Obama’s Higher Education Proposals

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With some fanfare, last week President Obama unveiled his proposal for higher education reform.  The principal focus of the Obama proposal is: (i) the development of a ranking system for colleges based on such measures as access (such as percentage of students receiving Pell grants), affordability (such as average tuition, scholarships, and loan debt), and outcomes (such as graduation and transfer rates, graduate earnings, and advanced degrees of college graduates), and (ii) the passage of new legislation that would allow the use of these resulting rankings as the basis upon which to award federal aid, with students attending high-performing colleges receiving larger Pell Grants and more affordable student loans.

In general, I find more information to be better than less information.  To the extent that the Department of Education can develop a ranking system that captures information not already available a few Google clicks away, then this could be a useful.  Even if the information is available elsewhere, if the new system merely serves to capture and house it in a single location, then it may still be useful (although the use may be quite limited).   For now, until the effort gets underway and a prototype (and the substance) of the ranking system becomes available, I am skeptical that anything developed by the Department will add meaningfully to the information already available from other sources with minimal effort.  For example, US News & World Report already publishes a list that ranks schools by the percentage of their respective students that receive Pell grants (a ranking of so-called “economic diversity”).

The second piece of the proposal – directing federal aid to students attending the high-ranking schools – seems at first blush a bit more problematic as it carries with it the ability of the federal government to favor certain schools (or types of schools) while disfavoring others, based on how the ranking system works.  As one simple example, for-profit schools would presumably score well on the “access” measure, since their target students tend to be lower income working adults, but may be expected to score less well on the ”outcomes” measures, again since their target students tend to be lower income working adults.   If the federal government chooses to weight “outcomes” more than “access,” or within the “outcomes” metric chooses to weight advanced degrees over employment, does this provide a means to tilt the federal aid playing field away from the proprietary sector?  Conversely, if “access” is weighted more than “outcomes,” could this in effect encourage lower income students to attend schools that perform poorly on outcomes metrics?   How would the system account for the impact of the 90/10 rule (applicable only to proprietary schools) on affordability?  Since not all of the measures will point in the same direction, how the government decides to weight the measures and allocate the funds will dictate the winners and losers in such a system.

In the end, this type of change to the funding system would require legislation.  Accordingly, its prospects of coming to fruition, at least currently, would seem slim indeed.

Topics:  Colleges, Education Reform, Student Loans, Universities

Published In: Education Updates, Finance & Banking Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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