A Closer Look at President Obama’s Higher-Ed Plan

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As I wrote last week on National Review Online, President Obama’s higher education reform agenda  acknowledges that decades of increasing government subsidies aren’t lowering the price of college. In fact, they have pushed prices to astronomical levels. This theory is known as the Bennett Hypothesis, after former Secretary of Education (and my boss) Bill Bennett, who first noticed the link in the 1980s. For 30 years, Bennett and others have been criticized by many liberals for noticing what President Obama explicitly stated yesterday: “It is time to stop subsidizing schools that are not producing good results, and reward schools that deliver for American students and our future.”

Obama’s tacit acknowledgment of the failures of federal money in higher education is quietly a watershed moment for higher ed reform: the Bennett Hypothesis has become a mainstream policy idea. Left of center writers like Slate’s Matt Yglesias, Derek Thompson at the Atlantic, and Rolling Stone’s Matt Taibbi have all recently written pieces acknowledging that the federal government has been mightily complicit in the rising costs of college.

But Obama’s political philosophy views government spending on public goods as an essential instrument for middle-class prosperity. So he stopped short of calling for a diminution of federal subsidies. He instead seems to believe that shifting federal money to the best performing schools will incentivize good behavior.

The centerpiece of his agenda is a new federal system of ranking colleges, which will rate schools according to access, affordability, and outcomes. Such a move upsets the professoriate and the university apparatchik class, who for years have been insulated from being accountable for their performance. Former Harvard President Derek Bok speculated, “I have to be somewhat apprehensive when any force as powerful as the federal government undertakes the task.” Rudy Fitchbaum, President of the American Association of University Professors, seemed to sneer at the fact that colleges ought to compete with one another: “I think that colleges will be looking at ratings – looking at who’s getting the highest rating – and that will begin to drive [where they invest] their money.” And Inside Higher Ed quoted Aaron Bady, a doctoral student in African literature at the University of California at Berkeley and a higher education blogger: “The idea that ranking universities according to new metrics will do anything to lower costs seems delusional; a lack of information is simply not the problem.”

If the President’s calls for accountability are already this unpopular among the higher education establishment, then credit must be given to him for trying to set the tone of reform and accountability. But in practice, I’m not optimistic about the prospect of a federal rankings system. First, the best schools will always be the ones with the students from the best academic and socio-economic backgrounds. This means that the rankings will always be preponderantly determined by economic inputs, not outputs. Secondly, there are so many differences in variables like size, mission, and resources among the nation’s thousands of higher education institutions that it is hard to rank them appropriately. Hall of Fame Pitcher Cy Young won 511 games, but played in an era when teams had three starting pitchers, and each pitcher was expected to throw a complete game every time out. Does that make Cy Young a “better” pitcher than Sandy Koufax, or Randy Johnson? Lastly, trying federal money to graduates’ salary outcomes neglects the importance of the liberal arts and social sciences. A school might turn out  a lot of smart, employed liberal arts grads (like Hillsdale or Amherst), but be eligible for less federal money. Cynically, we also might see a heavy emphasis on ranking schools by outcomes as a backdoor way of hurting for-profit colleges and universities (which deservedly ought to be criticized, but not to the exclusion of non-profits).

The shortcomings of the rankings system in turn exposes the shortcomings of the President’s plan for Pell Grants. He proposes financial incentives for schools which enroll large numbers of Pell Grant students, but Pell Grant students are the ones most vulnerable to never completing a degree. If the new federal college rankings system is built upon successful outcomes, what incentives does a school have to enroll these students? For them, the question becomes one of short-term (capturing Pell Grant dollars) vs. long-term (an attractive ranking) interests. This totally plays to the disadvantage of community colleges, which have high attrition rates and depend heavily on public money, but are still essential to educating many Americans.

Obama also called on states to stop cutting funding for higher education. On this point he’s correct; state schools have seen a decline in public money. But his calls for maintaining higher education budgets need to be accompanied by calls for responsible stewardship of money that public schools already get. While the University of California turns away thousands of students amidst a budget crunch, it still finds $194,000 to retain a vice-chancellor for diversity, plus a staff of underlings, which pushes the total line item to over $1 million.

Additionally, the President proposed a mish-mash of higher education reform ideas that most reformers can get behind. MOOCs, competency-based education, and three-year B.A.s all made it into the conversation. All of these measures in some way threaten the bottom line for many schools, but make perfect sense in view of lowering costs. Three cheers here.

Many of Obama’s proposals have to be considered in view of the Higher Education Reauthorization Act that Congress will take up sometime next year. While he can institute many of his reforms on his own, like the rankings system, Congress will have to take a hard look at how America keeps paying for school, and what we’re getting for our money. If the recent fight over student loans is any indication, it will be a contentious process. Obama’s plans might rely too heavily on big-government schemes to produce accountability, but kudos for him for setting a reformist tone that observers of higher education can get behind.

(Photo: President Obama discusses higher-ed. Credit: AP/Politico.)


  • David Wilezol

    David Wilezol is the co-author of "Is College Worth It?" with former U.S. Secretary of Education William J. Bennett.

2 thoughts on “A Closer Look at President Obama’s Higher-Ed Plan

  1. The Obama plan will result in many more middle class jobs for college graduates–jobs to implement his cost-cutting program. Thousands will now be employed to determine “best values,” check on the income of graduates and otherwise bring costs under control. Needless to say, costs will not decline and so more people will have to be hired and the the process will be repeated over and over until everyone one in America has a decent middle class job.
    What is so difficult to understand?

  2. Among many other problems with this proposal is the fact that colleges and universities are not monoliths. Some schools that wouldn’t do well under the ratings plan will have oases of educational excellence but they’ll be dragged down by the rest of the university’s low standards. The reverse is also true. This is a very clumsy instrument.

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