Everything you need to know about Obama’s higher ed plan

August 22, 2013

President Obama speaks at Morehouse commencement. (Mandel Ngan / AFP-Getty Images)

Today, while at SUNY Buffalo, President Obama will unveil a plan to contain college costs.  You can see the White House fact sheet here, but let's break down the big components, and how significant they actually are. Tl;Dr — this is a really big deal, and contains a lot of stuff the administration hasn't proposed before.

1. Spread good data

What they're doing

The administration will push for schools' "College Scorecards" to include information like:

• Access, such as percentage of students receiving Pell grants;

• Affordability, such as average tuition, scholarships, and loan debt; and

• Outcomes, such as graduation and transfer rates, graduate earnings, and advanced degrees of graduates.

What's old and what's new

A lot of this is rehashed. The percentage of students at a given school getting Pell Grants is already public information, as is the tuition, scholarship, loan debt, and graduation rates. The graduate earnings information isn't out yet, but schools are legally obligated to provide it and the Ed Department has been promising to include it for a while; the new plan says the data will be available this fall. The advanced degrees data exists (see, for example, Reed College bragging about all the future-PhDs it churns out) but isn't on the scorecard yet.

But what hasn't been emphasized before is the plan's push to make that data accessible through a variety of sources. "The Department of Education will enlist entrepreneurs and technology leaders with a 'Datapalooza' to catalyze new private-sector tools, services, and apps to help students evaluate and select colleges," the fact sheet promises. Whether that will actually catalyze new services students use will largely be up to those entrepreneurs and tech leaders so it's a bit hard to predict how significant that will be.

What this leaves undone

The proposal falls a great deal short of what the Student Right to Know Before You Go Act — sponsored by Sens. Ron Wyden (D-Ore.) and Marco Rubio (R-Fla.) — would do. That act would repeal the bizarre ban on federal collection of student-level college data and allow for much richer data analysis of schools than is currently possible. For example, it would link up individual transcripts with earnings data and make it possible to see earnings for students with given majors and GPAs from a given school.

2. Rank colleges based on that data

Stephen Colbert is skeptical of ratings. (Comedy Central)
Stephen Colbert is skeptical of ratings. (Comedy Central)

What they're doing

The marquee proposal in the plan is the creation of new rankings for schools based on the data in the college scorecard. "Before the 2015 school year, the Department of Education will develop a new ratings system to help students compare the value offered by colleges and encourage colleges to improve," the fact sheet explains. "These ratings will compare colleges with similar missions and identify colleges that do the most to help students from disadvantaged backgrounds as well as colleges that are improving their performance."

What's old and what's new

Suffice it to say, the federal government hasn't released rankings like this before. But it's worth noting that U.S. News isn't the only ranking game in town and there are alternative rankings that take criteria like those the administration is emphasizing into account. The Washington Monthly's rankings are based on three categories — social mobility (share of students getting Pell Grants, net price, graduation rates), research (faculty quality, spending on research, PhDs issued, number of undergrad students who go on to get PhDs, etc.), and national service (community service levels, ROTC/Peace Corps participation, etc.). So this kind of thing isn't totally unheard of.

What this leaves undone

As explained above, this doesn't include important granular data of the kind the Wyden-Rubio bill would mandate released. But it also doesn't include perhaps the most important data for any rankings system: data on whether students are actually learning.

As New America's Kevin Carey has often pointed out, schools' scores on two widely used assessments of student learning — the Collegiate Learning Assessment (CLA) and the National Survey of Student Engagement (NSSE) — are rarely made public, even though when they are, the results are frequently quite surprising. "The best Texas university by [the CLA] isn't the flagship, highly ranked UT-Austin campus," Carey writes. "The biggest gains are occurring at UT-San Antonio, UT-El Paso, and UT-Permian Basin, all of which are at the bottom of the U.S. News rankings."

Understandably, schools are terrified about that data getting out. But in a world where individual teachers' test scores are splayed across the pages of the Los Angeles Times, the fact that even the most basic college learning data is still private is a scandal.

3. Make those ratings matter


If you're a college and rank well, you'll be throwing around fliff like a sultan. (Brad Neely / Creased Comics)

What they're doing

This is where the data stuff gets really real. The fact sheet is a bit hazy on how exactly the administration will go about doing this, but its gearing up to tie federal student aid — including Pell Grants as well as federal student loans — to institutional quality, as measured by the new rankings system. In their words: "The Administration will seek legislation using this new rating system to transform the way federal aid is awarded to colleges once the ratings are well developed. Students attending high-performing colleges could receive larger Pell Grants and more affordable student loans."

What's old and what's new

This is basically all new stuff. Currently, as long as a school is accredited — which is almost preposterously easy, even for schools with paltry graduation rates — its students can get federal aid. That makes it easy for for-profit schools such as Kaplan University (owned by the Washington Post company) to get 86 percent of their revenue from the federal government, even though most for-profit college students don't graduate. Worse, federal aid at schools like that translates almost one-for-one into higher tuition, meaning it doesn't even make it more affordable for students. This plan promises to change that at least a little bit.

What this leaves undone

The plan is still vague, so it's unclear whether it will actually penalize drop-out factories or schools that don't educate poor students, or if it will just reward exceptional schools. It also is based on incomplete data, as the Obama plan doesn't mandate release of student-level records (as Wyden-Rubio would) or the release of college learning assessments.

One issue that the plan would have to address is the possibility of Pell Grant data itself affecting eligibility for Pell Grants. If the percentage of students getting Pell Grants is a data point in the rankings, and those with higher rankings get more Pell Grants, then a spiral effect could ensue with schools that — through fair or unfair practices — have racked up a large amount of Pell money just getting more and more. That said, the administration seems to have a plan to deal with that (see point 6).

4. Universalize income-based repayment


Rep. Jared Polis (D-Colo.) wants to make income-based repayment the norm. (Charles Dharapak / AP)

What they're doing

The plan expands income-based repayment programs to a wider range of college students. "The President has proposed allowing all student borrowers to cap their federal student loan payments at 10 percent of their monthly income," the fact sheet explains. "Currently, students who first borrowed before 2008 or have not borrowed since 2011 are not eligible for the President’s Pay As You Earn plan."

They also want to launch a campaign to get more people to use the programs: "Beginning this fall, the Department of Education will contact borrowers who have fallen behind on their student loan payments, undergraduate borrowers with higher-than-average debts, and borrowers in deferment or forbearance because of financial hardship or unemployment to ensure they have the information they need to choose the right repayment option for them."

What's old and what's new

About 2 million people, out of 37 million federal student loan borrowers, currently benefit from income-based repayment programs. That includes people currently ineligible for the specific Pay As You Earn plan. There are other programs — notably the program actually called Income-Based Repayment, but also Income-Sensitive Repayment and Income-Contingent Repayment — that you can use for older loans, though they require payments more like 15 percent (for Income-Based Repayment) or 20 percent (for Income-Contingent) than the 10 percent used in Pay As You Earn.

What it leaves undone

The plan doesn't go as far as Reps. Tom Petri (R-WI) and Jared Polis's (D-CO) ExCEL Act, which would make income-based repayment the norm for federal student loans. That plan eliminates loan forgiveness after 20 years of income-based payments (10 years for public service careers), which could provoke administration opposition, but it also caps the amount of interest borrowers will have to pay. It would be a much bigger change, especially for low-income students, than what the administration is proposing here.

5. Race to the Top for higher ed


Secretary of Education Arne Duncan is going to be overseeing so many races you guys. (AP)

What they're doing

"The President requested $1 billion in Race to the Top funding to spur state higher education reforms and reshape the federal-state partnership by ensuring that states maintain funding for public higher education," the fact sheet explains. "The Race to the Top competition will have a special focus on promoting paying for value as opposed to enrollment or just seat time."

What's old and what's new

This is pretty much stuff we already knew. The $1 billion was in the administration's fiscal year 2014 budget request.

What it leaves undone

Part of the administration's rationale for the plan is that it helps states avoid the kind of budget cuts that have been increasing public college tuition. "About three quarters of college students attend a community college or public university, and declining state funding has been the biggest reason for rising tuition at public institutions," as the fact sheet explains.

That's all well and good, but the plan doesn't solve the fundamental reason why states are cutting back: they have to balance budgets, and that means that they inevitably have to raise taxes or cut spending during recessions. States just can't be counted on to spend the same on higher education across the business cycle. A longer-term solution would be to put funding in the hands of the federal government, perhaps by having federally-funded endowments that fully finance public colleges and universities, or by implementing a state-federal revenue sharing program, like existed from the Nixon administration until the Reagan administration. Michael Lind at New America has proposed bringing that program back.

6. Reward colleges that enroll poor students


A chart showing how well schools serve poor students. (New America Foundation)

What they're doing

"The President will propose legislation to give colleges a bonus based upon the number of
Pell students they graduate," the fact sheet explains. "And the Administration will prevent the waste of Pell dollars by requiring colleges with high dropout rates to disburse student aid over the course of the semester as students face expenses, rather than in a lump sum at the beginning of the semester, so students who drop out do not receive Pell Grants for time they are not in school."

What's old and what's new

Obama included a boost in Pell Grant funding in his budget request, but the bonus idea is new. Particularly encouraging is his sensitivity to the fact that this could reward schools that don't do a good job of educating students but enroll a lot of Pell students. If the plan works, it would encourage schools to enroll more and more low-income students at a time they're working hard to do the opposite.

What this leaves undone

This wouldn't touch the big piles of federal money that go to middle- and upper-income students, such as the American Opportunity Tax Credit (which goes to families making up to $160,000), unsubsidized Stafford loans and PLUS loans. Those all provide an incentive for schools to enroll lots of upper-income students, who also make better development cases for the schools.

7. Tie aid to progress toward graduation


These guys are getting their aid cut off. (UNIVERSAL PHOTO)

What they're doing

The administration also wants to make aid accountable to progress at the student level, not just for colleges themselves. "To ensure students are making progress toward their degrees, the President will propose legislation strengthening academic progress requirements of student aid programs, such as requiring students to complete a certain percentage of their classes before receiving continued funding," the fact sheet explains.

What's old and what's new

The actual proposal here hasn't been made before by the president to my knowledge, but it's in keeping with the administration's focus on boosting graduation rates.

What this leaves undone

Mostly the plan just suffers from being vague at this point. Would funding be cut off entirely for students who aren't making enough progress toward graduation? Would it be tapered down? Would there be a hard limit on the number of years students could get aid? Depending on the details the proposal could be anything from a tepid reform to a major change in federal aid incentives.

8. Try out new models for college — and test them


Brian Caffo of the Johns Hopkins School of Public Health teaches an online statistics course. He teaches 15,000 students worldwide through his “massive open online course”, or MOOC, a concept that is catching fire in academia. (Doug Kapustin/FOR THE WASHINGTON POST)

What they're doing

The administration wants to experiment with "competency-based" models for college graduation, as pioneered by schools like Southern New Hampshire University. Under those models, students' graduation is based less on the number of courses they've taken than on their ability to demonstrate proficiency in the subject they're studying, somewhat akin to a GED for high school students.

To that end, Obama wants to expand the amount spent on trying out new approaches like that. "To demonstrate what works, President Obama has proposed a new $260 million First in the World fund to test and evaluate innovative approaches to higher education that yield dramatically better outcomes, and to develop new ways for colleges to demonstrate that they are helping their students learn. In addition, the Department of Labor is planning to grant an additional $500 million to community colleges and eligible four-year colleges and universities next year," the fact sheet explains. "A portion of these resources will be used to promote accelerated degree paths and credentials that would drive more high quality and affordable options for adult workers and students."

He also wants to reduce regulations that get in the way of experiments like this, by using Department of Education waivers to encourage more experiments. "Pilot opportunities could include enabling colleges to offer Pell grants to high school students taking college courses, allowing federal financial aid to be used to pay test fees when students seek academic credit for prior learning, and combining traditional and competency-based courses into a single program of study," the fact sheet explains.

They also want to try out more high tech approaches such as massive open online courses (MOOCs), noting that programs like Carnegie Mellon's online statistics course have been found in randomized studies to be as effective as in-person instruction.

What's old and what's new

The First in the World fund and the Labor Department funding were both in the 2014 budget request. The budget request wasn't as explicit that it was talking about competency-based agrees but that was certainly implied. The First in the World fund request called for, "A competition to stand up new quality validation systems that can identify appropriate competencies, assessments, and curricula for high-need fields." What's more, reports out of the Department of Education has previously suggested that it's keen on MOOCs.

The regulatory waiver proposal, however, appears to be new. Update: Wrong! Lindsay Tepe notes that there have been a few waivers along these lines before.

What this leaves undone

This is still basically a pilot phase proposal and there are major incentive problems keeping schools from adopting competency approaches. After all, if you only get three years of federal aid per student — as they're testing out early — when you could be getting four if they were doing a traditional route, why sacrifice that money? Eventually Obama might need to do something akin to his Pell Grant bonus and reward schools that get kids out faster using techniques like this.

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