Obama lags as states lead college reform

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Article Highlights

  • In reality, most federal aid goes to students, not colleges.

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  • The president’s #SOTU remarks on higher ed were disappointing largely for what he didn’t say.

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  • The federal government can do more for our college attendees by doing less, not more.

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President Barack Obama’s State of the Union remarks on higher education last night were modest in magnitude and tepid in ambition compared with promises in previous years. In 2009, for example, he suggested the U.S. would regain the planetary lead in the proportion of young adults with bachelor’s degrees.

I sensed either that the higher education establishment that supported him enthusiastically in the last election has indicated its opposition to major reform, or that other issues (immigration, gun control) are perceived to resonate better with the public or the Democratic Party base.

Obama had one idea that has been floated by other political leaders in a lackluster way: Tie federal college aid to the schools’ performance in controlling costs and offering value. There is some virtue to this proposal, but his remarks were vague and nonspecific.

In reality, most federal aid goes to students, not colleges. Is he going to reduce federal Pell grants if a student goes to expensive school A instead of cheaper school B? Is the availability of student loans going to be curtailed for attendance at certain schools? It seems nonsensical to tie the largest source of direct federal payments to colleges, research grants, to, say, levels of tuition increases.

The other idea mentioned explicitly, a college scoreboard, was promised last year but introduced only in a limited way that isn’t helpful to consumers. It supposedly will make students better informed by comparing the costs and value of different colleges.

States’ Role

The president’s remarks on higher education were disappointing largely for what he didn’t say. He didn’t even give lip service to the vital role of the states. Public higher education in the U.S. has mainly been a state responsibility, and the existence of 50 systems gives the U.S. variety and vitality rarely found elsewhere in the world.

Nor did he address innovations in the states. Republican Governors Rick Perry of Texas and Rick Scott of Florida are promoting a low-cost four-year degree ($10,000 total) and other consumer-friendly initiatives.

In his State of the Union speech last year, Obama called for publishing national data on the earnings of college graduates by school attended. Nothing has happened, however, and he was silent on it this year.

Virginia has done this on its own, so we now know, for example, that the recent graduates of George Mason University do much better on average when it comes to salaries than the graduates of, say, the College of William and Mary or Virginia Commonwealth University.

My own state of Ohio is one of several that increasingly finances state universities on the basis of outcomes, such as graduation rates, rather than inputs, such as students enrolled.

Georgia’s Hope Scholarship program for many years has promoted both greater access and rewards for meritorious high school performance. The federal government, by contrast, actually rewards poor performance and academic mediocrity by giving more Pell grant money to students who take five or six years to graduate, as opposed to those finishing in four. Obama has proposed nothing to change this.

Above all, experience suggests the president’s rhetoric far exceeds actual results.

His first goal in last year’s State of the Union then was to slow down the growth in college costs. The College Board reports that fall 2012 net tuition fees (tuition and fees after adjusting for financial aid) at four-year institutions rose far more in inflation-adjusted terms (6 percent for nonprofit private colleges and 11 percent for public universities) than the annual average for the past decade. In short, no progress has been made.

Loan Debt

A proposed $1 billion program to give states incentives to increase higher education funding was killed in the Democrat- controlled Senate. Other proposals for a universally used financial aid shopping list or a doubling of work-study awards didn’t go anywhere or passed in limited forms.

Two of Obama’s higher education proposals from last year were adopted. Congress agreed to maintain low interest rates on student loans. But why? To entice more students into greater student loan debt at a time when ever larger proportions of college graduates (48 percent by one measure) are taking jobs that historically have been the preserve of those with less than a college education? We already have 115,000 janitors with bachelor’s degrees.

The other 2012 goal that Obama met was to extend his American Opportunity Tax Credit. Yet liberal scholars deplore tuition tax credits because they mostly benefit the affluent and do little to improve access, while conservatives dislike them because they think the credits contribute to tuition inflation. Both sides are right.

What should the president have said this year?

“We need to encourage the states to continue the initiatives already under way to improve the quality and reduce the cost of higher education. We need to rethink and ultimately move away from our Byzantine and costly system of federal student financial aid that has not led to increased representation of lower-income Americans with college degrees, but has contributed to the cost explosion and growing student loan debt. The federal government can do more for our college attendees by doing less, not more.”

(Richard Vedder, a contributor to Bloomberg View, directs the Center for College Affordability and Productivity, teaches economics at Ohio University and is an adjunct scholar at the American Enterprise Institute. The opinions expressed are his own.)

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