Now we know the culprit behind the student loans problem.  The next question would be what are we going to do about it?  Previous research and studies that have been done by the Association is nothing but to diagnose the root of the problems.  To avoid unproductive debate and unnecessary discussions, the Association used NCES Delta Cost published data.  Econometrics and applied statistics have been used to analyze this information and the results have been shared to the American public several months ago.

Using these data, AAEA is able to statistically show positive correlation among student loans; tuition & fees; total administrative cost; full-professor salaries and money spent on public services.  The results of this study, among other evidences pointed out that student loan increases move toward the same direction with education cost increases (positive correlation).  If this nation really wants to keep its future education system to be one of the best in the world, while keeping its price affordable to majority of its citizens, then players in the industry need to cooperate and make every possible efforts to keep the product reachable to its consumers (students) and not artificially affordable through federal student loans.  In the process to reach such goals everyone needs to sacrifice and take their fair share.  Right now, this is not happening.  In contrast, most of the burden has been shifted to the students and their family.

What are the strategic implications of such studies?

1. College tuition needs to be controlled and this has been done by the regulator through the CAR which will be implemented in 2015 academic year.  Several other components as explained below as well as SFT can be added later to expand the CAR or expanded CAR (eCAR).
2. In addition to the planned CAR four components, federal loans could be awarded based on the ratio of money spent on administrative (overhead) expenses and the amount of net revenue generated only from tuition and fees, excluding any other revenues which may be generated from contributions or donations.  This could be the fifth component of the CAR.
3. The six component of the expanded CAR (eCAR) could include the ratio of total administrative expenses to total liabilities in addition to liquidity and solvency ratios.
4. Include the ratio of total administrative expenses to total student drop-out from the program (fall-to-spring or fall-to-fall semester).
5. Includes the ratio of total administrative expenses to total students graduated from the institution within normal completion time plus maximum two extra semesters.
6. The same ratio calculations can be applied on full-professor salary as well.
7. To make sure that every player in the industry will comply with the rule, the country can establish ESCC (Education Standard and Compliance Commission) which has two branches.  Each division concentrates on different areas i.e., (1) audit & financial accountability and (2). Program assessment & accountability. This new structure will energize current regional accreditation entities such as SACS, HLC and other regional accreditation agencies so that they can do a better job.