Sunday, November 24, 2013

President Obama's Proposed College Rating Plan is a Non-Starter: Colleges Should Prepare for More Bureaucracy and Higher Costs

"When someone describes himself as a Christian businessman," my former law partner once observed, "I put my hand over my wallet."

I feel the same way when President Obama announces a new plan to help the middle class. When the President proposes to do something nice for average Americans, I get nervous.

And what is President Obama's latest proposal to help the middle class? According to a White House press release, President Obama wants to implement a college rating plan "to Make College More Affordable" and "A Better Bargain for the Middle Class."

That's right. Having mucked up health care, the President now plans to screw up higher education even more than it is already screwed up.

President Obama wants to help the
middle class. No, really!
Although the details aren't yet clear, the President's new system "will measure college performance through a new rating system so students and families have the information to select schools that provide the best value."  This new rating system, the White House assures us,  will "incentivize [sic]colleges to provide better value by improving performance, lowering costs, and investing in student access and success."

What's the President's ultimate goal? I think it is to shift federal aid money to certain favored institutions.  The press release says the Department of Education ultimately plans to give more federal student aid to colleges that provide the best value. According to the White House press release, students attending high-performing colleges would receive larger Pell Grants and more affordable student loans than students attending lower-ranked institutions.

So how will the President's latest grandiose scheme roll out?  This is my prediction:

1) First, DOE will vet its proposed college-rating regulations with higher education's powerful constituencies: the for-profit colleges;  elite schools like Harvard, Yale, and Stanford; and the Historically Black Colleges and Universities (HBCUs).  These groups will have their lobbyists and lawyers weigh in and make sure the new regulations won't hurt them. DOE will acquiesce to all these groups' demands.

2) Next, President Obama will sign executive orders and DOE will promulgate administrative regulations that will implement the President's new college-rating system.  All this will be accomplished without Congressional approval because Congress would never approve this hare-brained scheme.

3) Colleges will hire consultants and low-level bureaucrats to comply with the new rating system without changing the way they do business.  College costs will not go down. On the contrary, tuition will continue to rise faster than the rate of inflation just as it has for the last 30 years.

If President Obama and Secretary of Education Arne Duncan were serious about lowering college costs and providing a "better bargain for the middle class," they would kick the for-profit colleges out of the federal student aid program. The for-profits educate about 11 percent of all post-secondary students, but they get 25 percent of all the federal student aid money--about $35 billion a year.  They have highest student-loan default rates in the industry and low student-completion rates.

If the federal government shifted that $35 billion from the for-profit sector to community colleges, think what could be accomplished. Community colleges could educate the same groups of students now going to for-profit colleges for much less money.

But President Obama won't stand up to the for-profit college industry.  That would be too hard.  No, he would rather impose another level of bureaucratic reporting on colleges and universities that are already over-regulated.  That's President Obama's big plan to make college more affordable for the middle class.


White House Press Release. FACT SHEET on the President's Plan to Make College More Affordable: A Better Bargain for the Middle Class. August 22, 2013.

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