Reducing Federal Intervention in Education and Moving Toward Student-Centered Policies: 10 Steps for the Incoming Administration

By Lindsey Burke / Heritage Foundation

The Trump Administration has unprecedented opportunities to work with Congress to advance education choice as appropriate, to limit federal intervention in education, and to reform higher education in a way that creates options for students and lowers costs. The Administration can take bold steps to advance education choice by supporting reauthorization and expansion of the DC Opportunity Scholarship Program, expanding school choice in the Nation’s Capital, establishing education savings account options for military-connected children and children attending Bureau of Indian Education schools, and streamlining the Title I program to make it work better for recipients. The opportunities for reform extend beyond creating choices for families. The Administration should also restore state and local control of education and can begin that work by allowing states to opt out of federal programs and mandates, rescinding burdensome regulations, and eliminating duplicative and ineffective programs. Finally, the Administration, along with Congress, should work to ease the cost of college by making space for private lending and more flexible higher education alternatives.

Reforms to Advance Education Choice

1. Support Reauthorization of the DC Opportunity Scholarship Program. The highly successful DC Opportunity Scholarship Program (DC OSP), which provides vouchers to low-income children to attend a private school of choice, is due for reauthorization. Under the Obama Administration, the OSP, which increased graduation rates for participants by 21 percentage points,[1] has been under constant threat of defunding. The OSP should not only be supported through reauthorization and full funding, but also be expanded to enable more children living in the District to participate. Scholarships of up to $8,452 are available for children in grades K–8, and scholarships of up to $12,679 are available for students in grades 9–12. Congress should also require that any excess carry-over funds not needed to fund existing scholarships be made available for new scholarships.

2. Expand Choice in the District of Columbia. The Trump Administration, along with Congress, should also work to make education funding in the District of Columbia entirely student-centered and portable, making DC an all-choice district.

Congress has two options for achieving this goal:

1. Restructuring federal funding for DC public schools so that it is student-centered and portable to schools of choice, including private schools; or
2. Creating a stand-alone education savings account (ESA) program available to all District residents.

As researcher Matthew Ladner explains:

From an equity standpoint, it is difficult to justify the District’s school finance system. The system routinely provides $29,000 for high-income students attending regular public schools. It provides $14,000 for high-income students attending charter schools but only a maximum of $8,381 for some low-income students who would like to attend a private school system that improves the chances for graduation by approximately 21 percentage points.[2]

To more equitably fund education in DC, the Trump Administration should work with Congress to transform DC into an all-choice district by redirecting funding for K–12 education from government schools into parent-controlled ESAs.

3. Education Savings Accounts for Military-Connected Children. Long before the advent of the Elementary and Secondary Education Act (ESEA) and the Department of Education, the federal government helped support the education of military dependents. The oldest federal K–12 education program is the Impact Aid program passed under President Harry Truman in 1950. A provision in the Every Student Succeeds Act (ESSA) makes military-connected children one of the newly classified subgroups to receive targeted attention. Approximately 1.4 million school-age children in the United States have a parent in the military; 80 percent of those children attend public schools.[3] The rest of these children homeschool or attend schools run through the Department of Defense. Public schools that educate military-connected children are reimbursed by the Department of Education through Impact Aid, a portion of which supports both the education of children on military bases and districts with high concentration of military-connected children. Although only a portion of Impact Aid is appropriated in response to military-connected children, the Department of Education will distribute $1.3 billion in Impact Aid funding to local education agencies in 2016.[4] This money is paid directly into a district’s general funds. Congress should explore directing Impact Aid funds provided by both the Department of Defense and the Department of Education to military-connected children in the form of ESA options.

4. Education Savings Accounts for Children Attending Bureau of Indian Education Schools. No child should be trapped in a failing school because of where he lives. Native American children attend such low-quality schools that a Politico ran a piece entitled “How Washington Created the Worst Schools in America.”[5]

Funding for Bureau of Indian Education (BIE) schools is unique among K–12 education financing because it is almost entirely federal. BIE schools are directly funded through a combination of Department of Interior, Department of Education, and Department of Agriculture funds, with the BIE itself operating one-third of the schools, and the other two-thirds being tribally operated.[6] BIE schools have higher per pupil expenditures than traditional public schools. The Government Accountability Office (GAO) reports that “student performance at BIE schools has been consistently below that of public school students, including other Indian students attending public schools.”[7] Parents of students who attend BIE schools should be made eligible for ESAs to pay for private school tuition, online learning, special education services and therapies, curricula, textbooks, and a host of other education-related services, products, and providers.

5. Transform Title I into a Student-Centered Support System. Although Title I, Part A, was created to augment education resources for low-income children, the complexity of its multiple funding formulas has limited the $15 billion program’s ability to provide resources to those children most in need.

The four funding formulas in Title I of ESSA are “prohibitively complex, with provisions that render the final results substantially incongruent with the original legislative intention.”[8] Moreover, the program has grown in complexity since it was instituted in 1965, making it likely that “no more than a handful of experts in the country clearly understand the process from beginning to end or could project a particular district’s allocation based on information about its low-income students.”[9] Growing evidence suggests that Title I has been and remains ineffective at improving educational outcomes,[10] with some evidence even suggesting that Title I “increases the inequality it was created to stop.”[11]

The Title I formulas should be consolidated and streamlined to use a straightforward set per pupil allocation. States should then be given the opportunity to allow Title I funding (amounting to roughly $500–$600 per student), to be harnessed by students to pay for local college classes, public and private school courses, online courses (public and private), SAT prep courses, and a host of other education-related services and courses. These micro-ESAs should be kept separate from existing state ESA and other school choice options to avoid entangling state options with federal regulations. As long as funding for Title I continues, a state option on portability through micro-ESAs would be a welcome improvement for low-income students. Any portability proposal should include strong protections for private school autonomy by incorporating language similar to that included in the law authorizing the DC OSP.[12]

6. Allow K–12 Expenses to Be 529 Eligible. Across the country, states have led the way in expanding education choice options for families. Federal policymakers can support this momentum by allowing K–12 education costs to be classified as allowable expenditures under 529 Plans for college savings. The federal government currently allows contributions to college savings plans to grow tax-free and to avoid federal tax penalties, if put toward higher education expenses. Many states also permit savings for college to accrue without state tax penalties when saved through a 529 account. Families who save through 529s in states with these additional benefits can also withdraw from their funds in order to pay for tuition, books, and other education-related expenses at any college, graduate, or trade school. As a savings vehicle for higher education expenses, 529 accounts are a valuable tool. Yet the same tax preferences cannot currently be applied to K–12 expenses through the 529 structure. According to this author and Rachel Sheffield in a previously published paper:

Since most states offer either tax credits or deductions to encourage saving in a 529 plan, revising Section 529 of the Internal Revenue Code to make K–12 expenses allowable would effectively create opportunities for millions of American families to open ESAs. Such an outcome would encourage educational choice, consistent with long-term goals for reforming the federal tax code.[13]

Reforms to Downsize the Department of Education

7. Allow States to Opt Out of Programs Under the Every Student Succeeds Act Through the A-PLUS Proposal. The Trump Administration should work with Congress to advance policies contained in the Academic Partnerships Lead Us to Success (A-PLUS) proposal which would allow states to opt out of the programs under ESSA completely, and to put dollars toward any education purpose allowed under state law. State and local leaders would determine how to best allocate resources to improve educational quality, and states would no longer be constrained by the dictates of federal programs.

The A-PLUS approach directs educational accountability to those with the most at stake in student and school success: parents and taxpayers. The A-PLUS approach would also relieve the burden on states to demonstrate compliance with the myriad federal program requirements and regulations associated with ESSA, which could substantially reduce administrative costs. Over the summer of 2015, the House and Senate considered an amendment to ESSA based on the A-PLUS proposal. The amendment received 195 votes in the House and 44 votes in the Senate. Congress should now consider the A-PLUS proposal as a stand-alone measure, enabling states to put federal education funding toward any lawful education purpose as defined in state law. Allowing states to opt out of the labyrinthine structure of ESSA through A-PLUS is an important first step in downsizing the size and scope of the Department of Education.

8. Eliminate Dozens of Formula and Competitive Grant Programs. Over the five decades since the ESEA was first signed into law by President Lyndon Johnson, programs and spending have accumulated rapidly while failing to improve the educational outcomes of the disadvantaged children the law was designed to help. The law’s competitive grant programs, which compose much of the programmatic design of the ESEA—currently reauthorized as ESSA—are particularly problematic in terms of the compliance burden placed on states and school districts. States must complete numerous applications, track federal program regulations and notices, and adhere to significant reporting requirements. The many niche competitive grant programs have multiplied as the federal government continued its efforts to reform education from Washington, expanding into almost all areas of local education.

The Trump Administration, along with Congress, should work to eliminate almost all competitive grant programs under ESSA, along with some formula funded programs, in order to streamline the law, stop the education spending spree, and curtail federal meddling in local school policy. Specifically, Congress should eliminate many of the programs that fall under titles II, III, IV, and V, and the newly established (under ESSA) Preschool Development Grants found in Title IX.

9. Rescind ESSA Regulations. On December 10, 2015, President Obama signed into law the Every Student Succeeds Act, the eighth reauthorization of the Elementary and Secondary Education Act and the most recent successor to No Child Left Behind (NCLB). Not only were many conservative priorities absent from the bill that became law, but the shortcomings of ESSA immediately became magnified through the Department of Education’s rule-making process. The agency engaged in a prescriptive regulatory process to define how states and school districts must meet their obligations under the new statute.

The Department of Education, through regulations, plans to dictate how state funds are distributed through prescriptive spending provisions. The Department is providing little latitude to states in designing accountability plans. Regulations promulgated by the agency prescribe a methodology for differentiation of school performance, counter to the intent of ESSA. And all is to be met on an unworkable timeline. Regulations pertaining to the design of state accountability systems and regulations pertaining to supplementing, not supplanting, language (thus creating an unworkable mandate for parity of funding between schools), should be rescinded. Both regulations were finalized during the fall of 2016, and as a result, are eligible for rescission under the parameters of the Congressional Review Act. The President-elect should rescind these regulations in order to align the implemented version of ESSA closer to the intent of Congress when the law was passed and to relieve states from the federal mandates created through these regulations.

10. Ease the Cost of College by Making Space for Private Lending. Federal higher education subsidies have increased substantially over the past decade, and now represent 71 percent of all student aid. The federal government now originates and manages 93 percent of all student loans. By extension, taxpayers now bear primary responsibility for paying for student loan defaults. A recent evaluation by economists at the Federal Reserve Bank of New York found that for every dollar increase in federally subsidized student loans, tuition increased 63 cents. As economists David O. Lucca, Taylor Nadauld, and Karen Shen note, those effects are highly significant “and are consistent with the Bennett Hypothesis,” which posits that federal subsidies encourage universities to raise tuition and fees.[14] Although the benefits of subsidized student loans are concentrated to those who qualify and receive the subsidy, the increased tuition costs are passed on to all students at a university.

Congress will soon consider reauthorization of the Higher Education Act (HEA). Among other issues, the HEA governs federal student aid including all federal student loans and grants. Title IV of the HEA authorizes federal PLUS loans, which are loans to graduate students and the parents of undergraduate students. A graduate student or the parents of an undergraduate student may borrow up to the cost of attendance at a given school, less any other aid received. The availability of Parent PLUS loans, created in 1980, has resulted in families incurring substantial debt while failing to ease the cost of college over time. The Graduate PLUS loan program, open to graduate students who elect to take out loans to finance graduate school, also enables students to borrow up to the full cost of attendance. In order to decrease loan burdens and place pressure on colleges to rein in college costs, the PLUS loan program should be eliminated to make way for more flexible private funding alternatives.

Conclusion

The Trump Administration has the opportunity to advance education choice as appropriate, and to dramatically reduce the intervention of the federal Department of Education into local schools. The Department has been wholly ineffective at improving educational outcomes for students, loading states and local school leaders with a bureaucratic burden that saps time and financial resources and overseeing a subsidized student loan structure that has enabled colleges and universities to raise tuition at breathtaking rates and place taxpayers on the hook for loan defaults in the process.

Pursuing a package of reforms that begins the important work of making federal education funding limited, targeted, and, as appropriate, student-centered and portable holds the promise to restore state and local control of education and better serve students and taxpayers across the country.

—Lindsey M. Burke is Will Skillman Fellow in Education Policy Studies in the Institute for Family, Community, and Opportunity at The Heritage Foundation.

This article is republished with permission from our friends at The Heritage Foundation.