Mr. President, “We Can’t Wait” to Deal with College Costs

Photo from whitehouse.gov

Given the increasing attention being paid by the President, Vice President, and Secretary of Education to college costs, we expected to hear something about it in the State of the Union. The question was whether the President would just continue to use his bully pulpit to implore institutions and states to keep costs down or whether he would go further. The President minced no words in answering that question:

So let me put colleges and universities on notice: If you can’t stop tuition from going up, the funding you get from taxpayers will go down.

Wow.

Does this mean financial aid eligibility will be on the line for schools with excessive tuition increases? The President didn’t say and the Blueprint on the White House website offers only marginal clarification: “The President is proposing to shift some Federal aid away from colleges that don’t keep net tuition down and provide good value.” Unfortunately, we have to wait until Friday, when the President gives a speech on college affordability at the University of Michigan, for more details. To steal your tagline, Mr. President: We Can’t Wait, so I’m going to offer my speculations and suggestions for Friday and beyond.

We have to rein in the shifting of college costs from states to students. Tying financial aid eligibility to tuition levels would certainly send a message to institutions and states that are passing on bigger and bigger bills to students. By discouraging price shifting, the federal government might also push states and institutions to think about reducing costs more generally. Federal financial aid a potential $150 billion a year lever–it’s nice to see the Administration talk about using it.

In addition to bringing out the big financial aid guns,  I hope we see a reincarnation of two competitive grant programs proposed in the President’s FY12 Budget. The College Completion Incentive Grant Program would reward states that implement specific systematic reforms and the First in the World program would reward institutions that reduce costs and increase completion and quality. If the feds are going to ask states and institutions to cut costs–they should help them figure out how to do it.

While the President’s speech focused on the cost of higher education, the Blueprint’s use of the word “value” gets to the link between cost and quality. Perhaps he’s been looking at the 57% of Americans who say US higher education is not a good value. Although we can say without a doubt that a college degree is a good value on average, we don’t know the value of specific degrees, from specific institutions, in specific programs, taught by specific faculty, at specific prices. What (if anything) are students learning? How are they faring in the labor market? How can consumers “vote with their feet” if they don’t know the outcomes of competing institutions? I hope the President calls for better, more useable, data to bring real transparency into higher education. This could go a long way in containing college costs–as colleges would then be forced to compete based on price and outcomes.

With  college costs being on the minds and lips of both Republicans and Democrats during this election season, there just might be an opportunity for the President to turn his bold words into bold action. With tuition, student debt, and defaults rising and Americans increasingly asking whether a college degree is worth it, We Can’t Wait anymore.