Can Obama Really Lower the Cost of College?

Making schools compete for federal aid is more feasible than an all-out assault on the powerful higher education lobby

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Jason Reed / Reuters

President Obama delivers remarks on college affordability at the University of Michigan in Ann Arbor on Jan. 27.

Let’s cut right to the chase — I have about the same chance of being picked up by the Boston Red Sox as a utility player as President Obama does of having his proposals to control college costs get through Congress this year. But looking at what the President proposed on Friday (in a raucous speech at the University of Michigan) through the lens of short-term Capitol Hill feasibility misses the significance of what Obama is up to. Just a few years ago, the ideas the President hinted at in last week’s State of the Union and is now describing in more depth were considered fringe topics, basically the province of a few wonks and reform-minded policymakers. Talk of improving productivity in higher education bordered on blasphemy. Now the President of the United States is on board.

Obama wants to provide more data to parents and students about what colleges cost and how their students do after graduation. He also wants to change how federal aid works in order to create incentives for schools to keep costs down and keep interest on federal student loans low. Most noteworthy is his attempt to catalyze innovations at colleges and universities to improve productivity and encourage states to reform higher education through a grant competition similar to his Race to the Top program that has led many states to adopt K-12 reforms in order to win federal dollars. More specifics on the higher-ed competition will accompany the President’s budget request in February.

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It’s clear now, though, that the President is essentially flipping the playing field. Regulating colleges from Washington is complicated and often impractical — and that’s when it isn’t politically impossible. But by using the competitive approach, Obama hopes to sidestep the obstacles the higher-education lobby can throw up in Washington and instead give states cover to put forward bold ideas to get college costs under control and improve student outcomes. He’ll still have to get his ideas through Congress, but this approach is politically more feasible than a frontal assault on the higher-education establishment. And there are some key Republicans, including House Speaker John Boehner, who in the past have supported versions of what Obama is proposing.

In other words, a Race to the Top for higher education is an idea so crazy it just might work. After all, it did in the elementary- and secondary-education sector, where the $5 billion Race to the Top initiative unleashed an unprecedented amount of policy changes as states vied to win that grant money (which, by the way, accounts for only a small fraction of the overall budget for K-12 programs). Whether the changes are all good ideas or will move the needle on student achievement — or even last after the money is gone — remains to be seen, but it’s indisputable that the competition broke the political logjam around education reform.

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That said, the higher-education lobby also saw what happened with Race to the Top and is already fighting back. Despite the lofty rhetoric from Washington about college and the American Dream, federal aid generally proceeds in a pretty predictable and staid way. A lot of federal dollars — more than $160 billion — goes to higher ed, and the slow pace of change in how we spend that money is in no small part because of the lobbying power of higher education. For all the apparent fireworks in the K-12 world, insiders know that elementary and secondary lobbyists are pussycats compared with their higher-education counterparts, who can really do some political damage. Within their states, colleges are powerful institutions and significant employers, and their collective political power nationally is formidable. Congress responds to their wishes accordingly.

As in the K-12 reform debate, some of the rhetoric around higher education can be — what’s the polite word? — exaggerated. Occupy protesters, for instance, are tossing around facts and figures on the scale of student debt with little resemblance to reality. In truth, according to the nonprofit Project on Student Debt, average student debt was $23,200 in 2008, up from $17,350 in 2000. It’s worth noting that the figure is even less when you exclude private colleges (kids can get a good education for much less at many state schools) and for-profit colleges, where students often incur high debt.

Still, costs and especially prices are out of control and growing faster than any other reasonable measure. According to the College Board, the average public four-year college tuition rose 7% last year (8.3% if you include California, where costs spiked because of the state’s budget crisis). Data aside, parents are feeling the pinch — especially in this economy — and you don’t have to spend too much time around higher education to see the myriad inefficiencies. College officials do have a point, however, when they cite declining state spending as part of the reason prices are rising. But even after taking that into account, as well as some election-year pandering underlying the President’s attention to this issue, college costs and productivity are a real issue.

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So don’t pay too much attention to all the handicapping that’s going on right now about what’s likely to happen in Washington this year. This isn’t even the first inning of a nine-inning game — we’re still buying peanuts and beer. But for those who want to see higher-education reform happen some day, the big news is that at least now they are in the ballpark.