Obama Just Found a Way to Make College Even More Expensive

The President's new College Scorecard will jack up federal taxpayer subsidies without improving accountability or reducing the soaring costs of tuition.


CollegeDegrees360 / Foter / Creative Commons

University presidents are crying a river over the Obama plan to create a federal scorecard to rate colleges. But their tears might be the only good thing to come out of this plan.

Otherwise, it's simply a welfare scheme for students masquerading as college accountability that won't do diddly to make college more affordable in the long run.

It is true that rating colleges ought to be as simple as "rating a blender" as Jamienne Studley, deputy undersecretary of education, told horrified college presidents this week. But it isn't, because unlike blenders, colleges obstruct efforts to test their performance.

Uncle Sam hands out $150 billion in financial aid to universities every year—about twice as much as all the states combined. Yet, notes State University of New York-Albany's Ben Wildavsky, colleges resist independent, national, standardized testing that would allow lawmakers to judge what exactly this aid is accomplishing—and give parents the information to determine the educational bang they are getting for their buck.

Take the Collegiate Learning Assessment exam, for example. It is hardly perfect, but it tests the reading, writing and critical thinking skills of a sample of incoming and graduating students to measure the "value added" of their university. But only 200 of the country's 1,700 or so colleges participate in it and hardly any make the results public. This is not surprising, maintains Wildavsky, given that the limited data available shows that colleges produce "dismayingly low levels of learning."

What's more, some years ago colleges actually managed to get a law passed barring the federal collection of individualized data that would, for example, allow student transcripts to be linked up with earnings data to see which majors from which colleges generate what returns to help students pick more lucrative colleges and majors.

So if Uncle Sam wants to do something, it ought to be to require universities to administer a CLA-like exam and also allow data gathering as a condition for federal aid. Instead, the Obama administration's proposed scorecard will simply duplicate the half-a-dozen or more private rankings that rate colleges by input rather than outcomes.

The main difference is that unlike them, it'll explicitly rate colleges by their "accessibility and affordability" and, if Congress agrees, tie federal aid to the score they get. Colleges that admit more Pell grant students will get a higher ranking and therefore more aid. This sounds great, but in reality it means that existing federal aid will beget more federal aid.

It gets worse. One of the most under-reported aspects of administration's scorecard is its loan forgiveness provision. Currently, "new borrowers" who obtained their first federal student loan after 2007 are eligible to signup for something called the "Pay As You Earn" program. This program caps their loan repayment at 10 percent of their income for 20 years after which the remainder is written off. (For professions such as nursing it takes only 10 years to get the write off.) In other words, students take loans according to their needs, and repay them according to their ability and hit taxpayers for the rest. The president wants to expand this socialist prescription to all students who receive federal loans.

Setting aside the fiscal insanity of expanding an entitlement at a time when the country is already groaning under debts and deficits, what incentive would students have to be careful shoppers if they know that Uncle Sam will eventually write off all their debts?

One reason college costs have grown 27 percent beyond inflation over the last five years is that parents are picking up an ever smaller share of their kids' college costs and the government (and other) grants ever more, according to a report last year by Sallie Mae, a government-sponsored enterprise that manages student debt. Loan forgiveness will shift this equation even more toward the government, giving students even less reason to seek—and colleges less reason to become—more cost-effective institutions.

Ultimately, if the administration wants to make college affordable, it'll have to stop reading the Communist Manifesto and curb inflation. And in order to curb inflation, it'll have to give parents information—and incentives—to be better shoppers.

The Obama scorecard does the exact opposite. That's the real reason to cry over it.

A version of this column originally appeared in the Washington Examiner.