Obama’s new “report card” for colleges — a Race to the Bottom?

President Obama followed up on his State of the Union with an address at the University of Michigan, in which he addressed rising college tuition.  It’s worth looking at his remarks in detail (from a transcript issued by the White House) to see what he is and is not proposing:

…it’s not just enough to increase student aid, and you can imagine why. Look, we can’t just keep on subsidizing skyrocketing tuition. If tuition is going up faster than inflation, faster than even health care is going up, no matter how much we subsidize it, sooner or later, we’re going to run out of money. And that means that others have to do their part. Colleges and universities need to do their part to keep costs down as well. (Applause.)

Recently, I spoke with a group of college presidents who’ve done just that. Here at Michigan, you’ve done a lot to find savings in your budget. We know this is possible. So from now on, I’m telling Congress we should steer federal campus-based aid to those colleges that keep tuition affordable, provide good value, serve their students well. (Applause.) We are putting colleges on notice — you can’t keep — you cant assume that you’ll just jack up tuition every single year. If you can’t stop tuition from going up, then the funding you get from taxpayers each year will go down. We should push colleges to do better. We should hold them accountable if they don’t. (Applause.)

Now, states also have to do their part. I was talking to your president — and this is true all across the country — states have to do their part by making higher education a higher priority in their budgets. Applause. Last year, over 40 states cut their higher education spending — 40 states cut their higher education budget. And we know that these state budget cuts have been the largest factor in tuition increases at public colleges over the past decade.

So we’re challenging states: Take responsibility as well on this issue. Applause. What we’re doing is, today we’re going to launch a Race to the Top for college affordability. We’re telling the states, if you can find new ways to bring down the cost of college and make it easier for more students to graduate, we’ll help you do it. We will give you additional federal support if you are doing a good job of making sure that all of you aren’t loaded up with debt when you graduate from college. (Applause.)

And, finally, today I’m also calling for a new report card for colleges. Parents like getting report cards. I know you guys may not always look forward to it. (Laughter.) But we parents, we like to know what you’re doing. From now on, parents and students deserve to know how a college is doing — how affordable is it, how well are its students doing? We want you to know how well a car stacks up before you buy it. You should know how well a college stacks up.

We call this — one of the things that we’re doing at the Consumer Finance Protection Board that I just set up with Richard Cordray — (applause) — is to make sure that young people understand the financing of colleges. He calls it, “Know Before You Owe.” (Laughter.) Know before you owe. So we want to push more information out so consumers can make good choices, so you as consumers of higher education understand what it is that you’re getting.

via Full transcript: Obamas speech today on education in Ann Arbor | Detroit Free Press | freep.com.

I have heard the assertion that this is an endorsement of educational assessment.  But it is really?   It is not clear that the Consumer Financial Protection Board’s “report card” is going to include assessment of learning outcomes at all; the President referred to “holding them [colleges] accountable” for tuition hikes, not learning outcomes.  In the absence of learning assessment, the new “Race to the Top” could easily become a “Race to the Bottom” in educational terms.

The assumption underlying all this is that poor management is responsible for soaring tuition, and that a tough regime of incentives and disincentives is the way to improve management.  Improving the college value proposition by improving learning outcomes (as opposed to focusing on cost) is an idea not even broached.

A 2009 U.S. News summary of a report by the Delta Cost Project argues that “since 2002, spending at public universities has generally not exceeded inflation”, but that “the main reason tuition has been rising faster than college costs is that colleges had to make up for reductions in the per-student subsidy state taxpayers sent colleges.”  [Note that this is based on pre-recession data; this cost driver is probably even more important today.]  In other words, it is government management, not college management, that is responsible for tuition hikes, at least in public colleges.

What impact the CFPB’s “report card” can have on that dynamic is unclear to me.


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