Beth Akers (along with Bob Shireman and others) was one of the most vocal proponents of capping access to federal student loans for grad students and hoping that the market would figure out a way to deal with the cutbacks.

I think its worth reading her reflections on this now that her proposal is reality for a generation of students. My takeaways from Beth’s latest and other reporting on the state of graduate education post-OBBBA:

1) Tuition is still high. The market-moving effect of caps has not translated to lower sticker prices for grad students. Beth calls out schools for taking a “head-in-the-sand” approach to what’s coming. Should we have expected otherwise?

2) Higher ed economics is not like regular economics (market forces are a myth). Schools, especially public colleges, depend on an extremely complex financial model including vast direct and indirect public subsidies. “Lower tuition” doesn’t happen in response to market forces. That’s why so many college leaders have ignored the strong signal a cap on grad lending creates when setting tuition. It’s easier to win more public subsidies or force students to go in to debt in other ways.

3) Private loans create less friction than lowering tuition, at least for colleges themselves. Beth acknowledges this but does not grapple with the consequences. We can’t have it both ways. Maybe financial products will never meet the needs of students who cannot access traditional, properly underwritten student loans and these students will not go to grad school. This is also bad for schools’ bottom lines. But maybe the alternative is worse— OBBBA will usher in a wave of predatory lending targeted at prospective grad students with the fewest financial resources. Schools will welcome this because a predatory loan is still revenue and tuition can stay high.

4) The mix of students who get to go to grad school will change. Maybe it already has. For a country that built our national identity around economic mobility, creating a pseudo-wealth test to determine who gets a graduate education is a sad outcome. Lawmakers should have seen this coming.