President Obama’s Proposal on Lowering College Costs!

Dear Commons Community,

President Obama yesterday gave his long-awaited proposal on lowering college costs.  No doubt that college costs and student debt are important issues that need attention but my opinion is that the President’s proposal will not resolve the problems.  The federal government has only modest control over the most prestigious private universities that tend to set the bar for a quality higher education.  They will continue to attract the best students regardless of any federal oversight.  For the past decade, the states have reduced funding to public higher education and have passed the costs on to students.  States have to decide whether they want a quality higher education system that provides access to the masses.  Those that do will fund their public colleges and universities;  those that don’t will not but do so at their own economic peril.  The idea that a federal program to review student employment outcomes looks good on paper or on a website but is difficult to maintain.  It is a bit like No Child Left Behind comes to our colleges.  NCLB has been a failure for K-12 and a similar approach will not work for higher education.   Lastly, the President’s proposal needs Congressional approval which is not likely.  The New York Times editorial today reviews several of these issues well (see text below).


New York Times Editorial


A Federal Prod to Lower College Costs


President Obama has been accused of promoting small-ball ideas in his second term, but the proposal he unveiled on Thursday is a big one: using sharp federal pressure to make college more affordable, potentially opening the gates of higher education to more families scared off by rising tuitions. While there are questions to be answered about his plan, his approach — tying federal student aid to the value of individual colleges — is a bold and important way to leverage the government’s power and get Washington off the sidelines.

The basic idea is to give more student aid to colleges that admit more disadvantaged students, that show progress in lowering costs and raising scholarships, and that shepherd students to earn a degree. To measure that performance, the government would create a rating system to compare similar colleges, a potentially useful consumer tool that would also serve to shame institutions that do not measure up.

The rating system would examine a college’s accessibility, looking at the percentage of students receiving Pell Grants; its affordability, tied to tuition, scholarships and financial aid; and its outcomes, based on graduation rates, advanced degrees and the salaries earned by graduates. Students would be required to show progress toward a degree before receiving continued aid, and schools would be rewarded for developing innovative programs to serve more students at lower costs. All student borrowers would have a cap on their loan payments of 10 percent of their monthly income, expanding the current system.

It’s increasingly clear that the higher education system cannot control costs or debt on its own. In 2010, graduates who took out loans left college owing an average of more than $26,000, the White House said. The actual price of private, nonprofit four-year colleges, after financial aid, has gone up an average of 4 percent a year for 20 years. For public institutions, which educate most students, the increase has been an average of 5 percent a year, with particularly sharp increases during the recession as states have cut back on their support. (Fortunately, those reductions are starting to be reversed.)

Many states let tuition jump even as they were cutting taxes. To provide incentives for states to do better, Mr. Obama proposed spending $1 billion on a race-to-the-top program that would reward states for keeping up their financing, and for demanding better performances from their colleges.

The proposal could have unfortunate unintended consequences. Would a needy student be punished who, for personal or travel reasons, has no choice but to attend a college that is low in the government rankings? The education secretary, Arne Duncan, said that such a student would still get some aid, but expressed only the hope that the incentive system would push the college up in the ratings.

The rating system could also become a blunt instrument, pushing universities into narrow molds. A liberal arts college should not be penalized simply because a history degree doesn’t lead to the same earnings as a computer science degree. As the Education Department develops the ratings criteria over the next two years, it also needs to be careful not to build perverse incentives into the system — for example, lowering education standards simply to raise graduation rates, which don’t show whether students are actually learning. (Universities long ago learned to game the ratings systems used by magazines.)

Many of these ideas — in particular, tying financial aid to performance — need Congressional approval, meaning instant opposition from Republicans who reject anything Mr. Obama wants. Already, several prominent Republicans were expressing predictable complaints about government meddling and even the slippery slope toward “federal price controls.” But Mr. Obama is absolutely right to make increased college access a high administration priority.

“We can’t price the middle class and everybody working to get into the middle class out of a college education,” he said Thursday at SUNY Buffalo. “We’re going to have to do things differently.”

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