The Obameter

Reduce federal aid to colleges that don't keep costs down

"I've told Congress, let's steer federal aid to schools that are doing a good job keeping tuition affordable and provide good value and serve their students well. If you're getting federal student loans -- colleges and universities -- you shouldn't just be loading up a whole bunch of debt on your students. You've got to figure out how are you working to make sure that they can afford their education."


Updates

No federal aid policy for schools that spend more

President Barack Obama said at a 2012 campaign rally in Las Vegas that federal aid should go to schools working to keep tuition affordable. He doubled down on this during his 2013 State of the Union address and later that year at a rally in Buffalo, N.Y.

When we last checked on this promise, Obama was attempting to implement his college rating system. We noted, however, that this promise relied on the renewal of the Higher Education Act, with a provision added to account for this ranking system.

The Higher Education Act expired at the end of 2013, as its renewal did not move past initial hearings. The last time this happened, it took five years to reauthorize the act after it expired.

The Obama administration did create Gainful Employment regulations for career colleges to ensure students graduating from these institutions were making enough money to repay their student loans. If a graduate from one of these programs is paying more than 20 percent of their discretionary income towards student loans, the regulations state that the institution has not adequately prepared them for gainful employment. Programs that don't qualify risk losing their federal aid.  While this is a step in the right direction, it only applies to for-profit career training programs, not public and private institutions.

Obama's college scorecard was created this year, which takes into account college costs when ranking schools. But there's no regulation on lowering aid for more expensive colleges and universities. And there is no policy moving in this direction currently, because Congress does not seem interested in picking it up again, said Stephen Burd, a senior policy analyst in education at the New America Foundation.

With no other evidence of progress, we rate this Promise Broken.

Sources:

Inside Higher Education, And so it begins, April 17, 2013

U.S. Department of Education, FACT SHEET: Obama Administration Announces Release of New Scorecard Data, Sept. 14, 2016

Department of Education, Obama Administration Announces Final Rules to Protect Students from Poor-Performing Career College Programs, Oct. 20, 2014

Email interview with Stephen Burd, New America Foundation, Nov. 1, 2016

Step #1: Build a yardstick to measure performance

When it comes to financing higher education, Washington swings a big bat. In loans and grants, it provides 70 percent of all the financial aid that helps students pay for college. So if the federal government wanted to nudge colleges and universities in a particular direction, it has some leverage.

In 2012, President Barack Obama told an audience in Las Vegas that federal aid should go to schools that keep tuition affordable and deliver the results that lead students to invest in higher education in the first place. Making that happen was his promise during the campaign and now we"re checking to see where that promise stands.

Obama pressed the proposal again in his 2013 State of the Union address, calling on Congress to put the concept into law. It was prominent again, in a recent speech he gave at the State University of New York Buffalo.

Obama"s plan would reward some schools at the expense of others. To do this, he needs to change the law. The administration plans to fold this approach into the reauthorization of the Higher Education Act, which expires at the end of 2013. The Senate and House have held initial hearings, but the last reauthorization took place five years after the law ran out.

In the meanwhile, Obama has told the U.S. Education Department to create a new college rating system that would be available for students and families before the 2015 college year.

Details of that system, reported in the New York Times, include comparing similar institutions along a number of dimensions including tuition, graduation rates, debt and earnings of graduates, and the percentage of lower-income students.

The goal is to refine those ratings so that by 2018, students attending higher-ranked schools would get larger grants and loans on more favorable terms than those available at schools lower down on the scale.

While colleges and universities increasingly track this sort of data for their own purposes, as a group they have been resistant to outsiders measuring their performance. Given the complexities of the Higher Education Act and the number of stakeholders who have a vested interest in its details, getting pay for performance into law must be seen as an uphill battle. And this is before considering partisan politics.

Still, if Washington is ever going to tie federal aid to how well colleges and universities deliver education and at what cost, the information Obama wants to assemble would be essential. The administration is moving forward with what it can do absent congressional approval. We rate this promise In the Works.

Sources:

College Board, Trends in student aid 2012

New York Times, Obama"s plan aims to lower cost of college, Aug. 22, 2013

Inside Higher Education, And so it begins, April 17, 2013

Washington Post, Wonkbook: Can Obama control the cost of college?, Aug. 23, 2013

U.S. Department of Education, FY 2013 budget request - Race to the Top

New York Times, College Costs: Rising, Yet Often Exaggerated, Aug. 22, 2013