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The first deflation should occur by capping or limiting the amount of funds available via the student loan program. This program should be reduced in a structured way by first deciding how much money will be placed at risk and then work backwards to a total volume of funds available for student loans. The second step of this program is to provide student loans on a competitive lowest cost to highest cost basis. By that, I mean that a student applying for a community college degree would get his student loan application processed first and the student applying to a state college next and lastly, students applying for out of state or very expensive college would be processed last or not at all. As part of that effort, limit student loans to US citizens and LEGAL immigrants who have already been legal residents for four years.

If a cap is placed on the total number of dollars available to the student loan program, then this will create a naturally competitive environment between colleges to contain their tuition rates.

The second deflation would come by way of the Pell Grant. This should be used only for US Citizens who are pursuing degrees that are of “hard” classes and can demonstrate through testing, their preparedness for college. Also, these would be given only to students pursuing professional degrees such as medical, engineering, computers, science and mathematics. No more Pell Grants for liberal arts, poly sci, business, education, etc. I would also require that those who receive Pell Grants be available to fill government jobs for 4 years if there is a need that is not being filled. Sort of a repayment program based upon the need to fill critical government jobs in exchange for the government paying for the degree.

The third deflation would be more of a structural change by allowing businesses to provide tuition assistance to their employees and take 100% of the cost as a business deduction without a cap or limit of the deduction. This will create a natural tendency to align the education programs with the needs of business. This will allow businesses to shop between college vendors and create a far more financially minded customer base. This will further push colleges to be competitive with each other by competing for the business customer.

It will also lay the ground work for moving the deduction to 105%. The additional 5% deduction would be offset by reductions spread across Pell Grants and Student loan risk program. The goal should be to move the population to seek employment and take advantage of their employers benefits.