College costs will keep rising under the Obama plan, predicts economist Richard Vedder, director of the Center for College Affordability and Productivity.
“Colleges’ exploitation of young Americans through rapidly rising and increasingly exorbitant fees is a national scandal,” writes Vedder on Bloomberg News. After promising “tough love” for higher ed for the last two years, President Obama has a plan.
Some of what he proposes is good in principle; some is very bad.
He wants to expand access to information on colleges by having the Department of Education issue a ranking of institutions relating outcomes to costs. The government has the power, via the Internal Revenue Service, to get some interesting data on college graduates’ earnings, and providing that data to consumers would be useful.
. . . Tying federal funding after 2018 to the new federal ratings, which in turn incorporate performance measures such as graduation rates, may be a step toward giving colleges incentives to take cost reduction seriously. But the potential for unintended and damaging consequences is high: If the key to federal funding is raising graduation rates, colleges may lower already abysmally low standards.
Funding educational innovation sounds like a good idea, but previous efforts haven’t paid off, Vedder writes. A better approach would be to stop accrediting agencies from stalling the “cheap or free online courses” that are being created without federal involvement.
The president’s “very bad idea” is to link loan repayments to income, letting millions of students avoid repaying part of their obligation, writes Vedder.
So why not major in fields the economy values least — anthropology or drama instead of engineering or math — if you don’t have to worry about earning enough to pay off your student loans over a certain period?
The idea simply raises incentives for future students to borrow more money, if they know their obligation to pay it back is capped. That, in turn, allows colleges to keep raising costs.
Federal aid has soared from $56.8 billion in 2001-2002 to $173.8 billion a decade later, Vedder writes. That’s fueled tuition increases — without improving access for low-income students.