to students in terms of who's responsible for education financing has long-term effects. Does it create a permanent shift or anything close to a long-lasting shift in terms of who finances education of human capital? And whether that matters for consumption, and savings, and investment in the aggregate economy.

So let me just illustrate this two somewhat distinct views on households, where the households form perfect units, perfect dynasties, and where there's a lot of substitution within a household that takes place. So with the first view, you have a parent and student, basically forming a very harmonious, kind of perfect union. And parents just use their home-- finance part of their student's education by taking out debt against their houses. That's the little diagram here.

Well, houses sometimes lose value. They get-- the home equity gets eroded. And instead of a parent borrowing against their house, it's the Department of Education that is providing loans to the student. But again, this is the same unit. And so if student loans are treated as a joint liability of the household, then having this mechanism whereby the Department of Education steps in when the economy turns sour, ensures household consumption.

You can have an alternative view, where this distinction is actually there, the distinction between parent and student liabilities. The same thing, once home equity disappears, the student turns to the Department of Education. But now, the loan is-- de facto is the student's. It's their financial responsibility. And so this is the case, of this intra-household risk sharing is less than perfect, than having these loans available, it actually ensures parents consumption, possibly at the expense of students, both in the short and the long run.

OK, so to answer any of these questions, we need data. And fortunately, there are two high-quality household level panel data sources that are available to answer this question. The first one is the transition to adulthood survey that is run by the University of Michigan's Panel Study of Income Dynamics, PSID. And then the other one is the Credit Bureau data that comes to us courtesy of the New York Fed and Equifax partnership. So the way in which we're going to approach this question with these particular data at hand is we'll explore two sources of variation to identify the effect of a shock to parents' home equity.

We're going to first explore differences in family composition, in particular whether or not there is a college-age student in the family. Because some families do have students and others do not. And then the second source of variation is parents' ability to tap home equity. Put differently, other liquid funds that parents can use to pay for college. And the variation here also comes from two elements. One is just house prices, how valuable your house is. And two is how much debt is already outstanding against that house.

And so with these two sources of variation in hand, we're going to look at the number of different decisions, whether or not there's home equity extraction, taking out student loans, working while in college, et cetera, et cetera. So I am not going to show any regressions. There are no tables here, just a few ways to summarize data effectively, in a handful of pictures.

So what these pictures show is, once again, these two forms of variation. So all of the red lines are going to depict measures that belong to families that have college students. The blue lines are those families that do not have students. That's the first source of variation. And the second one, along the horizontal axis, is how much equity is there in a particular house against which parents could borrow for a number of reasons. And so zero means you have a house, but it has no mortgage debt. And so you can basically borrow a lot. Whereas, 1, or close to 1, means you have very little equity left. This is just not a source of loanable funds to you.

So with that in mind, what we see here in the first picture is that families that have college students, the red line, are just much more likely to take out home equity loans. That is, until they no longer have equity to take out. This is where you see the two lines completely converge. On the flipside, you see those families that don't have a whole lot of tappable home equity wealth, these two dots here, be much more likely to have their students take out loans.

And there's a way to use a more robust regression framework to quantify this substitution between two forms of financing. And what we estimate is something like for every dollar of home equity that is not extracted, student debt increases by about $0.60. So there's a fairly robust substitution between these two sources. And we can put a number on it.

Well, does it matter? We just have this swapping of funds. Let's look at some of the outcomes. So what I'm picturing here is, in the left panel, what happens to parental expenditures on education. Same two lines, same arrangement. And what we see here is that being constrained by high LTV, high Loan To Value ratio, when your child goes to college, basically allows parents to spend less of their income on education. The share of income, parental income, that is spent on education goes from 11% here to, let's say, 6%, all the way across this measure.

What I'm not showing here, but what we also find in our regressions, is that these families that are spending less of their income on college, on their kids' college, accumulate more non-housing wealth. And as time goes on, they accumulate more and more of it, relative to families that are just not in the same position. And, again, on the flipside of this-- this was parents, this is students-- we see that those students whose families do not have a lot of housing wealth to borrow against-- our particular context is a result of the Great Recession and the shock to house values-- they worry about money, and they worry about money quite a bit more than other students in different circumstances, that, as we saw from the previous slide are not as likely to take out as much student debt and student loans.

Once again, what I'm not showing you is that these students who worry about money a lot, are also less likely to get parental support, which is consistent with this picture. And they're more likely to work while they're in college.

So one other set of key results that I wanted to share is that when we study the effect of housing wealth shock on whether to go to college and where to go to college, we actually don't see any measurable impact. The likelihood of going to college is unaffected. It seems to be unaffected by who pays for college, basically. Once enrolled, the students are not any more likely to drop out. And they tend to go to colleges that are quote-unquote "similar," meaning that, based on what we can observe, they have a similar sticker price of tuition, both in absolute dollar terms and as a fraction of their income.

So absolute dollar is good, because the picture that I've painted so far has parents' housing wealth taking a hit, but then their kids take out student loans. Parents get to maintain their consumption, and kids worry about money more, but maybe that's just a part of growing up. And they still get to go to college and possibly a college of a similar price or quality.

So not so fast-- as we argue later in the paper, we really should look a bit farther down the road and look at some of the longer-run outcomes. It says long run, but we're really just looking at the period of time following graduating college and turning 30. So basically, young adulthood, the formative-- the formative independent years. And to do that, we turn to Credit Bureau data to check whether this-- what we call extra student debt or student debt that we can attribute to parental home equity taking a hit during the Great Recession, whether it affects key outcomes in early adulthood. And it does.

So what we estimate is that having this extra debt reduces probability of being a homeowner yourself, of having a mortgage. And just to put numbers on this, our estimates suggest that an extra $1,000 in student loans, that again we attribute to this shock to parents' home equity values, reduces probability of having a mortgage by age 30 by about one percentage point, which is actually similar to other work in this field that uses very different methodologies.

We also find that having this extra debt lowers the likelihood of forming your own household, of moving out of your parents' bedroom, or extra bedroom, or basement and having a place of your own. And again, here-- and the effects are fairly sizable, even though-- you see it on this slide, an extra $1,000 translates to about 1.3 percentage points lower likelihood, compared to a base level of roughly half of all students moving out of their-- forming their own households by age 30. It does not seem to affect the likelihood of having an auto loan. That's what we see in the data.

So that's students, what about parents? This is still a bit under construction. So what we do want to see is whether parents, who, according to this study, now have less debt against their house, since they didn't have-- couldn't and didn't take it out to pay for their kids' education, whether this helps them down the road with their existing credit obligations or ability to obtain new credit instruments.

But what we're also looking for is some evidence of whether-- if you take this picture that I painted before, of different parts of the family insuring each other against shocks, you might expect that once home values rebounded, parents would be in a position to basically unwind the transaction that took place in 2011, let's say. Namely, they would take out that loan that they would have taken out had it not been for the Great Recession and just pay off their students' debt, which they took on, once again, because the parents couldn't at the time.

So we probably need to look harder, but we've looked hard enough. And so far, we don't have any evidence of those transactions taking place, no evidence of parents paying off their students' debt from accumulated home equity, which is actually somewhat consistent with survey attitudes in terms of who's responsible for debt repayment. Once you have a loan, it seems to be a fairly robust expectation that you, as the student, either have the sole responsibility, or that's a joint responsibility with your parents. That's the 30% and the 64% respectively of paying that loan back.

All right, it is possible-- so, so far I've only talked about two generations, the parents that had houses during the Great Recession and their students. But is it possible that that shock in relocating responsibility for education financing casts a bit of a longer shadow? Because, again, repayment of these loans really limits students' ability to save, and invest, and consume early on in their adult lives. But it also potentially affects their ability to save for their own children's education. And so this is the sense in which a one-time shock that effectively changes the mix of funding responsibilities has the potential to play out much farther down the line.

And this is a picture of Melissa Kearney, who was interviewed by a sister publication of Bloomberg, but it's the headline that I want to highlight to you. And the headline literally worries about that very same-- that very thing, whether parents, who are themselves paying down their own student debt, are going to be able to send their kids to college.

So with that, just to restate what I told you, it does appear to be the case that declines in house prices, limited access to home equity, then shifted some of the burden of college funding to students. It definitely served as a stabilizing mechanism in terms of preserving the ability to enroll in college. But it did increase the burden on students, both in the short and the long run, and decreased the burden on parents. And so we need to do more work, as always in research, to establish whether this has a longer life and longer lasting consequences. So with that, let me turn it over to Kristen Broady, the Director of the Economic Mobility Project . And thank you for your attention.

KRISTEN BROADY: Thank you so much, Gene and Lisa, for those very insightful presentations. I now have the pleasure of introducing our esteemed panelists. Dr. Makola Abdullah is the President of Virginia State University. Jason Delisle is a nonresident Senior Fellow in the Center on Education Data and Policy at the Urban Institute. Dr. Lesley J Turner is Associate Professor of Public Policy at the University of Chicago, Harris School of Public Policy. And I am now pleased and very happy to introduce Stacey Vanek Smith, Global Economics Correspondent at NPR, who will serve as our moderator. And Stacey, I will turn it over to you. Thank you.

STACEY VANEK SMITH: Thank you, Kristen. I am really thrilled to be part of this event. And I always love working with Kristen on anything. She is a brilliant-- a brilliant person. So to our panel, maybe before we get into the more economic questions, I was hoping to ask a little bit more of a journalist question, which is the whole idea of this is college worth it-- this question. I'm not even sure that this would have been asked 20 or 30 years ago, but now it's really being talked about everywhere. There are people choosing not to go to college. There are a lot of high-profile examples of people who did not go to college and have seen enormous economic success.

I would love to hear your initial thoughts on this idea of is college worth it, and the fact this question is coming up now so much. And then I promise we'll get to the economics. Or we can jump into the economics.

LISA BARROW: So think-- I'll take this on a bit. I think the reason we did not see it, maybe-- this question being asked as much 20 years ago is that-- or actually, to be fair, this question was being asked 20 years ago, or maybe being started to asked 20 years ago, but looking further back, education wasn't as expensive relative to median household income. I don't have the statistics right now, but the scale has gone up in that sense. And we were seeing-- there was a period of time where the tuition and fees at universities were rising pretty rapidly relative to inflation.

And, of course, the student debt crisis is-- just that there are students that have debt burdens that they cannot manage easily. And there aren't-- we don't have a lot of easy ways for students to reduce their debt burden. There are ways-- there are income-based repayment plans and stuff like that. But they are not the simplest to navigate. They don't automatically adjust to changes in students' economic-- or borrowers' economic circumstances.

So I think all of these reasons combined are why-- the eye-popping debt numbers and the sticker shock of what does it cost for years of college at a flagship university or a private not-for-profit university, I think those are what are driving some of these questions that people are asking.

LESLEY TURNER: And I can jump in here and talk a little bit about this. I think Lisa's presentation was very convincing, that on average there's pretty large returns to getting an associate's degree or a bachelor's degree. And I think it's also important to point out, however, that there's a risk that you don't get an associate's degree or a bachelor's degree.

When we think about the typical student going to college, they're not going to Harvard or a flagship public four-year with these very high sticker prices. They're going to a community college or an open access four-year institution. And these are the places where we've seen really big declines in state funding and state support, public support for higher education. We also have a fair amount of evidence that suggests there are things that can increase completion.

So things like the CUNY ASAP program or additional funding for instruction and student support services. And the fact of the matter is these are things that cost money. And so I think part of this question of whether college is worth it has to do with are these schools that are serving most students receiving the support that they need to help students get across that finish line, get that degree so that they can go in and reap the earnings gains that Lisa so nicely showed us in her presentation?

JASON DELISLE: Yeah, I would just jump in here. Because I was thinking about something in Gene's presentation around how-- the housing crash, parents lose home equity, and students turn to federal student loans. And just dovetailing on Lesley's point, you imagine a world where if you didn't have the federal student loan program. It's almost evidence that the federal student loan program is doing what it was supposed to do and provide families with easy access to credit and liquidity to pursue a higher education. So you could almost-- you almost want to imagine if you had the housing crash and not a federal student loan program.

I think-- you could conclude, I think, from Gene's presentation and work, that you would have had less college going. Obviously, we're here debating whether or not that's good or bad, but I think in the context of worries about student debt and the student debt crisis, I saw Gene's paper as the program was doing what it's supposed to do, and it's working-- it worked in that case.

MAKOLA ABDULLAH: It's interesting that you-- I'm sorry. I wanted to jump into if could. Is that OK?

STACEY VANEK SMITH: Yes, please.

MAKOLA ABDULLAH: I thought that it was very interesting that the messages that were hearing in some ways are counterintuitive to the messages that we hear in the media-- one that college is still valuable, and that even if you don't complete college, that going to college will make you a higher earner than if you don't go to college. That net cost, by and large, isn't rising at colleges. And most young people, as we know, and young at heart people, attend community colleges and access institutions, our North and South state institutions, if you will. And the debt hasn't necessarily increased. It's been transferred from one area of our economy to another.

And I think it's important that whether we believe in college or not, that we're sending the right messages to young people and their families to make sure that the wrong-- that it's not the wrong generation of students, and not underrepresented Black and Brown minority, or students who have lower income who are being discouraged from going to college because some say that college isn't valuable. By the way, most people who say that, of course, went to college, which is an incredible dynamic in that way. But that we make sure that we continue to provide quality access so people can change their lives.

STACEY VANEK SMITH: Well, speaking of that, obviously one of the big selling points of college is that it promotes economic mobility, and that is really often the justification you hear for taking on a lot of debt in the cases where people take on a lot of debt. People are investing in themselves. You're investing in your future. But I'd love to talk about the debt itself and how it affects the economic mobility that college promises.

LESLEY TURNER: So I'd be happy to start. And I think this kind of dovetails on what Jason brought up about the federal student loan program working to fill gaps in finances. I think not all student loan debt is created equal. And there are cases where research shows when students get access to additional financial resources through student loan programs, say when colleges start offering student loans, when they hadn't previously, or when federal student loan limits go up, students do, in fact, take on more debt.

But those who had previously run up against these constraints, who had maxed out their loans, or who hadn't been able to access loans, but needed those resources, those students actually end up doing better in school. Among four-year students, they do, in fact, borrow more, but they're more likely to complete and receive a degree. And after they complete, they actually go on to earn more. This is research of my own, with a few other co-authors-- Jeff Dunning, Sandy Black, Serena Goodman, and Lisa Detling.

And, in fact, our most surprising finding is that when these students get access to additional resources, when they borrow more when loan limits go up, they actually are less likely to default on their student loans. This seems surprising, but if you think about it, the additional resources through the student loans allowed them to persist, complete, and obtain those increases in earnings that Lisa showed us.

In contrast, when students have to borrow more because tuition gets higher, and when the additional student loan debt doesn't, in fact, expand how many resources-- how much they have in the way of financing, in these cases, we see the negative effects that Gene showed us. So reductions in home ownership, reductions in graduate school enrollment. So I think there really is a nuance here where when student loans are working the way that I think they were intended, to help free up time, free up resources for students to invest more, they actually do, in fact, produce mobility. But in light of all of the changes, when they're instead just used to counteract shocks to family resources, or when they're used to counteract increases in tuition due to reductions in public funding, then the consequences aren't as good.

STACEY VANEK SMITH: Well, I thought we could maybe pivot a little bit to talk about federal loans too. So colleges, obviously, make Federal loans available to all qualifying students. They do have this discretion over whether a loan offer is included in students' financial aid award letters, what is known as a non-zero loan offer, from what I understand. Do we have an idea of exactly how the loan offers impact enrollment, and impact retention, and students completing their degrees, things like that.

LESLEY TURNER: Yeah, thank you, Stacey. This is a really important question that also speaks to the nuance of how federal student loans work and how students interact with the program. So I just previously talked about research on what happens to four-year college students when federal student loan limits go up and they get access to additional resources. But I can also talk about research I've done with Ben Marx, where we're looking at community college students.

And, in fact, about half of all community colleges don't include loans in students' financial aid award offers or in the financial aid parlance, they don't, quote-unquote, "package" student loans. And students in these schools still are eligible for federal loans, but they're just not necessarily being notified about this or presented with their loan options when they get information about their costs. And there are other resources available, like grants and scholarships.

And so Ben and I worked with the community college where they were thinking about moving from offering loans to not including loan offers. And we convinced them, let's figure out if this is actually good for students, and worked with them to randomly assign students to either have a loan listed in their award letter or not have a loan offer listed in their award letter. And everything else was the same. All of these students still had access to the maximum available federal loan. They still had to go through the same process to borrow. They still had to actively opt in and say, yes, I do want to borrow.

But we found, first, not surprisingly, that students who received a loan offer in their award letter, they were more likely to borrow. But they also attempted more credits. They earned more credits. They had better grades. And a year later, they were more likely to transfer to a four-year public institution.

And so this, I think, highlights the tradeoff between, I think, very good intentions of protecting students from over-borrowing, and a desire to avoid students leaving school with the burden of student loans. But the tradeoff being that when students need funding, and they don't use student loans, they're going to turn to something else. And a lot of the time, that likely means they're going to be working most. Most college students work while they're in school, and some up to 40 hours a week.

And so working more has consequences. And I think-- this isn't to say every student should be borrowing everything that they can, but there is this important tradeoff. And for many students, a small loan might be better than working 40 hours a week.

MAKOLA ABDULLAH: If I could-- if I could add to that Stacey, if that's OK. Thank you so much for that. I think that's something that we definitely experience here at Virginia State University. There is a lot of talk now about how student loans are bad. And so we have many students who legitimately cannot afford to attend Virginia State University. And we are the most affordable four-year institution in the Commonwealth of Virginia.

But if students can't afford out of their pocket, and they don't want to get a loan, many times it means that they can't come to Virginia State. They can't access higher education. And so making sure that students and their parents understand, one, that it can be a good option for you to take out a loan. What it means to take out a loan in the right way, what it means to have to pay it back, and what kind of freedom that the loan can create to allow young people to be able to spend time on their classes is critically important.

And so we're actively doing that kind of work here. But it speaks to the danger of the narrative of student loans being inherently bad, when abusing student loans, of course, is bad. Taking them out if you're not serious about school is not a good idea. But like anything else, if you're taking out a mortgage, or you're taking out a car loan, that if you plan to use that to raise your economic level, then taking out a loan can be the best thing for you and your family.

STACEY VANEK SMITH: It is interesting that-- I feel like student loan debt always used to be considered-- and this is from a very layperson's perspective, but it always used to be considered good debt. And now, somehow, it seems to have transitioned into being considered maybe bad debt or dangerous debt. I feel like that's been a pretty big shift that I've noticed.

Let's see, I did want to talk about-- speaking of different kinds of loans, there's been a huge enrollment growth at private and for-profit colleges. And also, people go into student loan debt to attend those. I'm wondering what impact we've seen there. How has that impacted student loan debt? And has that changed anything?

JASON DELISLE: Yeah, I can jump in on this one. I've looked at these numbers recently. There was an increase in the number and the share of undergraduates enrolling at for-profit colleges in the late-- around 2010, around that time. But even at its peak-- now it's come down quite a bit as a share of the undergraduates as well. But even at its peak, it was 14%-15% of undergraduate enrollment. And it's now down-- it's now down to about 10%, maybe even less.

So on the undergraduate side, hard to say it made a huge difference, although there was a cohort of borrowers during the Great Recession-- and, again, this is starting to get quite a ways back in the rearview mirror-- a cohort of borrowers during the Great Recession that tried out college. Went for the first time, went back, were older. Maybe they lost their job. In some ways, all things we think people-- we think people should go to college in those circumstances.

And there was a big demographic wave of those individuals, and they borrowed. And that-- I think that trend has played itself out. And they did-- many of them went to for-profit colleges. So that did certainly contribute.

But we're actually seeing now, we're seeing-- at the undergraduate level, we're seeing student debt levels trend down. And they've been trending down for a number of years. And on top of that-- I think there was a slide early on in Lisa's presentation where you're seeing tuition trend down. And in fact-- and so it's interesting that we're now in this environment where college prices-- they're trending down relative to inflation. They may be going up, but if inflation is going up faster-- it's amazing, in some ways, inflation can could be producing good things, making college cheaper, relatively-- maybe not.

But I think those are important things to kind of keep our eye on. We spend a lot of time talking about college prices going up faster than inflation, and now they're going up slower. And I feel like-- and same thing with student debt. So these are recent trends, but ones to definitely keep an eye on.

STACEY VANEK SMITH: That is interesting. I know that-- I guess debt does become less-- I guess in an inflationary environment, it's good to have some debt because the debt decreases in value. Do we have any idea why tuition is going down relative to inflation? Because like you say, I feel like that was always the thing that was outpacing inflation by triple-digit percentages. Do we have any idea how that happened?

JASON DELISLE: I'll just say here too, I'm talking about net tuition after student aid. Which also, I think some people, if they go back and look at Lisa's chart, which is College Board data, net tuition, after student aid at a public four-year institution, is below $5,000 and declining. And I've actually found, if you break that out by income groups, because there's high income people in there. If you have lower and middle-income people, the amount is even lower than that.

But I don't-- so student aid is an important factor. But I would speculate-- I haven't done any necessarily research on what's pushing the prices down, but I think it used to be-- I think we're now in more of a buyer's market for higher education, when in the past there was more of a seller's market.

STACEY VANEK SMITH: Well I have Yeah I have heard a lot about colleges competing for students. And obviously, part of that competition could be tuition going down. What about, though, tax incentives, like Coverdell and 529 education savings accounts? Do those-- do those make higher education more accessible?

JASON DELISLE: I feel like I'm talking a lot, but I'll jump in--

STACEY VANEK SMITH: No, it's great.

JASON DELISLE: --since nobody else did. The thing I like to point out on the 529 plans is they're pretty-- they're pretty small. In terms of the grand scheme of how we finance higher education, if you look at the value of that tax benefit-- not the value of the money in them, because that's not the policy. The policy is the tax benefit that people get. The Federal budget shows around $3 billion a year as the cost. It sounds like a lot, but the Pell Grant program at the federal level is $30 billion. And this is just federal aid. So in terms of the size of the tax benefit, not very big. Also, you have to have a lot-- you have to have money to put in. And then it has to grow. And then you have to get the tax break. And just you add-- a lot of stuff has to come together in a really big way for that to have a big impact on an individual. And I just think-- my sense is that it's pretty rare.

STACEY VANEK SMITH: Well-- oh, yes, please, was someone about to jump in?

LESLEY TURNER: I was going to ask a question. This is not my area of expertise, but Jason, I was wondering which are the groups that benefit from these tax incentives savings plans? Because I think when we talk about the cost of higher education and what's going on, there's very different segments of the market. There's the elite, private, and flagship public that are competing for students. And then there's the open access institutions. And know different types of resources and aid go to very different student groups.

JASON DELISLE: Yeah, and I think the data-- I think the GAO has put some data out on this. It's getting a little bit old at this point, but it shows the distribution of benefits. And obviously, those benefits skew wealthy-- to wealthier individuals, because they have the money to put in, and they can put it in early, and reap the big tax benefit from that. So, yeah, if you segment it down to high-income families, yeah, they absolutely are generally benefiting from those plans more than others. But this all calls to mind-- and maybe we've all forgotten about this, but because of the big concerns about the regressive benefits of 529 Savings plans, President Obama proposed in his budget one year to do away with that tax benefit. And there was such an incredible backlash to doing that that I think he had to actually call from Air Force One and rescind that proposal.

So people love their 529s I guess, even though they don't provide that big of a benefit. So not a big benefit. Huge political cost for doing away with them, I guess.

LISA BARROW: I was going to say in that conversation about why are costs going down and what are the contributors to how we pay for colleges and universities, one thing to remember is most people do go to public institutions. And part of what's going to affect what is the tuition price is how much state and local support are going toward the institution. So we did see with the Great Recession, there was this pullback of support for institutions.

And you saw flagship institutions were like targeting foreign students, who might pay full tuition to make up for-- and other ways of making up for loss of state support. So to the extent that there has been maybe some recovery-- and I haven't looked at the data on this, but that could be a major contributing factor.

MAKOLA ABDULLAH: Well, since Lesley broke the ice and started asking people questions, I'd love to ask you one, Lisa, if I could. Given that your-- your data, it's pretty straightforward in terms of really showing that, economically, that going to college and having some college is worth it for most people. Why do you suppose-- and this may be a difficult question, but who does the narrative benefit that it doesn't-- that it isn't valuable? I can't figure out who really wants to push the narrative that college is not valuable and maybe it doesn't work for people. So I'm just curious if you have an idea.

LISA BARROW: Well, when I first started writing on some of this with Cecilia Rouse, Peter Thiel, who is-- I can't remember what his-- he's one of these very wealthy individuals whose background-- I can't remember what his connection is to things, but he was saying, you shouldn't go to college. You should do this entrepreneurial stuff. And that is fine for very, very, very few individuals. We are not all going to be entrepreneurs who create a new invention in our parents' garage and become billionaires.

And so for those individuals, sure, that makes sense. And maybe there could be a broader set of individuals who haven't taken on that risk. But that is a risky strategy also. We talk about risk in investing in higher education, and there is some risk, particularly this completion risk, that you don't actually complete your degree, and you have the debt without the diploma.

So I don't what's in it for-- I think there is-- there has been some decline in public trust in all sorts of institutions. Institutions of higher education are not immune from that. So I don't really know, but I think a lot of the people who might spout these things about don't go to college are still sending their kids to college. So I'm not sure you want to listen to them.

MAKOLA ABDULLAH: I'd say that that's probably the thing I worry about the most, is that those who are really listening to and applying the messages, may be those who can least afford to apply those messages. As you said, that many who say that college isn't worth it are sending their kids to college. Many who say that student loan debt is bad are using good debt to pay for their kids to go to college and others can be impacted. And so I'm a little concerned about that. But thank you so much for sharing. Thank you, Stacey for letting me ask a question. I appreciate it.

STACEY VANEK SMITH: No, actually, Makola, I was curious, is that something you're hearing more from students or a concern you're hearing more? I'm just wondering if what you've heard from students and parents has changed over the years at all?

MAKOLA ABDULLAH: Yes. One of the major concerns about financing college is, is there any way that we can do it without debt? And we end up in conversations quite a bit with parents and students where it seems like a standoff. Well, what are you going to do, because I'm not going to take out any debt? And even though we are the most affordable institution in the Commonwealth of Virginia, and we spend almost all of our fundraised money on financial aid, we still don't have enough to meet every student's need without either private philanthropy, or the state, or the parents and the students themselves.

And part of that sometimes comes down to applying for and accepting debt if they are, again, serious about-- serious about going to college. And there are so many young people who are declining that. And, therefore, in some ways declining going to college. Because they believe that student loan debt is the devil. And so I really-- and even we talk about whether college is worth it. Again, there are many young people, Black, and Brown, under-resourced across this country, who are hearing that message, and are taking that message to heart. And so it is a great-- it is a great concern of mine. That's why I'm so excited to be here.

STACEY VANEK SMITH: That's interesting-- oh, yes, please.

LESLEY TURNER: Oh, I'm sorry. If I could just jump in and circle back to the question about the for-profit sector. I think even though this was a sector that wasn't serving the majority of college students, I think during the 2010s, as Jason mentioned, it was disproportionately serving first generation students, students of color, students from lower-income areas. And you I don't want to paint the entire sector in broad strokes, but on average, students who went to for-profit colleges took on more debt. They saw smaller or no earnings gains. And some of the really well-publicized wide-scale unexpected closures were among for-profit chains, like IT Tech and Corinthian Colleges.

And I think it is worth considering whether these experiences of students, in particular students maybe who don't have parents that could say college is worth it, yes, you should go, whether this also helped undermine the belief that college is a good investment. And so I don't want to say tax status alone determines a school's quality. I think we're seeing more blurring of the line between for-profit and non-profit public institutions. But when these types of fraud and abuse cases happen, I think it does have long-lasting effects on the public's belief about the value of investing in higher education.

STACEY VANEK SMITH: Yeah, I think that's true, and those stories were so high profile. And also, Lisa, what you said is making me think of maybe not going to colleges a little bit part of the Silicon Valley lore a little bit. The person with the dream, and an idea, and nobody believed in them. I wonder if it's-- and it's easy to say if you're Peter Thiel, and you have millions and millions of dollars. And I think he actually paid students a couple thousand dollars to not go to college. But I think most of us are not billionaires, building computers in our garages. So, I wonder if it was maybe a combination of things that kind of got us here.

But I would love to talk about something that has come up in the news a lot lately. I have been hearing a lot about it, which is student debt cancellation. There was a lot of back and forth. It obviously got very political. One of the big arguments that I heard over and over again against student debt cancellation is that it would be a regressive policy, that it would disproportionately help already affluent people, and that would come at the taxpayers' expense. I would love to hear some reactions to that, if that is a fair critique, if it's not fair, what you all think of that.

JASON DELISLE: Yeah, I think that's a fair critique. It's a an echo of some of the things we've been talking about here, that for the most part, the student loans help people get a higher education, and then their earnings are higher because of that. And so, yeah, the people who benefit from mass student loan cancellation are people who have student loans, who tend to be people who have higher education.

But there is-- obviously, there is, of course, a group that tried out college, dropped out, it didn't work for them. They don't have the earnings gains. And their debt tends to be low. Because they were only there for a little while. And that certainly is a group that would also benefit from mass student loan cancellation, although only once. This is a one-time policy, which I think is also problematic.

I would point out, though, that the Biden administration has just launched a new income-driven repayment plan for student loans. So you pay based on your income. We already have these plans. You pay based on your income, and then after 20 years or so, if you have any balance left, you have it forgiven. So we already have a loan forgiveness program. Not that beneficial in the past to undergraduates. Paying your loan for 20 years is a very long time anyway before you have it forgiven.

But the Biden administration is, for lack of a better phrase, is absolutely turbocharging the program for undergraduates. It is set to become the most generous income-driven repayment plan in the world. There are multiple countries that do this. The Biden plan will cut payments and make them very, very low. And will provide loan forgiveness as early as 10 years of payments. And I actually-- this is-- I think this is one thing to really watch.

Because folks at the Congressional Budget Office are estimating that this is going to lead to an increase in student loan borrowing. They're projecting a 15% increase in the amount of debt that people take out because this plan is so beneficial. So I actually think this plan is about to change, potentially, the way we should be thinking about student loans going forward. Because they're now-- a big chunk of them are about to become grants under this plan.

STACEY VANEK SMITH: How do you expect to see them changing?

JASON DELISLE: So, if you-- right now, there are a lot of people that don't take out loans. Are you asking how does the payment plan work or how will it affect people's decisions? STACEY VANEK SMITH: I guess how it will affect people's decisions Yeah, you just said a big change is coming, so I was wondering if this is potentially a solution to the-- JASON DELISLE: Yeah, well, it's strange, right? Because it is going to make loans, federal student loans-- particularly for undergraduates who are going to qualify for the lowest payments under this plan, it's going to make loans a great deal. And they're not risk free, but on average, they're going to become a great deal, in that borrowers are not going to have to pay back the whole loan if they use these income-based repayment plans, in I would say, probably the majority of cases for undergraduates, particularly for associate's degrees or certificates.

STACEY VANEK SMITH: Unless you're Peter Thiel, maybe.

JASON DELISLE: Yeah, if your income is really high, then you pay back the loan. The worst thing that happens is you have a high income and you pay back the loan. That's the worst that could-- in that particular case. Now obviously, you have to sign up for this plan, and there's paperwork . It hasn't worked very well in the past. There's an attempt to fix this.

But just to give you a sense of how the payments are going to work under this plan. A borrower wouldn't need to make a payment on their student loan until they were earning over $32,000 as a single individual. The payment is zero until earnings are over 30. And then after that, any income above that, it's 5% of their income. So those are very low payments. And this is-- like I said, I think this is about to really change some of the conversations around student debt in a tricky way.

Community colleges, where students don't borrow much-- we're here having this conversation, and Makola's talking about it as well, about how everybody has said student loans are bad and you should avoid them, but this-- again, it's going to be leaving money on the table if you don't take them.

STACEY VANEK SMITH: I'm curious about who is maybe the most impacted by the student debt crisis, and maybe who would most benefit from either the debt going away or some kind of an income-driven repayment plan. Do we know-- do we know who is the most impacted?

LISA BARROW: I don't if we-- I don't know. Did you have an answer to that, Lesley? I was just going to say one of the issues about the standard loan payments, the way the default program is, you pay off your loan in 10 years. And it's the first 10 years of your career. And peak earnings happens typically after that. So one of the benefits of the income-based repayment is it stretches-- it moves some of that time over which you're paying back your loan to the time when you can afford it more.

So at the beginning of your career, you may not be able to afford those initial payments on a fixed based-- like a loan structured like your mortgage, where it's a fixed amount every month. But in this income-based repayment plan, you're moving some of those payments in the future. And that's what's valuable. So anybody who's in a career where you initially start out with low earnings, and then hit-- once you establish your career, you're much more on sound financial footing, any of those individuals are going to benefit.

GENE AMROMIN: If I could just underscore-- sorry, Lesley-- just underscore what Lisa and Jason before said. This really is a fundamental change in the way student loans are seen. Because they always have this tough love aura about them. It's a fixed loan. It has to be paid off in 10 years. It's not dischargeable in bankruptcy, and so on, and so forth. It's there regardless of whether you're working, how much money you're making, et cetera.

Making it income-based, especially-- and I want to underscore especially-- if it can be done in a less bureaucratic way, removing all sorts of barriers in terms of automatic enrollment or the ease of satisfying and verifying income requirements and so on, that would be, in fact, a fundamental change. And, yes, it would make not taking student loans leaving money on the table for many, many, many students.

LESLEY TURNER: I don't think I have an answer here, but I just wanted to highlight this tension of there are groups of students that we think are under-borrowing and that's inhibiting their ability to access higher education or be successful. And then there are groups that are, struggling who take on student loans because of this promise of the returns to higher education and are really struggling with repayment. And I think the issue is, are students able to complete? Are they able to get that degree that pays off in a program that pays off? And then are there options available that help them service that debt in a way that doesn't overwhelm their finances?

And I think to the extent that more generous repayment plans help solve both of these problems, it could be a step in the right direction. I do worry that given the hesitancy of many groups of students to take on student debt whether or not this very generous program, as Jason describes it-- whether that will be internalized or not. There are likely community college students today that would not repay their loans under current income-based repayment programs. These exist-- there are less generous, but they do exist, and they have forgiveness at the end of the road. And these students don't borrow.

So I think this is a challenge for institutions serving low-income students who may be hesitant to borrow, to help them understand that this program is, in fact, not going to lead to unaffordable payments after they complete. And a challenge to make sure that current borrowers are aware that this option exists and that it's a good option for them. MAKOLA ABDULLAH: Well said, Lesley. I just wanted to say, well said.

STACEY VANEK SMITH: I did want to-- we have some great questions from our audience. There's a question from Bill. This question's from Bill. He says, there seems to be considerable variation in earnings for college graduates. To what extent does this depend on the choice of major or other choices that students make during college? I feel like a few of you have touched on this, but I think it's a great question. Because I do feel like people have very different attitudes about borrowing to become a surgeon, which is going to bring in a lot of income, or borrowing to become an elementary school teacher, which is probably not going to bring in as high a salary.

MAKOLA ABDULLAH: Well, think that-- if I can start it-- I think those two things are definitely important, the institution you choose, the major you choose. But in some of the data that I've had a chance to take a look at, the biggest predictor of income was the household income of the parents. That the connections that the parents have, what the young people have been exposed to in their household, plays a huge-- has a huge impact on the career choices and on the potential income that folks make.

And so I think it's critically important that as we look at this that we make sure that when we're dealing with low-income students that we understand that students that come from low-income backgrounds are more likely to make less money than those who come from high-income backgrounds, and to provide them with the level of access and career choices that give them a chance to move generations forward, not just through one generation, but through another, through higher education.

And so those two things are ultimately very important, the university chosen and the major chosen. But I think there's some other factors that are outside the bounds of the institutions that also play major roles in terms of students' income when they graduate.

LISA BARROW: Yeah, and I would go back to this work that I did with Ofer Malamud on is college a worthwhile investment. We did look at some different college majors. And there are big differences across college majors in terms of the financial-- net financial benefit that we estimate. Now one thing that is probably true is that the individual who borrows money and goes to school to become a surgeon, what they would have done had they not gone to college at all or had they not gone to grad school also probably paid more than maybe the individual who decides to become a high school teacher.

And so it's not-- for that individual, the net benefit may not be that different. The surgeon is kind of way out there, right? That's probably not the best example. But it could be that the net benefit is actually quite similar. Because when we looked at-- when I was looking at the profile of earnings for Black or African-American women and men, and you saw the associate's degree men were making-- I'm sorry-- associate's degree women were making the same as a high school degree man, that's not the comparison, right? It's what would you have made if you only had a high school degree.

So, yes, there is a lot of variation. It is true it doesn't pay off for everyone. And so people should probably think about-- if they are really concerned about the money and making the right investment, they want to make sure they're not choosing something that is going to make them worse off. Hopefully, they make an informed choice on that. But to be fair, this new payment plan is going to-- if you choose something that doesn't pay off, it's going to help a lot because you're going to get your loans forgiven in the medium to longer term.

LESLEY TURNER: If I could just jump in here. I wanted to talk about this from a slightly different angle, which is differentiable access to majors that tend to produce high earnings, acknowledging that earnings are not the only reason why people go to college, but especially for students from backgrounds of less resources, it's important to be able to earn enough after you complete.

And the first set of papers I'd like to talk about are by Zach Bleemer. And he's looked at access to particular majors at four-year institutions, where certain majors tend to be oversubscribed. And so colleges use various mechanisms to restrict who gets access to them, generally like a GPA requirement. You have to have a grade point average above a 3.5 to do an economics major.

And what he finds is that when schools implement these screening mechanisms, the students who get these majors that tend to lead to high earnings are less likely to be students of color, are less likely to be students from low-income backgrounds. And just to take this back to the point I keep harping on, one of the main reasons why schools have these restrictions is reductions in funding or a lack of funding. There's not enough funding to provide all of the seats that students want within a given major. And so the department has to ration seats.

I think this also shows up at two-year institutions. There's a very nice paper by Michelle Grove looking at a nursing program in a community college in California, where he can look at students who got in and students who didn't get in, because this program was basically using a lottery. There were more students than seats, and so the program said, OK, to be fair, we're just going to randomly select people. And so people are very comparable in terms of who gets to do the nursing program, who doesn't.

He can look at their earnings and shows that this nursing program pays off a whole lot. But then the question is, if there's a lot of demand, it pays off, why aren't students-- why isn't the school expanding seats and allowing all of the students to pursue this program? And it's because nursing programs are expensive to offer. And the per student funding that the school gets is less than the cost of expanding the seats by one to let that student in.

And so this is really highlighting the tension of schools may realize this is a program that really pays off, we know there's a lot of students who would benefit from it, who want to enroll in it, but just because of our very limited resources, we can't expand access. And I think this is a really important consequence of when the funding from the public sector declines, what happens to students, and which students are impacted by it.

STACEY VANEK SMITH: Well., and we definitely see that in the economy later on, when there are-- we really need more nurses and they're not there. We're getting very close to the end, but I did want to ask one final question, which-- to bring everything together. But I'm wondering if anyone has thoughts on how student loan policies could be changed or restructured to be most beneficial, to help maybe borrowers who are being left out right now. If you have any thoughts on that

JASON DELISLE: Well, I still think that this new income-driven repayment plan is a really big deal in that regard. And borrowers will be able to sign up soon. But not all of the benefits will be available. They'll be available starting next year, some of them now. But I actually think, for better or worse, it's going to reduce borrowers' payments a lot and subsidize low-earning borrowers quite heavily.

STACEY VANEK SMITH: Well, thank you so much. I know we're getting right to the end of our time. I promise Kristen I would be done by 1:29, and it is 1:28. So I'm going to hand it back over to you. But thank you, everyone, for just a really wonderful discussion.

KRISTEN BROADY: That was amazing. Thank you so much, Stacey for moderating this panel. Thank you, Lisa and Gene, for your very insightful presentations and for all of your research. I also want to thank President Abdullah, Dr. Turner, and Mr. Delisle for joining us. We are so happy to have had all of you.

So we'll be sending a post-event survey. So please look out for that. To our audience, thank you, everybody who joined us on the webinar and via live stream.

So a recording of the event and a summary will also be available on the Economic Mobility Project website. We'll email you when that's live. Thank you again for joining us. And please, look forward to seeing future events from us. Everybody have a great afternoon.