Obama needs push to shake up higher education

Whitehouse.gov

US President Barack Obama speaks to students gathered at Knox College on July 24, 2013

Article Highlights

  • As students get ready to go to college this month, let me suggest ways to “shake up the system” and “tackle rising costs.”

    Tweet This

  • Any efficient solution to the explosion in college tuition and fees must either damp demand or increase supply.

    Tweet This

  • The single largest obstacle is the dysfunctional accrediting system, which is rife with conflicts of interest and gives consumers little information.

    Tweet This

President Barack Obama keeps declaring war on rising college costs. In a speech at Knox College last month, he vowed to unveil an “aggressive strategy to shake up the system, tackle rising costs and improve value.” He said something similar in his 2012 State of the Union address, so I’m a little skeptical that much will happen.

As students get ready to go to college this month, let me suggest ways to “shake up the system” and “tackle rising costs.” In doing so, I would point out that two things lead to higher prices: rising demand and falling supply. Any efficient solution to the explosion in college tuition and fees must either damp demand or increase supply. With that in mind, here is a five-point federal-action plan.

First, scale back federal student loans and related government programs. The increased demand for higher education in recent decades partly results from the explosive growth of these programs. They were originally intended to help poor people gain access to college, yet they have probably had the opposite effect, pushing up the sticker prices of colleges substantially. The easy money has helped fuel an academic arms race that provides amenities such as climbing walls and luxury student centers that entice kids from higher-income families but scare poor students away. The proportion of recent college graduates from low-income backgrounds has fallen since the federal student-assistance programs became large.

Cut out loans to affluent parents. Eliminate the federal tuition tax credit. Put stricter time limits on student borrowing. Ultimately, the goal should be for the federal government to get out of the student-loan business altogether.

Colleges’ Duty

Second, require colleges participating in federal student-assistance programs to share some costs associated with high loan-default rates. Some colleges admit students they know have low probability of academic success and into majors that employers aren’t interested in. One-third of loans are either delinquent or in default. This means despair for borrowers and burdens on taxpayers but revenue for colleges accepting many marginal students. If they had to cover some of the cost of defaults, schools would be encouraged to accept fewer students, reducing demand and the ability to raise tuition.

Third, substantially improve consumer information. Lots of students enter college based on bad advice, often from guidance counselors and school marketing efforts. Politicians make things worse with a “college for all” mantra, implying life will be a failure without a college degree to provide the ticket to the moderately affluent middle class.

To counteract the propaganda, a bill proposed by U.S. Senators Ron Wyden, an Oregon Democrat, and Marco Rubio, the Florida Republican, would mandate the disclosure of information regarding post-graduation earnings of students by college and major. Polls show that college students’ single biggest goal is achieving financial success. With more information, they and their parents might be more realistic. They can see how many graduates are in McJobs, becoming sales clerks, bartenders, janitors -- the employment class they were promised they could escape.

Fourth, develop new ways to demonstrate potential workplace competence. Colleges are screening devices; a diploma is meant to convey that a person who holds a degree is likely to be smarter, more knowledgeable, more disciplined and even more honest on average than others of the same age. But there are other, cheaper ways of providing that function. Why doesn’t someone (College Board? Educational Testing Service? Google Inc.?) develop a national college equivalency examination that tests for the critical learning skills, literacy and basic knowledge that all college graduates are expected to have?

Degree Options

There are also less expensive ways of packaging courses into degrees. Instead of taking 40 courses at a single university and calling the whole package a degree, allow students to take courses from perhaps eight to 10 providers, some taught in traditional ways and others online, and have course aggregators (another name for “university”) evaluate credits and confer degrees. If students are taking the college exam at the end of their schooling, the worries that online classes will dumb down education are greatly reduced.

Fifth, expand supply by eliminating barriers to entry. The previous ideas largely lower prices by dampening demand for traditional degrees. But there are barriers to entry that lower competition and thus supply.

The single largest obstacle is the dysfunctional accrediting system, which is rife with conflicts of interest and gives consumers little information. The crude nature of its assessments (colleges either are or aren’t accredited, with not much in between) discourages new providers. Arguably, we should eliminate accreditation as such, with the government simply defunding programs that fail to meet minimum standards (such as institutions with student-loan-default rates greater than graduation rates).

The list above isn’t exhaustive. But it suggests measures that collectively might reduce the college-cost gap -- a widening divide that is worsening national inequality and is unsustainable in the long run.

Also Visit
AEIdeas Blog The American Magazine

What's new on AEI

In year four of Dodd-Frank, over-regulation is getting old
image Halbig v. Burwell: A stunning rebuke of a lawless and reckless administration
image Beware all the retirement 'crisis' reports
image Cut people or change how they're paid
AEI on Facebook
Events Calendar
  • 21
    MON
  • 22
    TUE
  • 23
    WED
  • 24
    THU
  • 25
    FRI
Monday, July 21, 2014 | 9:15 a.m. – 11:30 a.m.
Closing the gaps in health outcomes: Alternative paths forward

Please join us for a broader exploration of targeted interventions that provide real promise for reducing health disparities, limiting or delaying the onset of chronic health conditions, and improving the performance of the US health care system.

Monday, July 21, 2014 | 4:00 p.m. – 5:30 p.m.
Comprehending comprehensive universities

Join us for a panel discussion that seeks to comprehend the comprehensives and to determine the role these schools play in the nation’s college completion agenda.

Tuesday, July 22, 2014 | 8:50 a.m. – 12:00 p.m.
Who governs the Internet? A conversation on securing the multistakeholder process

Please join AEI’s Center for Internet, Communications, and Technology Policy for a conference to address key steps we can take, as members of the global community, to maintain a free Internet.

Thursday, July 24, 2014 | 9:00 a.m. – 10:00 a.m.
Expanding opportunity in America: A conversation with House Budget Committee Chairman Paul Ryan

Please join us as House Budget Committee Chairman Paul Ryan (R-WI) unveils a new set of policy reforms aimed at reducing poverty and increasing upward mobility throughout America.

Event Registration is Closed
Thursday, July 24, 2014 | 6:00 p.m. – 7:15 p.m.
Is it time to end the Export-Import Bank?

We welcome you to join us at AEI as POLITICO’s Ben White moderates a lively debate between Tim Carney, one of the bank’s fiercest critics, and Tony Fratto, one of the agency’s staunchest defenders.

No events scheduled this day.
No events scheduled today.
No events scheduled this day.
No events scheduled this day.
No events scheduled this day.