A look inside federal higher education proposals

kivaIn the last month, the Department of Education and President Obama have released two important proposals affecting higher education. The first, released by the department last month, was for the long-awaited college ratings plan that the president had first proposed 16 months earlier. This plan would evaluate over 6,000 colleges that participate in the government’s Title IV federal student aid grant and loan programs.

President Obama’s more recent policy idea was one he offered up January 9 in Knoxville, Tennessee, where he suggested that the first two years of community college be offered for free to all students in the country. Under the president’s plan, the costs would be covered through a federal-state partnership, where the federal government would pick up 75 percent of the tuition and participating states the remaining 25 percent.

Both of these ideas sound appealing at first glance. Certainly colleges should be held accountable for their use of public funds; the federal government invests over $150 billion per year in grants, loans and tax credits for college students, and the states invest a total of over $80 billion in direct appropriations and student financial aid.

It is also hard to argue against the notion of providing two free years of community college education for all students. We know that tuition prices, even in community colleges, can be a barrier to attendance for some students. And many students and their families lack good information about financial aid that is available to help pay for college.

But as is often said about any new policy proposal, the devil is in the details. Most colleges and universities are large, complex and diverse organizations. Crafting one system to evaluate Michigan State University on the one hand, and our neighbor, Lansing Community College, on the other, is a difficult undertaking. The missions of the two organizations are very different, so evaluating their effectiveness requires that these differentiated missions be recognized and appropriate metrics be used for each.

The Department of Education’s college ratings plan, as released last month, is still very broad and lacking in specifics, so it is hard to determine exactly how it will affect colleges, and how useful it will be to consumers. The department has asked for comments on the plan, and based on those comments, will fill in the details to develop an operational program later this spring. Its goal is to have the ratings program in place by next fall.

President Obama’s proposal for free tuition in community colleges is also lacking in specificity. Most importantly, he has not said how the federal program will pay for its share, which the administration estimates will be $60 billion over ten years. The president, in his State of the Union speech this past Tuesday, proposed a series of tax increases on large banks and higher-income Americans. The revenues raised from these taxes could presumably be used for the community college tuition program. But it is unclear whether he can convince the Republican-controlled Congress to go along with these tax increases, or for that matter, his community college program. It is also unknown how many states will step forward to shoulder their share of the costs.

We also do not know whether offering free community college tuition to all students is the best use of $60 billion and will truly benefit the nation. Many of the beneficiaries of this program would come from families that can afford the lower tuition charged by most community colleges, and this leads one to question whether the money could be better targeted at students who are more financially needy. It would also be important to examine whether the nation would benefit more from higher subsidies for students attending 4-year colleges and universities, whose credential – a bachelor’s degree – generally carries more value in labor markets than do community college credentials. All of these are important questions that should be examined before moving forward with the president’s plan.

If you are interested in reading more about these proposals, I invite you to read my blog post about the college ratings plan, and an op-ed I wrote on the website, The Conversation, about the free tuition program.

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