Investing in Education

The Nobel Prize–winning economist James Heckman is known for many things, but perhaps his most famous contribution is the Heckman Curve. In its simplest form, the Heckman Curve shows that as people age, improving their skills and knowledge becomes more expensive.

Now, we can quibble about some of the specifics. The estimates for early childhood education (ECE) student outcomes, for example, are almost surely too optimistic and based on a few small-scale studies conducted decades ago. But one doesn’t need a lot of fancy econometrics to make Heckman’s larger point. Indeed, in 1855, Frederick Douglass pointed out that “it is easier to build strong children than fix broken men.”¹

It’s not clear that our schools are building strong children. The National Assessment of Educational Progress, established in 1971, completes a long-term trend review of students every four years in addition to biannual testing. The long-term trend review allows us to see how a representative sample of American nine- and 13-year-olds have performed in reading and math over that period.

In 2022, nine-year-olds had made substantial gains in reading and especially mathematics since 1971. However, scores for both subjects peaked in 2012 and have been on a downward trend ever since, with a particularly large dip between 2020 and 2022. The story is less sanguine for 13-year-olds. They have made no gains since 1971 in reading and much smaller gains in math than their nine-year-old counterparts. Like those of their younger peers, though, 13-year-olds’ scores are down substantially from 2012, with no signs of an imminent rebound.²

This portends poorly for the ability of today’s students to achieve the American Dream, which is correlated with education. According to the Bureau of Labor Statistics, in 2023, American adults without a high school diploma had a median income of $708 per week, while those with a high school diploma earned $889. Those with a bachelor’s degree earned $1,493, and those with a professional degree earned $2,206.

Moreover, education is inversely related to unemployment. While the unemployment rate for Americans without a high school diploma was 5.6 percent, it was 3.9 percent for those with a high school diploma, 2.2 percent for those with a bachelor’s degree, and 1.2 percent for those with a professional degree.³ There are crucial questions about whether postsecondary degrees, in particular, actually reflect learned skills or simply serve as a signaling mecha nism, but these relationships need to be taken seri ously by anyone seeking to expand access to the American Dream.

Education also plays a foundational role in what has been termed the “success sequence”—earning a high school diploma, landing a full-time job, and marrying before having children, in that order. Based on their analysis of Bureau of Labor Statistics data, Wendy Wang of the Institute for Family Studies and Brad Wilcox of the American Enterprise Institute (AEI) and the University of Virginia reported in 2017 that only 3 percent of millennials who followed the success sequence were in poverty. By contrast, 53 percent of millennials who did not follow that pattern were impoverished. Even after controlling for demographic factors, childhood family income, and test scores, the association remained robust.⁴

Education isn’t everything, and fixing the American education system’s ills would not fix all the country’s problems overnight. But improving our schools is a key step toward ensuring more children achieve the American Dream.

The Problems in the American Education System

Our education system is generally thought of in three segments: early childhood, K–12, and higher education. It is worth looking at the problems with and some potential solutions for each. We’ll start with the problems.

Starting Off on the Wrong Foot: ECE

Good, reliable, and convenient ECE can be vital for children and parents. Working parents need child care, and children need to be prepared to start ele mentary school with essential skills and knowledge. There is also great value in providing a safe, nurtur ing place where children can explore and develop social skills. Unfortunately, for too many families, ECE is too expensive, impersonal, out of sync with their work schedules, or inconvenient.

Even if we set aside the considerable numbers of children involved in private or home-based ECE, nearly 1.4 million children age three to four were enrolled in public preschool programs across the nation in 2021. Another 600,000 three- and four-yearolds were enrolled in the federal Head Start program. All told, 14 percent of three-year-olds and 39 percent of four-year-olds participated in one of these pro grams. Local, state, and federal funding on ECE totals $8,129 per child in pre-K and $11,315 for those in Head Start.⁵

According to the Cost of Child Care calculator from the left-leaning Center for American Progress, childcare and ECE costs are unaffordable for many fami lies. In Missouri, for example, the Center for American Progress estimates the annual cost of childcare to be $17,388 per child for an infant classroom, $11,724 for a toddler classroom, $10,584 for a preschooler classroom, and $8,388 for home-based family childcare. These are the prices for just one child; a family with multiple children will face a larger burden.⁶

The median annual household income in Mis souri is $65,920, yielding estimated ECE and care costs between 12.7 and 26.4 percent of pretax income. According to the US Department of Health and Human Services, childcare is affordable when it takes up less than 7 percent of family income.⁷

To make matters worse, the very people complaining the most about the cost of ECE want to make it more expensive by imposing costly regulations and requirements on ECE providers. In 2021, the Biden administration made a $220 billion investment in ECE a key part of the Build Back Better proposal, declaring, “The President’s plan will also ensure that all publicly-funded preschool is high-quality, with low student-to-teacher ratios, high-quality and developmentally appropriate curriculum, and sup portive classroom environments that are inclusive for all students.”⁸

While grand new spending schemes might appeal at first glance, it’s worth taking a harder look. Take the seemingly innocuous term ” high-quality.” In almost all cases, ” high-quality” means ECE class rooms staffed by a teacher with a bachelor’s degree and classroom assistants with specific certifications in the field. This requirement would force millions of professionals to spend years in costly training programs, which would dramatically limit the supply of early childhood educators and drive tens of thousands of providers out of the field, thereby tremen dously increasing costs for families. Add in smaller classes, which increases the number of adults needed to staff ECE facilities, and the problem only gets more pronounced.

Staying on Course or Veering Off: K–12 Education

Consulting firm McKinsey & Company has been writing about the future of work for several years now, trying to anticipate the impact of automation, artificial intelligence, and remote work.⁹ You’ve seen the headlines: Self-driving trucks will put huge numbers of truck drivers out of work. Fast food establishments are replacing cashiers with robots. Tollbooths are automated. Homes can be 3D printed. And so on.

While the world rarely obeys anyone’s plans, it’s a pretty safe bet that some jobs will go away, others will change, and still others will emerge. The good news is that in coming decades, McKinsey foresees a rapid growth in high-wage jobs for those who can take advantage of them. The trick is that taking advantage of new opportunities requires workers to have the requisite skills.

What are those requisite skills? Well, they start with literacy and numeracy, cultural fluency in his tory and literature, familiarity with science and technology, and a working knowledge of the world. Jobs created by technological advances frequently entail creative, relational tasks.

It’s also expected that “soft skills” such as teamwork, communication, and diligence will become more important. Unfortunately, the entry-level jobs that teach these skills—such as working the counter at McDonald’s or shelving books at Barnes & Noble— are being automated, meaning that schools may need to do more to cultivate skills that previous generations acquired elsewhere.

The bottom line is that preparing today’s students for the next world of work isn’t about trying to blindly guess how technological, societal, and commercial trends will play out in decades to come. Rather, we should focus on equipping students with the knowledge, capabilities, and skills that will allow them to thrive as responsible and productive citizens in a rapidly evolving world.

It’s not clear whether our schools are equipped for this challenge. There are currently 14,000 pub lic school districts across the country with more than 100,000 public schools. The majority of these schools rely on residential assignments to decide which students attend what schools. This means that more affluent neighborhoods can create quasi-private public schools, because families need a high enough income to afford a house in such areas. As a result, low-income families can be stuck in lower-quality schools, while families of means can always opt out by enrolling their children in private schools.

Moreover, the COVID-19 pandemic showed us that even in what we usually consider “good” schools and districts, serious disconnects among the administration, parents, and teachers can exist. This came to the fore during the pandemic with issues like masking and quarantines, and these tensions quickly spilled over into debates over student discipline and how schools teach American history.

Also consider the millions of American students who are simply choosing not to attend classes any more. Chronic absenteeism, defined as a student missing 10 percent or more of a school year (18 days in a 180-day school year, or one day every other week), has long outlived the pandemic.

This has been starkly documented by AEI’s Nat Malkus, who reported in January 2024 that the rate of chronic absenteeism was over 25 percent of stu dents nationally, up by over 50 percent from 2019.¹⁰ The Thomas B. Fordham Institute’s Aaron Churchill reported that over half of all students in Ohio school districts like Cleveland, Columbus, Lorain, and Youngstown were chronically absent in 2022.¹¹ We can talk at length about choice, curricula, technology, and teaching, but none of this matters if the students aren’t at school.

A Capstone or a Millstone: Higher Education

Americans are steadily losing faith in higher educa tion. In 2023, Gallup reported that trust in higher education had plunged, with just 36 percent of Americans saying they had a “great deal” or “quite a lot” of confidence in higher education (and fewer than one in five Republicans saying so).¹² That was down from 48 percent in 2018 and 57 percent in 2015.¹³

In 2023, The Wall Street Journal and the Univer sity of Chicago’s NORC research group found that more than half of Americans thought a four-year college education was no longer worth the cost “because people often graduate without specific job skills and with a large amount of debt.” Barely 40 percent of respondents said that a four-year degree offered graduates “a better chance to get a good job and earn more income over their lifetime,” down from 53 percent in 2013.¹⁴

The negative sentiment was broad-based, with those age 18–34 (the prime college-age demographic) being the least likely to say a degree was worth it.¹⁵ The skepticism put an exclamation point on a decade-long trend in which the share of adults who valued a col lege degree had steadily declined.

To be fair, higher education today faces new and unfamiliar challenges. Higher education saw incredible growth in the 20th century. In 1910, just 3 percent of Americans age 18–24 were enrolled in higher education. Across the whole United States, 37,000 bachelor’s degrees were awarded that year.¹⁶ By 2020, the number was two million.¹⁷

But those numbers may have peaked. The peak of college enrollment occurred during the 2010–11 school year, when just over 18 million undergraduates were enrolled in an institution of higher education. By 2022, that number had dropped to 15.4 million, and it stood at 15.8 million in 2023, the most recent year for which data are available.¹⁸ Given that there will be just over 3.8 million projected high school graduates in the 2025–26 school year and only 3.6 million in 2034–35, institutions of higher education are going to have to compete for fewer students.¹⁹

And we haven’t mentioned cost. According to the Education Data Initiative, in the 60 years from 1963 to 2023, the annual tuition at a public four-year college increased 23 times over. Even adjusting for inflation, tuition grew seven times over. Between 2010 and 2022, tuition increased an average of 12 percent annually.

Declining student populations and increasing costs are not a recipe for success.

These challenges are concerning for the future of higher education. Universities play an important role in safeguarding, transmitting, and adding to the store of accumulated knowledge. Without serious change, academia could be in for some rough times.

Colleges have become accustomed to a world of high growth and high prestige. Their norms, rules, routines, expectations, and policies were shaped by a world in which ever-increasing numbers of people were willing to pay the ever-increasing cost of tuition. That tenuous state of affairs no longer exists, so for colleges, change is necessary.

Some Ways Forward

Now that we know where some of the problems lie, it’s time to turn to potential solutions.

Rethinking ECE

The push for transforming ECE into two new grades tacked onto the public school system is ultimately a ploy to replace informal, spontaneous, customderived, and tradition-sanctioned programs with the measures and metrics of government. It entails ushering the littlest of children out of the home and community and into more formalized systems.

Many families won’t feel comfortable with this type of impersonal ECE and would prefer providing childcare themselves. Indeed, according to a 2019 Gallup report, half of women with children under age 18 preferred the homemaker role to working outside the home, compared with 45 percent who were inclined toward the workforce. And staying at home with children was the top reason mothers cited in 2022 for changing jobs or leaving the workforce.

But even if mothers aren’t the ones providing the childcare, it’s clear that formalized ECE isn’t right for many children. Childcare provided by extended family and close relations has virtues that even compe tent bureaucracies inevitably lack—virtues like love, wisdom, values, and shared traditions—that are qualitatively different from what kids get even in a ter rific childcare setting. We should reject ECE “reform” attempts that would attenuate those bonds or push kids into a less personal setting.

While many parents rely on friends and family for childcare, plenty of others seek more formal early childhood care and education due to work schedules, a lack of informal options, practical considerations, or a desire for socialization. It is also true that a center-based environment is better for some students. For students from chaotic homes or in challenging living situations, getting them out of the house and into a center might be the best possible option.

This is sensible and appropriate. We should seek to support all these choices, and the guiding princi ples in doing so should be maximizing flexibility and diversity. Parents need flexible options because their work schedule might not fit neatly with the sched ule of their child’s preschool. Families might need half-day schedules or weekend availability.

Parents need diverse options because different children thrive in different environments and because different families want different things out of their child’s early learning environment. Some small children benefit from less structure, and others benefit from more. Some might need more help with early academic skills, while others need more socialization and play. Parents also need support in learning about different types of environments to choose the best option for their child.

The best way to promote flexible and diverse options is to create a fungible funding mechanism that can be used to pay for a variety of providers. Too often, though, that’s not how ECE funding works. While families can choose from many different providers, determining where they can use public funds can be complicated. Some programs, like the federal Child Care and Development Block Grant (budgeted at $10 billion a year), give low-income families the freedom to choose among providers, whereas other programs can be much more restrictive about which providers are eligible and how those providers can operate.

Given this reality, we see the most appealing solution is the creation of a state-based education savings account (ESA) for every child, funded with the dollars that federal and state governments would otherwise devote to that child’s ECE. The amount would vary based on the programs that child is eligible for.

Students who qualify for Head Start, for exam ple, could get around $10,000 per year put into their account, and that is just the federal funding. If they were also eligible for state-level programs, they could get even more. Parents would have the flexibility to spend those funds as they see fit on any approved provider or product.

We should also explore ways to permit ESA dol lars to be appropriately used by households that are providing their own childcare or education. After all, it’s a perverse set of affairs to subsidize out-of-home care but not offer assistance when a parent provides in-home care to their children. There needs to be a qualification process for families to participate in the state payment system.

Once they’re qualified, though, families seeking to care for or educate their children at home should be able to access funds for resources, instructional materials, or online services just like any more for malized care center. This would make it easier for parents seeking to stay home with their children and facilitate the home-based care that many families want and need.

The path that Virginia Governor Glenn Youngkin has taken is a good model for this type of ECE policy. Youngkin is launching digital wallets, capable of accepting public and private funding, which families can use to pay for ECE. These wallets, alongside an additional $200 million to support working families, aim to establish a flexible and robust ECE system, independent of traditional school districts.

Youngkin’s model includes more than just digital wallets. It also features provisions that reduce red tape and repurpose underused space on public col lege campuses, expanding the supply of high-quality options available to families. Additionally, the Vir ginia model would have a searchable database to help families find their preferred ECE option. In short, Youngkin’s plan would make it easier and more convenient for families to exercise choice in ECE.

There are other ways to provide early childhood care and education. ECE is important for children and their parents. Without reliable childcare, par ents’ economic opportunities are limited. Without a quality foundation for future schooling, students’ educational (and thus economic) opportunities are limited.

Can policies solve for both parts of the equation? They can. For those who are in the workforce, what would be better than high-quality, on-site childcare? There is enormous sense in helping parents access childcare and ECE that’s proximate to where they work. Imagine the time and headache saved when parents can drive to one place that’s the location of their work and their child’s preschool. Moreover, should a child get sick, get hurt, or have an emergency, it’s a lot easier for a parent to walk to an on-site provider than to have to leave work and scramble across town.

One way to incentivize on-site childcare and ECE is through the Fischer Tax Credit, a pilot program included in the 2017 Tax Cuts and Jobs Act. It pro vided employers tax incentives of up to 25 percent of wages if they offered paid family and medical leave to qualified low- and middle-income employees. Policymakers could apply the same principle to employers that provide on-site childcare and ECE.

Improving K–12 Education

Expanding the range of educational choices can help meet the needs of students while giving educators and communities more freedom to rethink school ing. Our support of educational choice shouldn’t be taken to mean that school choice “works” or that we’re prescribing it as a remedy to increase standardized test scores.

In fact, we think the term “school choice” is too narrow. Rather, we support empowering parents and educators in all kinds of ways. As a result, we use the term “educational choice” to refer to the broad array of choices that parents may exercise for their child or situation.

Some parents may demand other options due to disagreements with a school’s educational philosophy, its poor academic quality, inconvenient schedules, or unsafe environments. Even with some of these differences, parents often like their kids’ teachers and value schools as community anchors, and they may live where they do precisely because they like the local schools. Indeed, schools are often where children make lifelong friends and parents meet friends of their own. Calls to “end zip-code education,” which seem righteous and inspiring to the most gung ho advocates of school choice, can alienate normal parents because such calls ignore the real bonds that parents and children make as a result of their neighborhood schools.

It’s misleading to suggest that we must choose between empowering parents and supporting public education. Most parents don’t see it that way.

While families deserve the freedom to leave their assigned public school when it isn’t serving their children well, other powerful rationales for choice aren’t articulated frequently enough. Choice empowers parents and teachers to find the schools that best fit their values and talents, especially when they are frustrated by their local districts. And it allows them to vote with their feet—a more effective form of accountability than test-based, aggregated numerical metrics.

This suggests the value of full-spectrum choice. That means promoting choice within public school systems, enabling families to enroll across district lines, authorizing more charter schools, providing substantial vouchers to attend private schools, and making homeschooling more convenient.

After the COVID-19 pandemic, nearly half of parents reported that they were interested in hybrid schooling, in which students learn at home for two or three days and attend a more formal learning environment for the other two to three days.²⁰ During the pandemic, some families formed “learning pods,” in which a handful of parents jointly hired a tutor to teach their children at home. Now, they want resources to keep this arrangement going—not a voucher to enroll in a new school. In both cases, parents value flexibility, not the ability to leave one school for another.

There are also families that like their assigned public school but just want flexibility for one or two classes. A gifted math student, for example, might wish to opt out of the district’s math program and receive funds to enroll in an advanced alternative, such as a course at a local college, while still participating in all the other aspects of their school. This option would allow them to be in the marching band and to joke around with their classmates in the lunchroom while also taking precalculus—an opportunity that wouldn’t otherwise be available if the highest math course their school offers is Algebra II. Course choice proposals weave together a variety of existing and widely supported policies under a single funding umbrella that allows funds to flow easily to whichever part-time course offerings parents prefer.

In many of these cases, the optimal tool for this is the ESA, the policy we mentioned in the section on ECE. Optimally, an ESA should be available to the largest feasible number of families, funded on par with what that student would receive for their tra ditional public education. The funds should cover a wide variety of educational products and services, including not only private school tuition but also approved instruction materials, tutoring, enrichment courses, or learning tools. Accompanied by policies that accommodate learning pods and hybrid home schooling, ESAs provide a powerful opportunity for parents to make choices that will provide their children with better opportunities to learn.

A related policy to ESAs is a tax credit scholarship program, which allows individuals to donate funds to a scholarship-granting organization (SGO) in return for a reduced tax liability. Several states—including Alabama, Georgia, and Rhode Island²¹—have these programs on the books, and the federal government joined the fray in July 2025 with the passage of the One Big Beautiful Bill Act (OBBBA).²² OBBBA created a $1,700 tax credit for individuals donating money to SGOs that grant scholarships to K–12 students, creating the potential to promote full-spectrum choice at the federal level.

There are some caveats: States must opt in to the program, which could limit the number of students who receive these scholarships. Moreover, there remain substantial questions about the regulations that state leaders can place on the funds. But as written, the law would allow private school students to spend scholarship dollars on tuition, curricula, education therapies, and a host of other expenses. It also apparently allows public school students to access scholarship dollars for tutoring and other supplemental and enrichment activities.²³

Between state activities and the federal government’s intervention, the next decade promises to unlock massive increases in parental choice. As more families can access public dollars to finance their child’s education outside the traditional public school system, advocates will need to examine the thorny issues around zoning, land use, building codes, educator preparation, licensing, and the regulation of nonpublic schools to ensure there is sufficient supply to meet the increased demand.

Saving Higher Education

The focus on expanding access to higher education by building big universities and many local colleges made good sense in an era of scarcity, when things like academic books and credentialed instructors were in short supply. Today, though, getting students, instructors, and books together is no longer much of a challenge. Providing a relevant, appropriate education at a reasonable cost is a challenge.

The first step in solving the problems we’ve identified in higher education is to rethink some of the routines and norms that have developed on our nation’s college campuses. For example, rewarding professors based on their research production rather than their teaching quality is not a recipe for student success. Neither is basing instructional credit on the number of hours a student sits in a classroom rather than their ability to demonstrate mastery of a course’s content. Moreover, recent campus disruptions and protests have caused even supportive observers to question whether administrators still prioritize education at all.

Changing some of these practices could put us on the right track toward saving higher education. In a digital world in which online delivery of content and instruction has become a routine part of higher education, there’s an opportunity to rethink the way colleges go about their business. One way to do this is through competency-based programs, in which students earn credit based on what they can prove they’ve learned rather than how long they’ve sat in class.

Of course, higher education is about more than simply knowledge transmission. Participation in the social facets of a college can be a rewarding and formative experience. These things are great for students who value them; they just shouldn’t be compulsory, nor should they be an excuse to justify out-of-control costs. No one should imagine the goal is some kind of cyber campus where young people sit in their parents’ basements and stare at computer screens all day. But not every person wants the traditional college experience.

More than 40 percent of college students are enrolled in a community college. Still others are nontraditional students, attending classes part-time or going back to school later in their careers. These people are seeking training that will give them access to better jobs, courses with near-term labor market prospects, or classes that can be a springboard to another kind of institution. They need efficient and cost-effective options.

Whatever the specifics of the delivery mechanism, this calls for the creation of new institutions of higher education. We have had periods in our history when large numbers of new institutions were created out of frustration with existing options. The industrialists of the late 19th and early 20th centuries were tired of the ministerial teaching methods of the elite institutions of their day and founded new schools—many of which, like Stanford, the University of Chicago, Carnegie Mellon, and Vanderbilt, have become some of our most prestigious universities. What if the elites of our day, formed by the information rather than the industrial age, took a similar path?

Now, for this to happen, entrepreneurial university leaders will have to overcome a significant barrier: accreditation. For an institution of higher education to be eligible for federal funds (think Pell Grants and subsidized loans), it must be accredited. The problem is that accreditors are trade associations operated and funded by the colleges they oversee, which means they operate as something of a protected, publicly funded cartel. Lots of mediocre colleges keep their accreditation even though they overcharge and underperform.

Meanwhile, nontraditional entrants intent on providing something that will compete with traditional degrees find their way blocked. The federal government can change this by authorizing the creation of new accreditors not beholden to the same entrenched interest groups. This is particularly important when new educational models emerge, like competency-based education.

What could this look like? The Postsecondary Commission (PSC) offers one intriguing approach. PSC seeks to adapt the K–12 model of charter authorization to higher education by focusing more on outcomes than on compliance. PSC founder Stig Leschly says that the goal is to stop counting faculty and campus materials and instead judge colleges based on economic returns, transparency, account ability, and innovation.

To be accredited by PSC, institutions need to track and report short-term results such as graduation rates, year-to-year retention, and job placement. Over the longer term, they would need to track student labor market outcomes and calculate graduates’ earnings. Such a system rewards programs and institutions that focus on outcomes and student returns, which has the happy consequence of put ting pressure on the ideological stylings that have proliferated at institutions where such an emphasis has been largely absent.

Unfortunately, it seems that many higher education advocates today are pushing for student loan forgiveness more than rethinking how higher education might be delivered. It is worth taking a moment to highlight just how misguided this approach is.

Forgiving the loans of students who have already graduated does absolutely nothing to improve the efficiency or effectiveness of higher education for current or future students. In fact, if we enter a world in which we can reasonably expect higher education debt to be forgiven, why would schools have any incentive to try and control costs if those costs will ultimately be passed to the taxpayer? What’s worse, all the money that is spent forgiving the loans of college graduates, many of whom make high salaries, could be otherwise spent helping low-income students attend higher education through increasing Pell Grants or supporting institutions that serve disadvantaged students.

Like with K–12 education, OBBBA took steps to reform higher education, particularly the federal student loan program. Before the law’s passage, graduate students and the parents of undergrads could borrow an effectively unlimited amount of federally subsidized money, incentivizing colleges to continually increase tuition prices²⁴. To cut back on these subsidies, OBBBA capped graduate program lending for professional and nonprofessional programs²⁵. As AEI’s Preston Cooper has noted, OBBBA’s student loan provisions caused some universities to reduce tuition just months after the bill passed, suggest ing the reforms could deliver swift and durable cost reductions across higher education.²⁶

OBBBA also reformed the income-based repayment provisions of federal student loans. After the Biden administration used the Saving on a Valuable Education (SAVE) plan to offer backdoor loan forgiveness— SAVE made it so half of borrowers had a $0 monthly payment—OBBBA created the Repayment Assistance Plan, which requires payments that more closely track borrower incomes but waives interest accruals for those who make their required payments on time. This plan also reduces borrowers’ payments by $50 for every dependent child.

Finally, OBBBA inserted accountability provisions for higher education programs that do not generate a sufficient return on investment. If an undergraduate (or graduate) program fails to produce graduates with median earnings above those with a high school (or bachelor’s) degree in the state where the program is located, it will not be eligible for federal student loans.

Considering these measures collectively, Cooper predicts savings of more than $300 billion over the next decade. He argues that OBBBA “will also ameliorate some of the most vexing problems in the student loan system: excessive borrowing, runaway interest, and lavish funding for degree programs with a poor ROI [return on investment] for students”²⁷.

Going Forward

The American education system is a target-rich environment for improvement, from an inconvenient and expensive ECE system to a choice-starved K–12 landscape and a bloated higher education cartel. Policymakers can take concrete steps in each area to support both families and students.

States and institutions, some of which we have already highlighted, are doing just that. As we mentioned, Virginia is leading the way on ECE. Arkansas has taken serious steps in K–12.

The Literacy, Empowerment, Accountability, Readiness, Networking, and School Safety (LEARNS) Act, signed into law in 2023 by Arkansas Governor Sarah Huckabee Sanders, included a universal ESA pro gram that deposited an average of about $6,700 for the 2025–26 school year in flexible-use spending accounts.²⁸ These accounts allowed families to access a host of private providers. Beyond expanding educational choice, the LEARNS Act also invested heavily in rebooting the teaching profession by boosting the minimum salary for teachers to $50,000, raising salaries for most Arkansas teachers (disproportionately those in high-poverty school districts), granting 12 weeks of paid maternity leave to teachers, and earmarking funds for literacy coaches²⁹.

In higher education, it’s hard to overlook leaders like Mitch Daniels, the former governor of Indiana who became president of Purdue University. Daniels froze tuition for more than a decade and helped lead an institution that avoided the massive increase in costs seen by its peers—without losing a bit of quality or prestige. He is quoted as saying, “People think there’s some voodoo in here. There’s not.”³⁰ Leaders in West Lafayette, Indiana, simply took a harder look at budgets, tried to control health care costs, and encouraged economizing.

The reforms passed via the 2025 OBBBA address some of the issues at the federal level. With the new federal scholarship tax credit and the student loan system overhaul, OBBBA promises to expand educational choice and reduce college costs.

The need is there, and the path has been cleared. The question is whether more leaders will follow. If they do not, and more of our young people can’t achieve the American Dream, we’ll know where to point the finger.

Notes

1. Quoted in Charles M. Blow, “Fathers’ Sons and Brothers’ Keepers,” The New York Times , February 28, 2014, https://www.nytimes.com/2014/03/01/opinion/blow-fathers-sons-and-brothers-keepers.html.
2. Nation’s Report Card, “Explore NAEP Long-Term Trends in Reading and Mathematics,” 2023, https://www.nationsreportcard.gov/ltt/?age=13.
3. US Bureau of Labor Statistics, Earnings and Unemployment Rates by Educational Attainment, 2023, September 6, 2023, https://www.bls.gov/emp/chart-unemployment-earnings-education.htm.
4. Wendy Wang and Brad Wilcox, The Millennial Success Sequence: Marriage, Kids, and the “Success Sequence” Among Young Adults, American Enterprise Institute and Institute for Family Studies, June 14, 2017, 5, https://www.aei.org/research-products/working-paper/millennials-and-the-success-sequence-how-do-education-work-and-marriage-affect-poverty-and-financial-success-among-millennials/.
5. Allison H. Friedman-Krauss et al., The State of Preschool 2021 , Rutgers University, National Institute for Early Education Research, 2022, https://nieer.org/sites/default/files/2023-10/YB2021_Full_Report.pdf.
6. CostofChildCare.org, website, https://www.costofchildcare.org.
7. US Department of Health and Human Services, Administration for Children and Families, “Child Care and Development Fund (CCDF) Program,” Federal Register 80, no. 190 (September 30, 2016): 67438–595, https://www.govinfo.gov/content/pkg/FR-2016-09-30/pdf/2016-22986.pdf.
8. White House, “Fact Sheet: The American Families Plan,” press release, April 28, 2021, https://bidenwhitehouse.archives.gov/briefing-room/statements-releases/2021/04/28/fact-sheet-the-american-families-plan/.
9. Susan Lund et al., The Future of Work in America: People and Places, Today and Tomorrow, McKinsey & Company, July 11, 2019, https://www.mckinsey.com/featured-insights/future-of-work/the-future-of-work-in-america-people-and-places-today-and-tomorrow.
10. Nat Malkus, Long COVID for Public Schools: Chronic Absenteeism Before and After the Pandemic, American Enterprise Institute, January 31, 2024, https://www.aei.org/research-products/report/long-covid-for-public-schools-chronic-absenteeism-before-and-after-the-pandemic/.
11. Aaron Churchill, “Ohio’s Sluggish Pandemic Recovery in 2023 as Seen Through Six Charts,” Ohio Gadfly Daily, December 31, 2023, https://fordhaminstitute.org/ohio/commentary/ohios-sluggish-pandemic-recovery-2023-seen-through-six-charts.
12. Megan Brenan, “Americans’ Confidence in Higher Education Down Sharply,” Gallup, July 11, 2023, https://news.gallup.com/poll/508352/americans-confidence-higher-education-down-sharply.aspx.
13. Gallup, “Confidence in Institutions,” 2024, https://news.gallup.com/poll/1597/confidence-institutions.aspx.
14. Douglas Belkin, “Americans Are Losing Faith in College Education, WSJ-NORC Poll Finds,” The Wall Street Journal, March 31, 2023, https://www.wsj.com/articles/americans-are-losing-faith-in-college-education-wsj-norc-poll-finds-3a836ce1.
15. Belkin, “Americans Are Losing Faith in College Education, WSJ-NORC Poll Finds.”
16. Thomas D. Snyder, ed., 120 Years of American Education: A Statistical Portrait , US Department of Education, Office of Educational Research and Improvement, National Center for Education Statistics, January 1993, https://nces.ed.gov/pubs93/93442.pdf.
17. US Department of Education, Institute of Education Sciences, National Center for Education Statistics, “Table 322.10. Bachelor’s Degrees Conferred by Postsecondary Institutions, by Field of Study: Selected Years, 1970–71 Through 2019–20,” https://nces.ed.gov/programs/digest/d21/tables/dt21_322.10.asp.
18. US Department of Education, Institute of Education Sciences, National Center for Education Statistics, “Table 303.70. Total Undergraduate Fall Enrollment in Degree-Granting Postsecondary Institutions, by Attendance Status, Sex of Student, and Control and Level of Institution: Selected Years, 1970 Through 2023,” https://nces.ed.gov/programs/digest/d24/tables/dt24_303.70.asp.
19. Patrick Lane et al., Knocking at the College Door: Projections of High School Graduates , Western Interstate Commission for Higher Education, December 2024, 68, https://www.wiche.edu/wp-content/uploads/2024/12/2024-Knocking-at-the-College-Door-final.pdf.
20. EdChoice and Morning Consult, The Public, Parents, and K–12 Education: A National Polling Report , March 2024, https://eric.ed.gov/?q=source%3a%22EdChoice%22&ff1=subParents&id=ED652219.
21. EdChoice, “Tax-Credit Scholarships,” https://www.edchoice.org/school-choice/tax-credit-scholarship/.
22. One Big Beautiful Bill Act, Pub. L. No. 119-21.
23. CLA, “Scholarship Granting Organizations and the One Big Beautiful Bill Act,” August 13, 2025, https://www.claconnect.com/en/resources/blogs/nonprofits/scholarship-granting-organizations-and-the-one-big-beautiful-bill-act.
24. Sandra E. Black et al., “Plus or Minus? The Effect of Graduate School Loans on Access, Attainment, and Prices,” Working Paper No. 31291 (National Bureau of Economic Research, July 2, 2025), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4461641.
25. One Big Beautiful Bill Act, Pub. L. No. 119-21.
26. Preston Cooper, “The ‘Big, Beautiful Bill’ Is Already Bringing Down Tuition,” AEIdeas, October 2, 2025, https://www.aei.org/education/the-big-beautiful-bill-is-already-bringing-down-tuition/.
27. Preston Cooper, An Analysis of the One Big Beautiful Bill Act’s Effects on Student Loans, American Enterprise Institute, July 2025, 12, https://www.aei.org/research-products/report/an-analysis-of-the-one-big-beautiful-bill-acts-effect-on-student-loans/.
28. EdChoice, The ABCs of School Choice: The Comprehensive Guide to Every School Choice Program in America, 2026 Edition , December 11, 2025, 38, https://www.edchoice.org/wp-content/uploads/2025/01/2026-ABCs.pdf.
29. Literacy, Empowerment, Accountability, Readiness, Networking, and School Safety (LEARNS) Act, Act 237, Arkansas General Assembly, 94th sess. §§ 21, 35, 42 (2023).
30. Greg Toppo, “The Pros and Cons of Purdue’s 7-Year Freeze,” Inside Higher Ed, April 18, 2018, https://www.insidehighered.com/news/2018/04/19/tuition-freeze-raises-purdues-profile-what-cost.