From School Choice to College Choice

It’s no secret that Americans are struggling to bear the burden of student loans. 

Nearly 43 million Americans — one in six adults — currently have student loan debt, and the federal student loan portfolio now exceeds $1.6 trillion. The median borrower currently holds more than $20,000 in debt, and it may take them an average of more than 20 years to become debt-free. These obligations not only tank credit scores but also delay critical life decisions. According to research from the Federal Reserve, ”a $1,000 increase in student loan debt … causes a 1 to 2 percentage point drop in the homeownership rate for student loan borrowers during their late 20s and early 30s.”  

It makes sense. Who can responsibly invest for retirement, buy a home, or start a family when they are hampered by five or six figures of student loan repayments?

There is little sign that any significant relief will come from universities. Although some institutions have frozen tuition, either voluntarily or under state government orders, tuition remains exceptionally high overall. What’s more, while the Trump administration has tried to bring cascading federally subsidized loans to heel, many universities can still operate as if the federal government will guarantee the bulk of students’ tuition payments. 

In other words, while the money tree is not growing as fast as before, it’s still bearing fruit. 

Fortunately, relief for future college-goers could be around the corner. In fact, they might already have access to it. 

Twenty-one education savings account (ESA) programs in 18 states were intended to help families customize their children’s education and give them access to more opportunities. Education savings accounts are publicly funded K-12 savings accounts that commonly allow expenses like private school tuition, tutoring, therapies, curriculum, and more. 

But nobody ever said this flexibility had to end in 12th grade. Fifteen of the 21 ESA programs across the country allow funding to roll over for postsecondary education expenses. 

Arizona is one of the states that lets funds not used for K-12 education expenses roll over year over year and flow into a college savings account. In practice, Arizona’s rollover provision rewards families for spending ESA funds efficiently on K-12 expenses, allowing them to carry the remainder into higher education later. 

And it’s working. Since 2022, data from the Arizona Department of Education shows that ESA families have spent at least $5 million on higher education. And ESA funding flexibility shouldn’t stop at college tuition. 

However, the future of higher education will clearly be more than forcing a “college for all” model onto students. Only 33 percent of Americans think a four-year college degree is “worth the cost because people have a better chance to get a good job and earn more money over their lifetime,” according to NBC News polling. 

Employers are also acknowledging this future by dropping degree requirements in job postings. From 2017 to 2021, the number of jobs requiring a college degree fell by around 15 percent. By 2031, only about 4 out of 10 jobs are projected to require a bachelor’s degree. All the while, employers are increasingly switching to skills-based hiring, with 70 percent of respondents for a recent National Association of Colleges and Employers survey reporting that they use this practice. 

When Milton Friedman reinvigorated the idea of educational freedom, he envisioned families having access to a true marketplace of educational options. Policymakers can honor Friedman’s vision when designing ESAs by allowing rollover funds to be used not only for college tuition, but also for dual-enrollment costs, apprenticeship costs, industry-recognized credentials, and other expenses related to career pathways and post-secondary education. 

Undoubtedly, the student debt crisis took generations to build, and ESAs won’t fix the issue immediately. Still, they can serve as one approach in a suite of policy solutions that can chip away at a problem that never should have reached this point. States that give families the option to benefit from ESAs before sinking into college debt will be better for it.

Garion Frankel is editor at the James G. Martin Center for Academic Renewal. 

Cooper Conway is a state policy director at EdChoice, a 501(c)(3) nonprofit, nonpartisan organization working to advance educational freedom and choice for all students as a pathway to successful lives and a stronger society. Follow him on X @CooperConway1