Risk-Sharing 101

Higher education is one of the biggest investments someone can make in their lives, and yet there is no warranty that institutions will leave students better off than before they started. Currently, students and taxpayers bear all of the financial responsibility of attending college, while institutions bear none—even institutions with abysmal student outcomes. As policymakers work to reauthorize the Higher Education Act, it is critical they consider risk-sharing proposals that would give institutions some skin-in-the-game for the financial investment students and taxpayers make, and hold institutions accountable for paying back a portion of the federal tax dollars received if they are unable to help students get a good job and pay back their loans. The better outcomes a college gets, the less risk it has to bear.