Government, colleges must prioritize careful cost-reduction

When Barack Obama enrolled for his first year at Occidental College in 1979, the average cost of a university education stood at roughly $8,700 per year. When he sends his daughter, Malia Obama, off to college in 2016, the cost will be about $18,300 per year — and that’s after being adjusted for inflation. 

Perhaps the president had this sentiment in mind when, two weeks ago, he publicly unveiled his plan to use federal financial support to encourage universities to reduce the price of the education that they provide. 

It would seem that he’s also well aware that most American families will have a much harder time paying that $18,300 than he and Michelle Obama will.

The plan that the president fittingly announced at university campuses across New York and Pennsylvania calls for a system to rank universities — public, private and for-profit — along several metrics, including reduction of cost, accessibility to low-income students and graduation rates. These rankings would then correlate to the amount of federal support each university receives by way of student-loan programs. 

Simply put, if you go to a school with a better ranking, the federal government will allot you a more generous loan package. 

This plan promises to be a much-needed step in the right direction for higher-education policy. With the tug-of-war between public universities and their less-than-supportive state governments coupled with runaway costs of private and for-profit colleges, the federal government can provide a fresh voice in the conversation. And states and universities might actually pay attention when that voice is backed by billions of taxpayers’ dollars. 

You would be hard-pressed to find any university administrator or policymaker who doesn’t decry the rising cost of college education. Even more difficult, however, is finding any agreement on why the costs are rising in the first place. The current debate is no more than an intricate web of finger-pointing.

Public universities blame austere state governments, and state governments blame irresponsible public universities. 

In the midst of this chicken-and-the-egg debate, the cost of financing for-profit colleges has skyrocketed with disappointing returns. The 13 percent of all enrolled college students who attend these institutions receive 25 percent of all federal student aid, even though only about 50 percent end up with a degree to show for it. It comes as no surprise, then, that these students also default on their loans at a rate much higher than those at non-profit colleges.

Universities of all varieties enjoy the autonomy to set their tuition at whatever they deem necessary, and the funding mechanism for federal student loans will continue to foot the ever-mounting bill. So when universities incur the considerable cost to build extravagant new dining halls, residence halls and rock walls, they can often pass it off to taxpayers. The federal government, then, is perfectly positioned to discourage the needless expense and unfinished degrees that too often characterize the contemporary university. 

But just as with any hopeful policy goal, the devil is in the administrative details. 

Though no legislation now exists to stipulate the specifics of the ranking criteria, the generality of standards the president listed leave them open to gaping loopholes. 

The primary goal of the legislation is to financially reward institutions that can creatively reduce costs — an admirable goal, no doubt. However, the problem lies not just in the excessive costs of many universities, but also in their misplaced spending in programs that provide no value to a student’s education. According to one study, a group of for-profit colleges spent a collective $4.2 billion on marketing and recruiting, as opposed to only $3.2 billion on instruction.

It is not overly pessimistic, then, to consider the possibility that universities would reduce costs primarily by slashing those programs that actually produce educational results, whether they be small classes or tenured faculty. It is particularly concerning that President Obama encourages these cuts to legitimate classroom expenditures by suggesting that universities pay for online classes for their students, rather than providing flesh-and-blood instructors. 

What is more, universities could appear more attractive to these hypothetical rankings by increasing graduation rates — but only by diminishing expectations for student performance. 

These problems parallel those that have arisen in the wake of other evaluation schemes the federal government has applied to educational institutions — most notably to public schools — through the No Child Left Behind Act and the president’s Race to the Top program. When policymakers tie funding to broad benchmarks without providing the tools and methods to responsibly achieve them, those benchmarks become irrelevant. You need look no further than the standardized tests which measure nothing more than how much time the teacher spent working exclusively on test prep, to the exclusion of all else. 

To prevent these same flaws from infecting his otherwise promising higher-education policy, Obama must include professional university educators to oversee and evaluate universities’ cost-reduction plans. By including seasoned educators in the ranking process, the federal government could disseminate and encourage best practices among universities through financial incentives. Only then could the admirable educational goals of the legislation become a reality.

The nation, and the president, must work urgently on this policy before it is lost in a partisan sea-change. When Obama writes out his daughter’s first tuition check in three years, he’ll be nearly unemployed.

Write Simon at spb40@pitt.edu.