President Obama unveiled a plan on Thursday that would, for the first time, tie federal student aid to a new rating system for colleges and universities. While the president's message that higher education costs should be reined in was simple enough, the sweeping proposal is anything but.
Beginning in 2018, the administration wants colleges and universities that depend on federal aid to disclose exactly what their tuition and fees cover, how many low-income students a school admits, graduation rates, how much debt students graduate with and whether they find good-paying jobs after graduation.
Based on this information, the U.S. Department of Education would then rate schools. The higher a school's rating, the more federal aid a student at that school would receive. Students at poorly rated schools would get less.
"This raises lots of questions," says Sandy Baum, an economist at the Urban Institute and a fellow at George Washington University. "Do you mean earnings right after you graduate," asks Baum — or seven years later?
"So really, we're going to have good data on how much students earn seven years later? That's what you need," Baum says. "The question about how much students borrow — are you including students who dropped out or only those who graduate? It's very difficult to do this right."
President Obama's carrot-and-stick approach, though, is the result of a growing frustration not just about rising costs but about the value of a college education and whether students are getting their money's worth. So, there's a certain logic in shifting $150 billion in annual student aid to higher-rated schools. The problem is that many of the things the administration wants to measure are hard to measure.
"We support data analysis and we support transparency, but it is hard to imagine that you can develop a rating or a ranking of institutions on the basis of an extensive amount of data, and right now the data available [are] seriously limited," says Molly Broad, president of the American Council on Education, which lobbies Congress on behalf of higher education.
What higher education is more likely to support, Broad says, is the president's push for more experimentation. Many institutions have just begun to adopt online learning as a cheaper way to deliver instruction. Three-year degree programs are rare. The administration wants to earmark at least $500 million for innovative programs and new approaches to instruction.
So, yes, Broad says, some of the president's ideas have merit. Now, she says, the people the president really needs to persuade are lawmakers in Washington.
"The administration will not be able to implement this without action by the Congress," she says.
The president says his proposal should appeal to both Democrats and Republicans, but already Republican leaders sound skeptical.
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