'F' for O's Fed College Scorecard

[Armando Ramos]

Like Amtrak and the Post Office? Who knows more about quality, efficiency and value for the money than the feds?

Morning Bell: 4 Problems with Federal College Scorecards
Lindsey Burke
August 23, 2013 at 6:50 am

Yesterday, President Obama announced his plan to make “college more affordable, tackle rising costs, and improve value for students and their families.”

But a big part of the President’s plan includes creating a college rating system—a federal scorecard—to evaluate colleges on measures such as graduation rates, the number of low-income students served (i.e., the percentage of Pell Grant recipients), graduate earnings, and affordability.

Scorecards are a seductive idea. But having the federal government issue scorecards to measure college output would be a mistake. Four problems with the President’s plan:

1. Government says what’s best. As we wrote yesterday in National Review Online, for one thing, a monopoly government scorecard would inevitably reflect what bureaucrats—rather than parents, students, and scholarly communities—determine is or is not important in education.

2. Special-interest institutions with more clout could shape the standards. Existing institutions that are comfortable within the cocoon of protectionist accreditation would lobby hard, and no doubt effectively, for output measures that define success in their own terms.

3. Standard-setters would also control college funding. Educational institutions’ lobbying becomes particularly problematic when considering the second part of President Obama’s proposal: to then tie federal student aid to the new rating system by giving larger Pell Grants and lower student loan interest rates to students who enroll in colleges that fare well on the federal scorecard.

The logical outcome is a system that has the federal government handing out subsidies based on a rating system designed by the people handing out the funding. What could possibly go wrong?

4. We already have scorecards. A competing range of private outcomes-based scorecards already exists, sponsored by such outlets as U.S. News & World Report, Forbes, ACTA, and Kiplinger’s. Each of these reflects the differing visions of quality held by different Americans, from post-graduation salary to the likelihood of a well-rounded education. A one-size-fits-all federal rating system is unnecessary and will likely trump these independent evaluators that parents and students have long trusted.

If the Obama Administration truly wants to “shake up” higher ed and bring down college costs, it would acknowledge that federal government intervention is the problem, not the solution.

Continuing to increase federal subsidies enables universities to raise tuition. Since 1982, the cost of attending college has increased 439 percent—more than four times the rate of inflation. Increases in college costs exceed increases in health care costs, which have risen more than 250 percent over the same time period. Economist Richard Vedder argues that “some of these financial aid programs have contributed mightily to the explosion in tuition and fees in modern times.”

The key in education reform is to do things that improve students’ learning. A federal college scorecard gets an F on all counts.

[Martin Eisenstadt]

Obama Plan to Make College Affordable Will Raise Costs



by Charlie Kirk
25 Aug 2013

This week, President Obama is hitting the road to unveil his plan to "combat the soaring costs of higher education." His three part plan consists of connecting financial aid to school performance, supporting academic innovation, and making college more affordable.

His road tour and policy initiatives sound good in the nightly news cycle. They make for great talking points, but President Obama's plan does not address the fundamental reasons behind why tuition is rising. Both sides can agree that rising college costs are a big problem and burden for students. But more college subsidies and government aid will not solve the problem; in fact it is the reason why tuition is rising.

Over the past thirty years tuition has risen by over 250%, despite Washington continually putting forth new government aid programs and subsides with the attempt to cut tuition costs. The more money Washington puts into the hands of students only enables the colleges and universities to continue propping up the price of education.

When students have access to low-interest loans and government aid, colleges have no incentive to cut costs. Why should a college lower tuition if more students are able to pay with subsidized loans from the government?

Neal McCluskey, associate director of the Cato Institute said, "Basically the aid ensures that students can pay almost anything they are charged." Universities have no reason to lower tuition because they know whatever sticker price they put on a college degree, there will be students ready to take out low interest loans to pay for it.

According to the National Center for Education Statistics, 71% of all undergraduate students received some type of financial aid in the 2011-2012 academic year, up from 66% in 2007/2008. The average amount also grew from 9,000 to 10,800 in just four years.

Nowhere in President Obama's plan does he talk about cutting back on aid or low interest loans to students. There is also a deeper problem with the entire cost of college debate. We need to ask ourselves: Is college for everyone?

In 2012, a Harvard study was released that showed only 56% of all students who enter college will graduate within six years. Forty-six percent of all students who enter college will not graduate, yet many members of congress are pushing for increased government aid and programs to allow more people to go to college.

The narrative needs to be personalized for each student and individual. Yes, college tuition is a problem for many young Americans, but it is a problem exacerbated by government subsidies and an overwhelming demand to get a college degree, despite high dropout rates.

Subsidies and grants throw off the natural market signals that are supposed to allow students to make informed decisions on the true value of a college degree. Increasing aid, and expanding subsidies only intensifies the problem which will lead us down a path of more college dropouts and a continuation of skyrocketing tuition.

[Harrison J Bounel]

President Obama pledges to rescue failing college education system with another failed plan
by Ed Farnan on August 27, 2013

After years of claiming he was making a college education more affordable, last week President Obama finally came face to face with the reality of his efforts and proclaimed college education was too expensive.

Record numbers of students are taking out record amounts of loans and are now defaulting on those loans, discovering they cannot find jobs in his moribund economy. The colleges themselves are booming with unprecedented amounts of money flowing in, but the graduates are failing. So what’s the metric here?

In response to this reality President Obama unveiled a new plan that he says will solve spiraling college education costs and help rescue students drowning in student loan debt used to pay for these educations.

But predictably, his plan is another huge dose of government intrusion that will only compound the meddling these policies already inflict on the education system.

His idea to set up a college rating system that will tie aid to the colleges that government bureaucrats feel are giving the best bang for the buck, putting yet another layer of government on an already overburdened system.

This has all of the signs of government taking over yet another industry and nanny stating it into a politically correct arm of this administration….Determining who the education winners and losers are through bureaucratic regulation.

Typically, showing where President Obamas values really are, his policy will reward students who choose a career in government or working for tax exempt organizations. Those winners in the Obama social engineering system, will have their student loans cancelled after ten years….All others pay up or else.

In the brave new world of President Obama, if you become a government employee, you are elevated to a status above the rest of the hoi polloi.

These are exactly the kind of policies you would expect from someone who has no experience in the real world private sector….The sector that actually pays for government programs and can actually create the jobs that college graduates can find a career in.

President Obama’s plan does not attack the root of the problem, but only props up and promotes a failed model.

[WilliamW]

Move Over, Obamacare. Here Comes Obamaschool
Friday, August 30, 2013 by Hunter Lewis

The president gave a speech on August 22 in Buffalo outlining his proposal to “reform” the student loan program. He acknowledged that the program has some problems, but assured the audience they are easily fixed. Just take the principles behind Obamacare and apply them to education. The president personally “guaranteed” that his proposals would make college more affordable.

Here’s the plan. The government will rate colleges based on fees (the lower the better) and graduation rates (the higher the better) and student success in finding a job. Then student loan funds will be allocated to schools according to the rating. Students will also be guided to the best-rated schools via government web sites. And schools will get more funding if they set up demonstration projects to reduce costs. This will all encourage more “competition” among schools. Yes, you heard that right: more government control of colleges will increase market “competition.”

We don’t have a 2,000 page bill in Congress yet, but it’s all quite familiar: government will take even tighter control of higher education just as it has taken even tighter control of medicine, and use Obamacare as its operating manual. Of course, Obamacare not only rated medical insurance policies; it mandated what would be in them at what prices, which in effect put government in charge of defining what healthcare is. Presumably, the government rating of schools will in due course also lead to mandates and the government defining what higher education is. Obamacare also set up government sites where people would be steered to buy government approved policies, and set up demonstration projects, even though the history of government-inspired healthcare demonstration projects has been dismal.

There is a lot more in common between Obamacare and Obamaschool than these superficial characteristics. Obamacare came into being because of a crisis in medical care. As usual, that crisis had been caused by earlier government interventions in medicine, especially price controls. At present, Medicare price controls about 7,500 medical procedures. Because payment varies by location and practitioner (e.g., doctors employed by hospitals get paid more than other doctors), it has been estimated that Medicare price-controls six billion medical transactions at any one time. As government has come to dominate medicine and price-control it, prices have inevitably risen at a rate that threatens to bankrupt the economy. Obamacare has doubled down on the price controls, mandating allowed price increases under Medicare and installing a price control board. All of this will no doubt lead to the kind of legislation recently passed in Massachusetts where any “material” change in a medical practice, in either prices or services, must be approved by the state.

Obamaschool is coming into being for similar reasons. In this case, the government set up a student loan program which was ostensibly designed to subsidize students. But whenever government subsidizes demand without increasing supply, prices inevitably rise, and this was no exception.

As President Obama pointed out, “Over the past three decades, the average tuition [and fees] at a public four-year college has gone up by more than 250 percent. 250 percent. Now a typical family’s income has gone up 16 percent. That’s a big gap.” Yes it is.

In reality, both the 250 percent and the pitiful 16 percent have been caused by government policies, especially price manipulations and controls. The 250 percent increase in fees (mitigated somewhat by increases in student aid) has specifically been driven by government’s mistake in flooding schools with student loan money. That money did not help students; it enabled schools to keep raising fees. What students mostly got out of the loan program was an early initiation into massive debt. If leaving school with heavy debts is not exactly slavery, it certainly represents some kind of indentured servitude.

Obama was more than a bit mendacious about this debt burden. He took credit for keeping student interest rates down. He even said that “government shouldn’t see student loans as a way to make money; it should be a way to help students.” But the reality is that his administration is currently borrowing money at negligible interest rates and then relending it to students at much higher rates. The difference is booked elsewhere in the federal budget under “deficit reduction.” If that isn’t a clear case of using student loans as a way to make money, then what is?

What will really happen if the federal government completes its takeover of higher education pricing? The certain result will be even higher prices, which will then lead to calls for a complete federal takeover, just as advancing prices under Obamacare are now leading to admissions by Senator Reid and Congresswoman Pelosi that it was only intended to be a stepping stone to a “single payer” system in which government in effect nationalizes all healthcare. Nationalizing healthcare would make the crisis worse, not better, but Reid and Pelosi don’t understand that.

The president’s specific proposals for student loans will have some other presumably unintended effects as well. If schools get more federal money as their graduation rate increases, they will simply stop taking students who are more likely to drop out. That of course means they will stop taking disadvantaged students who need help the most.

The administration says that it will get advice from schools in devising the rating system. This is all we need: closed door meetings in Washington between the government and special interests with the consumer excluded. This is exactly how Mussolini ran Italy and Roosevelt tried to run the U.S. with the National Recovery Act. The results of dismantling a consumer-driven market economy will be no better now than they were then.