Obama On Higher Education (Or: Do Colleges Need More Rankings?)

by Tracy R. Walsh

Yesterday, President Obama delivered the first of three speeches setting out his vision for higher education: an ambitious if not-entirely coherent list that includes new federal college rankings, outcomes-based funding, more MOOCs, and universal income-based student loan repayment. Jon Chait zooms out:

The most controversial element of Obama’s proposal is to create a metric measuring which colleges provide the best value. This has been a longtime goal of higher education reformers – the Washington Monthly, for instance, has published its own college rankings. Under Obama’s proposal, the U.S. Department of Education would craft such a measure by 2014 and then, after trying it out to ensure it works well enough, begin using it to prorate federal tuition subsidies by 2018. That is, students could get more generous loans for the most effective schools, and less-generous loans for the least effective. 2018 is far enough in the future that it might as well be “eventually,” but it matters in the sense that Obama is laying down a marker that a successor president can choose to hit if the first stage goes off as planned.

Kevin Drum adds, “The basic idea here is that endlessly increasing the amount of federal student aid just isn’t working anymore”:

At this point, all it does is encourage universities to raise their prices, which means that students are no better off than they were before. In fact, maybe worse, since they end up graduating with ever more gargantuan loans to pay off. Instead we need to reward universities that actually provide a good bang for the buck: a solid education and high graduation rates at a reasonable cost.

Scott Jaschik notes that the plan has “common elements” with the administration’s proposed regulations for for-profit schools:

An underlying goal both of those regulations and this plan is an attempt to judge colleges based on the “value” they provide to students and taxpayers, based on a mix of student outcomes. Gainful employment, aimed at vocational programs, focused exclusively on employment outcomes and debt; the president’s plan for colleges generally would look at a broader mix of institutional and student outcomes, including access and affordability as well as employment outcomes.

For his part, Josh Barro is enthusiastic:

We’ll need to see how the rating systems work when the Department of Education releases them next year. But this is the right direction to be moving in. As with health care, third-party payment causes the education sector to focus too little on cost, and the government needs to make sure that tax dollars are spent efficiently. If we want to make college affordable, the government needs to bend the cost curve, not just write bigger checks.

Daniel Luzer is cautiously optimistic, but notes that “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.

Tyler Cowen is more skeptical:

So far, I don’t get it. There seems to be plenty of information about colleges, and I doubt if a federal rating system would improve on those ratings already privately available. To the extent that federal system became focal, the incentives to game and scheme it would become massive, and how or whether to punish the gamers, if and when they are caught, would be a political decision. I don’t see that as healthy. … Should we be giving colleges an incentive to identify and deny admission to potential lower earners? Do we really want the federal government helping to crush humanities majors? And I don’t see that the kind of rating system under discussion here is measuring actual value added.

Meanwhile, Diane Ravitch slams the plan as “No Child Left Behind for higher education,” and Walter Hickey is outright cynical:

In the pursuit of fundamental change, President Obama will in all likelihood create just a new way for college to juke the stats. He shouldn’t be surprised. Colleges “adjusting” the stats in order to achieve a higher rating is a longstanding tradition in academia. In order to rank highly on the U.S. News and World Report college ranking — by and large the most trusted resource for high school seniors attempting to ascertain an arbitrary and decontextualized numerical value of a college — universities will do anything necessary to move the needle. … George Washington university lied about their freshmen class rankings, worth 6 percent of the score. Baylor paid their freshman to retake the SAT, worth 7.5 percent. The U.S. Naval Academy allegedly inflated their admissions numbers, worth 1.5 percent. Allegedly, the Ivy League often has discrepancies between the numbers they report to U.S. News and the number they report to the Federal Government. Clemson University was alleged to have manipulated a realm of stats in order to climb from 38th place to 22nd place in the ranking.

Borrowers in the class of 2013 started their post-collegiate lives $35,200 in debt and entered a job market where even biology and chemistry majors struggle to find work. In that context, Obama’s speech is welcome: After all, the first step is solving a problem is admitting you have one. But ranking systems and accountability-based funding have backfired at the K-12 level, and Obama’s plan does little to address two major problems: declining state aid to universities, and student-loan bankruptcy laws that encourage banks to lend students enormous amounts of money regardless of their ability to repay (and encourage schools to raise tuition accordingly). Given those realities, it’s not clear students have much to celebrate.