Among the reform proposals discussed were the use of tax expenditures to offset costs of student debt, initiatives that facilitate loan refinancing, and alternative financing mechanisms, such as Income Share Agreements (ISAs). ISAs are a “new form of private financial aid that offers students money upfront to pay for college in return for a percentage of students’ future earnings,” according to American Institutes for Research.
Financial literacy and enhanced consumer protection were also debated.
State lawmakers from Arkansas, Connecticut, Georgia, Massachusetts, Minnesota, Nevada, Ohio, and Oregon were among those in attendance. Members from the legislative and executive branches shared the challenges they face.
The meeting was part of the Fiscal Federalism Initiative by The Pew Charitable Trusts. The initiative explores the sensitivity of state budgets to changes in federal spending, how federal regulatory policy impacts states, and the interconnectedness of federal and state tax policies. It was designed to foster better communication and symmetry among the various branches of government.
The group also heard from experts in the field. Rajeev Darolia from the University of Kentucky presented on consumer protection and financial literacy, including asymmetry in power and information, how states can empower regulators to investigate and punish bad actors, and how states can help educate people on taking out and repaying student loans.
Audrey Peek from American Institutes for Research was also on hand to discuss the differences between ISAs and income-driven loan repayment. She also spoke about how Purdue University is using ISAs.