College Guide

Blog

August 22, 2013 1:35 PM Can Obama’s New Proposals Make College Cheaper?

By Daniel Luzer

After much ado, the President Barack Obama, in his bus tour of college affordability, announced his plans to try to cut college costs.

The Obama plan, introduced today at SUNY Buffalo, would mean a lot more oversight into federal financial aid. Reforms would measure, and reward and punish, colleges based on their outcomes.

It’s a welcome policy proposal, and contains many elements the Washington Monthly has favored in its annual college rankings. But will actually reduce costs? Well it certainly could.

ObamaAtBuffalo

According to the New York Times the president introduced,

A plan to rate colleges before the 2015 school year based on measures like tuition, graduation rates, debt and earnings of graduates, and the percentage of lower-income students who attend. The ratings would compare colleges against their peer institutions. If the plan can win Congressional approval, the idea is to base federal financial aid to students attending the colleges partly on those rankings.
Mr. Obama hopes that starting in 2018, the ratings would be tied to financial aid, so that students at highly rated colleges might get larger federal grants and more affordable loans. But that would require new legislation.

This is the promised plan to “shake up” college funding. Shake up it certainly will. A press release from the White House is here. Under the proposed reforms

the Department of Education will develop a new ratings system to help students compare the value offered by colleges and encourage colleges to improve. These ratings will compare colleges with similar missions and identify colleges that do the most to help students from disadvantaged backgrounds as well as colleges that are improving their performance.

Colleges would get more if they have better outcomes, specifically graduation. They’ll also be rewarded for enrolling more low-income students.

The proposal also aims to establish a “Race to the Top for Higher Education” that will provide more federal money for states to make college cheaper and reward states for prioritizing outcomes, not just the number of students enrolled.

The reforms also propose to help students by “allowing all student borrowers to cap their federal student loan payments at 10 percent of their monthly income.”

For years both liberals and conservatives have complained that the federal financial aid system, designed to make college affordable for all Americans, costs more and more every year but fails to curtail the escalating cost of college. Some conservatives argue the financial aid system has actually led costs to increase. The truth of this is debatable, but the current system certainly doesn’t incentivize colleges to keep costs down.

Will this make college affordable, however? That’s hard to know. Because the Obama policy actually constitutes many different policy fixes, there are a lot of ways for this to go wrong. Colleges are likely to lobby pretty seriously against more oversight. Republicans might oppose it just because it’s an Obama policy, and because it introduces more regulations to a system many argue is already over regulated.

The real outcome will look a lot different from what Obama proposes and it’s possible some compromises will result in very different outcomes from those intended. Rewarding colleges for higher graduation rates but not also rewarding them for enrolling more Pell students would likely cause colleges just to enroll fewer poor students, who have more trouble getting through college. Enrolling all students in “pay as you earn” programs but not providing schools with more money through Pell grants could result in massive funding shortages, for instance. But there’s a lot to work with here, and the ideas are impressive.

We’ve allowed this situation to build up for far too long. It’s time to start having the serious conversation about how to really keep college costs down. The debt problem is only going to get worse otherwise.

Daniel Luzer is the news editor at Governing Magazine and former web editor of the Washington Monthly. Find him on Twitter: @Daniel_Luzer

Comments

(You may use HTML tags for style)

comments powered by Disqus