President Obama’s Biggest Higher Ed Misses

Blog Post
Nov. 1, 2012

With the presidential election fast approaching, we are taking a closer look at President Obama’s higher education record. Yesterday, we highlighted the administration’s most significant accomplishments in this area. Today, we are examining the administration’s most significant blunders and missed opportunities.

So without further ado, here are the Obama administration’s biggest higher ed misses:

1. Fighting to Keep the 3.4% Interest Rate: Eager to woo the youth vote and tap into America’s anxiety about student debt, the Obama administration launched an all-out “don’t double my rate” PR campaign earlier this year aimed at stopping Congress from allowing the temporary 3.4 percent fixed interest rate on federally-subsidized Stafford loans to revert to 6.8 percent. Not wanting to be on the wrong side of this popular issue during an election year, Republicans and Democrats lawmakers made national headlines for their bipartisan efforts to maintain the lower rate. Largely left out of this debate, however, was any acknowledgement of how small the benefits of this fix would be: after all, it only extended the 3.4 rate for another year, only applied to a subset of new borrowers (those who qualify for subsidized Stafford loans), and only would save eligible borrowers about $9 a month. And it cost the government $6 billion. With the Pell Grant program facing a multi-billion dollar funding cliff, it’s a shame that the administration spent so much political and financial capital on a one-year gimmick that provided neither meaningful relief to financially-distressed borrowers in the short term nor to the Pell Grant program over the long haul.

2. Sacrificing Non-Traditional Students in the Pell Grant Budget-Cutting Game: While the Obama administration admirably fought to increase and then maintain the maximum Pell Grant, it also agreed to reduce the program’s budget by making eligibility changes that disproportionately affected non-traditional, working, adult students. These eligibility changes included eliminating financial aid for students without a high school diploma who could show that they have an Ability to Benefit from college; retroactively limiting the number of semesters a student could receive Pell from 18 to 12, which could harm students who previously stopped out and are now looking to finish their degrees; and eliminating the year-round Pell which many community college students used to take summer courses. The administration has repeatedly said that community college students and adult students are critical to meeting the President’s 2020 completion goals, so it was disappointing to see the administration and Congress try to balance the Pell Grant program's budget on the backs of these students (while they found the political will to spend $6 billion on a one-year student loan interest rate freeze that won’t provide meaningful relief to borrowers).

3. Caving on Gainful Employment: While the Obama administration deserves much credit for its effort to rein in for-profit colleges, it also deserves to be blasted for caving in to political pressure by taking the teeth out of its final Gainful Employment rules. Responding to a massive lobbying campaign from the for-profit higher education industry, the administration watered down its proposed rules to such an extent that these regulations – which were meant to shut down programs that load students up with unmanageable levels of debt but provide inadequate training – make even the most poorly-performing for-profit college companies look pretty good. In July, a federal court judge struck down the final regulations on a technicality. We hope that if President Obama is reelected, administration officials will use the opportunity the judge has given them to rewrite the rules and put the teeth back into these important regulations.

4. Not Holding Traditional Colleges Accountable for Affordability and Outcomes: The Obama administration has made it easier for students to pay for college on the front end (Pell increases and FAFSA simplification) and repay their loans on the back end (Income-Based Repayment). What it hasn’t done is used its power to hold colleges accountable for reigning in college costs or improving student outcomes. President Obama caught our attention when he said he was putting colleges “on notice” in his State of the Union address, but his pledge to tie campus-based financial aid to whether colleges provide a “good value” has not materialized. Nor has the $1 billion Race to the Top for College Affordability and Completion. Nor has mandatory adoption of the financial aid shopping sheet or college scorecard. To be fair, these efforts require Congressional cooperation, which has not exactly been forthcoming in this highly-charged election year. But it also requires a willingness to take on the entrenched and powerful institutional interests of One Dupont Circle. If there’s a second term, we hope that the administration will up both the rhetoric and action to ensure that institutions have some “skin in the game” for college costs and outcomes.

5. Not Doing Enough to Reform the Back End of the Student Loan Program: While the Obama administration achieved its most significant higher education victory when it overhauled the front-end of the federal student loan system, it has not done nearly enough to fix the back end of the program – leaving more and more borrowers at the mercy of the Education Department’s all-too-often predatory student loan collection contractors. While administration officials have recently taken some limited steps to address the worst abuses, they have largely left the current system and its many dysfunctions in place. Collection companies are still being paid based on how much revenue they can extract from defaulted borrowers, and the Department’s lax system of oversight of collection agencies shows no real signs of improving. If there’s a second term, we hope the administration will make reforming the back-end of the system a much more urgent priority because, as of now, too many lives are being ruined as a result of the government’s harsh policies and inaction.

Now that we've had our say, what do you think? We'd love to hear your thoughts on the administration's hits and misses.