Obama eyes fix to ‘crisis’ of college costs

Updated

Over the last 30 years, the typical household income for an American family has gone up about 16%. Over that same period of time, the average tuition at a public four-year college has gone up by more than 250%. This is obviously unsustainable, and given the importance of a college degree in the workforce, it creates a barrier that will keep millions from entering the middle class.

President Obama, who already approved sweeping student-loan reforms in his first term, has some ideas on how to address this challenge in his second term.

“We’ve got a crisis in terms of college affordability and student debt,” Obama told students at the State University of New York at Buffalo, one of the four public schools catering to middle-class students at which he was set to speak in coming days. He asserted that the government has spent more money on prisons than colleges in recent decades, suggesting that the government’s priorities have been misdirected.

The centerpiece of Obama’s education plans was a proposed new ratings system that would allow prospective students to evaluate which schools provide the best educational bang for the buck. Congress, in turn, could then tie student aid to value, allowing students to maximize aid at schools that provide the best value. The White House said it hoped to publish these new ratings before the 2015 school year; Education Secretary Arne Duncan, who traveled with the president on Thursday, said the administration would “take our time” on the ratings.

Obama’s proposals also called for rewarding schools that maximize the use of technology in education, as well as easing the burden of student loans for recent graduates by capping loan payments at 10 percent of their income.

If I didn’t know better, I might think the editors of the Washington Monthly planned Obama’s speech as part of an elaborate scheme to promote the new edition of their college guide, which has repeatedly stressed many of the same ideas the president outlined today.

Regardless, there’s a lot to like in Obama’s plan. The White House vision involves using federal regulations to rate colleges on a variety of measures – tuition, graduation rates, debt and earnings of graduates, and the percentage of lower-income students who attend – and then using the results to help dictate federal financial aid.

It is, as Matt Yglesias explained, a proposal to “radically subvert” the usual model “on a conceptual level.”

The president has decided, essentially, that the old bargain has failed. The liberal idea of pumping more federal dollars into the system – something his administration has done enthusiastically – has failed to deliver affordability. More controversially, although America’s elite universities are the envy of the world, the White House views the system of open choice and competition as having essentially failed the marginal college student. Far too many students enroll, take on debt, and fail to graduate, while far too many schools face weak-to-nonexistent incentives to think about how to become more cost-effective.

Jon Chait added:

Obama’s basic goal is to change the culture of higher education by prodding it from every direction. The government would give students more options in the schools available to them and for getting the best terms on their loans – low-income students, in particular, have far less information and make far worse decisions about applying to and paying for college. The federal government would encourage more innovation by colleges themselves, to prod them into find more cost-effective models. Ideally, these reforms would feed into each other, with colleges facing pressure from better-informed consumers and competition from peers.

To that end, the White House has some fairly ambitious thoughts on rewriting the rules that make college such a back-breaking expense. But there’s a nagging question that I suspect is on your mind: Obama can come up with all kinds of great ideas, but so long as Republican lawmakers prevent Congress from functioning as en effective legislative entity, what difference does it make?

There are a couple of angles to keep in mind. The first is, yes, congressional Republicans will almost certainly balk at the president’s plans. I’ve seen some suggestions today that GOP lawmakers are concerned about tuition inflation, too, so this might be an area where bipartisan work is possible, but I highly doubt – vast new federal regulations are an integral element of Obama’s proposals. If given a choice between fixing a serious national problem and satisfying an ideological goal, Republicans will almost certainly prefer the latter 10 times out 10.

But the second is Congress is only needed for about half of the president’s plan. Ezra Klein had a good piece on this:

What’s interesting about this plan, though, is that only half of it needs congressional approval – and it’s the half that comes later, and that can be done quicker. The Obama administration doesn’t need congressional approval to build the performance measures. That’s something the Department of Education can do on its own.

The fact sheet is pretty clear on this: “Before the 2015 school year, the Department of Education will develop a new ratings system to help students compare the value offered by colleges and encourage colleges to improve.” Look ma! No Congress!

Linking the new ratings system to financial aid does require congressional action. But it doesn’t come till much later.

It is, in other words, a major policy focus worth watching.

Student Loans and Higher Education

Obama eyes fix to 'crisis' of college costs

Updated