Marco Rubio Calls for 'Student Investment Plan,' More Choice in Higher Education

Rubio also pushed ideas to streamline tax credits and simplify federal financial aid applications.

Sen. Marco Rubio speaks during a keynote address about his plans to overhaul the country's higher education system at Miami-Dade College, Monday, Feb. 10,  2014.

Sen. Marco Rubio made several proposals to increase college access and affordability in a speech Monday at Miami-Dade College.

By + More

Sen. Marco Rubio, R-Fla., proposed an overhaul of America’s higher education system Monday that would include the wider use and acceptance of free online courses, more information about potential earnings and a “pay it forward” investment plan that he said would allow students to attend college without taking out loans.

Rubio said the country’s “postindustrial era” has replaced some middle class jobs with cheaper labor and made other jobs available – but only to those who have the right education, during a speech at a National Journal's event on community colleges.

“Those with the right advanced education are making more than ever. But those that do not are falling farther and farther behind,” Rubio said. “The result is a growing opportunity gap between the haves and the have-nots, those who have advanced education and those who do not. And if we do not reverse that trend, we will lose the upward mobility that made America exceptional.”

[READ: White House, College Presidents Target Affordability]

Rubio made several proposals for ways to address shortcomings with the access and affordability of college, focusing on the need to prepare more individuals to fill hundreds of thousands of job openings in the coming decade. One of the reasons America may fall short when it comes to having enough educated and trained workers in the future is the fact that the cost of college has skyrocketed, “at a rate far exceeding the rise of inflation,” Rubio said.

Many of the reasons for problems with access and affordability, Rubio said, stem from the federal government. The federal student loan program, he said, subsidizes “a myriad of nonacademic pursuits” at colleges and universities. The process of applying for financial aid is “confusing and bureaucratic,” while the system of tax policies is “tangled and bureaucratic,” he said. 

Rubio, a potential 2016 presidential candidate, also pushed for the passage of the “Know Before You Go Act,” which would provide students with data about potential earning by different fields. But such a proposal would require reversing the ban on a national student unit record system.

“It’s important for students and families to have access to the information they need to make a smart choice,” says Ethan Senack, a higher education associate at the U.S. Public Interest Research Group. "Sens. Rubio and [Ron] Wyden undertook an important effort … trying to balance the need for transparency and information with institutional burden and privacy concerns. I think it’s certainly an important step in the discussion, but there’s a lot more that needs to be done.”

One of two suggestions Rubio made to tackle the growing mountain of student loan debt is to make income-based repayment the default option for all borrowers. Recent data from the Consumer Financial Protection Bureau shows just slightly more than 10 percent of federal loan borrowers are enrolled in some type of income-driven repayment plan.

[SEE ALSO: Democratic Senators Announce Ambitious Student Debt Agenda]

“We have various Income-Based Repayment programs already in place, but they are terribly insufficient and replete with unintended consequences,” Rubio said. “Many graduates don’t even know the programs exist, making them extremely underutilized.”

As part of President Barack Obama’s plan to reform America’s higher education system, the federal government is working to raise awareness about different student loan repayment options. The Department of Education and the Treasury Department teamed up with Intuit to put banners on the company’s TurboTax Online, which would redirect users to the Department of Education’s “Repayment Estimator.” The online calculator helps borrowers choose between several student loan repayment options.

But Rubio said there’s another way for students to attend college without taking out a single dollar in student loan debt. Rather than taking out loans, he said, students could apply for a “Student Investment Plan,” in which investors would pay a student’s tuition. In return, the student would pay a percentage of his or her income for a set period of time after graduating, whether or not that payment ends up amounting to the original investment.

Such “pay it forward” programs have already elicited pushback from some in the higher education community. Opponents have said that these programs do not address the larger issue of the increasing cost of college, and also have the potential for students to end up paying more than they would with federal student loans.

Carrie Warick, director of partnerships and policy at the National College Access Network, says students should first look to exhaust all of their federal student loan options before using a “pay it forward” model to finance their college education.

“Depending on the percent of income that a student could pay back, a pay it forward model could actually be far more expensive than federal student loans,” Warick says. A student who does well after graduating, and pays a percentage of a higher income, could end up making larger payments than he or she would under another system, Warick adds.

“They’re paying back far more than they would have under another system, which is then giving money they could be putting into their 401K or a fund to buy their first house or into their own children’s college fund, instead this money is going back to the investor,” Warick says.

[RELATED: Free Community College Not a New Idea]

Additionally, the “Student Investment Plan” -- which would take into account factors such as a student’s major, the type of institution he or she is attending and the student’s academic record – could create inequity for those coming from a disadvantaged background, or those pursuing less lucrative careers, Warick says.

“The federal student loans provide the best interest rate for students and they also treat all students equally,” Warick says. “So regardless of their background, or their major, or other what could be considered high-risk investment factors, those loans are available to students.”

Another option for expanding access to college at a lower cost, Rubio said, would be to embrace innovation through online education. But in order to do that, Rubio said Congress needs to take action against a “broken accreditation system that favors established institutions while blocking out new, innovative and more affordable competitors.”

Rubio called on Congress to establish a new and independent accrediting board to oversee the quality of free online courses, and make the credits transferrable to traditional universities. With the Higher Education Act up for reauthorization, a restructuring of the role of accrediting bodies is possible.

But Judith Eaton, president of the Council for Higher Education Accreditation, says several of Rubio’s asks are already in the works.

“Higher education is already involved in accepting credits from private providers like StraighterLine. We’ve been doing competency-based education and assessment of prior learning for years,” Eaton says. “It may not be as much as the senator wants, but to maintain that higher education is not addressing these issues at all, and therefore accreditation is not, I think that goes a bit too far.”

[MORE: Congress Should Reform College Accreditation to Save Students, Taxpayers, Report Says]

Additionally, she says those within the higher education accreditation community are already working to develop ways of managing and overseeing the quality of noninstitutional education, which would include free online courses.

And although Rubio did not explicitly lay out plans to take the accreditation process out of the hands of those within higher education, he gave a nod to a proposal from Sen. Mike Lee, R-Utah, that would allow states to take control of accreditation. Eaton says she would have “serious questions” if Rubio’s intent is to remove higher education from the accreditation process.

“There can be a lot of players involved in this, but you don’t want judgments about the effectiveness of hospitals not to involve doctors or people in the medical profession,” Eaton says. “Artists are wonderful and construction workers are wonderful, but are they in a position to make those judgments? With all respect, I don’t think so.”