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A public policy blog from AEI
President Obama’s speech said nothing new about higher education. But like most law professors, he buried the real substance in the footnotes.
In last year’s State of the Union, the president had his “Stephen Colbert” moment on higher education: He put colleges and universities “on notice” that if they couldn’t keep tuition from going up, the amount of money they receive from the federal government would go down. Two days later, he proposed a College Scorecard that would help consumers avoid pricey schools with lackluster student outcomes. So far as I can tell, the “on notice” part went nowhere; for all intents and purposes, his proposal to tie campus-based aid eligibility to measures of affordability and value never made it off the dais. The Scorecard lives on.
This year, the president struck almost exactly the same tone. After citing the new money he has poured into financial aid and bemoaning the cost of college (while disregarding, for the umpteenth time, that the two are likely related), he told the audience:
Tonight, I ask Congress to change the Higher Education Act, so that affordability and value are included in determining which colleges receive certain types of federal aid. And tomorrow, my Administration will release a new “College Scorecard” that parents and students can use to compare schools based on a simple criteria: where you can get the most bang for your educational buck.
The ideas aren’t bad. After all, the federal government sinks more than $150 billion a year in student aid into colleges and universities while asking for very little in return. The institutions have responded by allowing the cost structures to balloon, raising tuition prices, and throwing a temper tantrum each time somebody tries to hold them accountable. And you could argue that the speech set the agenda for a frank discussion of student aid and accountability in the next reauthorization of the Higher Education Act, which is a good thing.
But it would have been nice to hear something new… Like, say, what was buried in the SOTU note, the “Plan for a Strong Middle Class”:
The President will call on Congress to consider value, affordability, and student outcomes in making determinations about which colleges and universities receive access to federal student aid, either by incorporating measures of value and affordability into the existing accreditation system; or by establishing a new, alternative system of accreditation that would provide pathways for higher education models and colleges to receive federal student aid based on performance and results.
The important phrases here: “alternative system of accreditation,” “higher education models,” and “performance and results.”
To the uninitiated, the accreditation system is the cartel-like structure that we use to determine access to federal aid. Accreditation is a form of “self-governance,” where colleges are subject to periodic review by representatives from other institutions. In other words, the regulators are the regulated. Not exactly a recipe for objectivity, accountability, and innovation. Accreditation is place- and process-based, involving things like site visits, faculty credentials, and even the number of volumes in the library, even though higher education is moving in the opposite direction with digital content and instruction more readily accessible than ever before. As a result, what’s supposed to act as a seal of approval does more to protect the existing, high-cost/high-price model of higher education than it does to protect consumers.
Put simply, accreditation is a barrier to entry, and barriers to entry stifle competition. Lack of competition distorts prices. That’s what makes the small phrases “alternative system,” “higher education models,” and “performance and results” intriguing. An alternative system—one that is not run by the very people who have incentive to stifle competitors—could let new models that look nothing like colleges, especially when it comes to their prices, into the market. And certifying new ventures on the basis of performance and results would move us away from the stilting, obsolete criteria accreditors use today.
In K-12 education, charter schooling has created an alternate path to the market, freeing entrepreneurs to provide education differently in exchange for results. The best charters have challenged the traditional model and our notions of what’s possible. In sectors like trucking, air travel, and telecom, it wasn’t government fiat or accountability policy that drove down prices, but the opening of the market to lower-priced competitors who could, you know, compete. Similar barriers to entry and regulatory capture have protected colleges and inflated prices for too long. It’s time to level the playing field.
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