Sen. Elizabeth Warren (D-Mass.) recently gave a speech about the affordability of higher education: a matter that is as personal to her, having put herself through school, as it is for those of us who’ve done the same for ourselves and our children.

Her focus is on finding ways to make it possible for graduating students to be free of debt (or, at worst, manageably indebted) through a combination of increased federal and state funding, and other measures that center on the public education system.

The states’ role is indeed critically important in this regard because of public education’s traditionally lower tuition prices for roughly three-quarters of all students who attend these schools. Lately, though, the funding for that has come under increasing pressure because of budgetary constraints.

To be clear, this is not to say that state schools should be the exclusive providers of higher-educational content. There will always be a market for concierge-level education, just as there is for concierge-level health care, and the consumers who are willing and able to pay extra for that.

State-Run Student Loan Programs

Apart from delivering lower-cost education, though, the states have another responsibility as well, which until now has escaped much notice.

A number of states have set up education-financing authorities that offer low-cost loans that rival the Federal Direct program. To the extent that the state-run authorities fund these programs in the same manner as the federal government (through direct borrowing) the authorities should be able to comparably restructure troubled debts. But when a state chooses to guarantee the loans that are then transacted by private-sector lenders, financially distressed borrowers often suffer because the contracts are controlled by nongovernmental entities (FFEL borrowers routinely encounter this problem).

Differences such as this that exist between the two programs need to be made clearer to prospective borrowers.

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Mitchell D. Weiss