President Obama Aims to "Shake Things Up" in Higher Ed

Blog Post
Aug. 23, 2013

When President Obama said he was going to “shake things up” in higher education just under a month ago, many of us didn’t really believe it, fatigued from lofty presidential promises that failed to go anywhere due to Congressional gridlock and the effective workings of the higher education lobby. Well, we were wrong. This week he revealed his bold new vision for higher education that will focus on three key areas: paying for performance, promoting innovation and competition, and ensuring that student debt remains affordable. The first priority—paying for performance—could be the most ambitious reform to higher education funding since the creation of federal financial aid.

Speaking to a large crowd of mostly college students at SUNY Buffalo, Obama explained, “Our first priority is aimed at providing better value for students -- making sure that families and taxpayers are getting what we pay for.  Today, I’m directing Arne Duncan, our Secretary of Education, to lead an effort to develop a new ratings system for America’s colleges before the 2015 college year.”

A ratings system based on college performance across the dimensions of access, affordability, and outcomes would be a welcome alternative to input- and prestige-focused rankings. In his speech, the president called out the much-derided (but much-used) US News and World Report rankings:

Right now, US News and World Report puts out their rankings [each year], and it encourages a lot of colleges to focus on ways to…game the numbers, and it actually rewards them, in some cases, for raising costs.  I think we should rate colleges based on opportunity.  Are they helping students from all kinds of backgrounds succeed, ...on outcomes, on their value to students and parents?

Even if the president had stopped with the creation of a new ratings system, this would have been big news and a huge step because it doesn’t require congressional approval, making it harder for the education lobby to thwart. But he didn’t stop there. He challenged the way that federal financial aid dollars are allocated by proposing that they be based on these outcomes-focused ratings, rather than enrollments (examples from the White House fact sheet include providing larger Pell grants or more affordable federal student loans to students at high-performing colleges).

Last year, when the president proposed tying just a small portion of federal campus-based financial aid dollars (i.e. Perkins loans, federal work-study) to “value” in his State of the Union, the higher education lobby cried foul—stating that the proposal was both: 1) Too small to matter; and 2) Too large a federal intrusion. Given that the president just proposed tying a much larger pot of money to outcomes—Title IV aid that is the lifeblood of most institutions of higher education—perhaps he agreed that his first attempt was too modest. But he clearly disagrees that this is too large a federal intrusion, and said as much in his speech:

And I’ve got to tell you ahead of time, these reforms won’t be popular with everybody, especially those who are making out just fine under the current system.  But my main concern is not with those institutions; my main concern is the students those institutions are there to serve…It is time to stop subsidizing schools that are not producing good results, and reward schools that deliver for American students and our future.

We couldn’t agree more. And we’re glad that our (low) expectations for the speech were mistaken. A rating system is coming. One that will be created after much careful consideration and participation with stakeholders and one that we hope is based on much better data that focus on access, affordability, and outcomes. Once this happens, students, families, and taxpayers will have a better understanding of the value of specific institutions, and Congress will no longer be able to ignore the good and bad actors the ratings reveal. Instead, lawmakers will know where money should be focused to get the most bang-for-the-constituent-buck.

Stay tuned in the coming days for more analysis of the White House proposal."