0 Arne Duncan's Got it All Wrong, Again

I'm just back from Washington DC and now unhappily certain that President Obama is headed in the wrong direction with his efforts to get a handle on college costs.  The winds have shifted and Arne Duncan has taken the lead on the planning-- and well, you know what that means.  We're going to get yet another quasi-market solution that fails to grapple with the real problems and destroys any hope for a good result.

Here's the thing:

The current financial system hinges on the actions of students, prioritizing their consumer choice in the hopes that those choices will be well made.  It assumes that any problems with schools will be resolved by students turning away from them.  But this assumption is deeply flawed, not only because students do not (and cannot, and will not) make informed choices, but also because a segment of selective schools (and states) have manipulated aid policy for so long that the incentives are now distorted and they can do whatever they wish. And what they want is to maximize their own interests, which are rarely aligned with those of their students. So the problem, in other words, is really the behavior of schools and states.  Yes, students and families are an issue too, but their lack of information is just a fraction of the overall college cost problem.

Creating a ratings system for all of the nation's colleges and universities will do absolutely nothing about institutional and state behavior because:

• Student choice is often highly constrained by finances, family, and geography -- you can declare a local community college "bad" but students have no choice but to attend it anyway, and if it closes nowhere else public to go (remember, there are far fewer community colleges than k-12 schools, and for-profit institutions who'd jump at the chance to fill in for the missing community college). We already have a ranking of community colleges, thanks to Kevin Carey, and no one is making use of them.

• Schools simply won't care -- good luck making ratings the elites will take more seriously than US News, and for the others, they know their consumers and count on the fact they have no other good options

• States won't view the ratings as their problem

Frankly, it is laughable to suggest that a college ratings system will be "consumer protection" from the college cost crisis we now face.  Instead, just like Arne's war on teachers (rather than poverty and segregation) it is an enormous waste of taxpayer resources and destined for failure. Just look at the Scorecard and the Navigator-- they aren't used or demonstrably effective at all.

This kind of nonsense has to stop. President Obama had it right when he said he'd tie Title IV financial aid to institutional performance. The next step was not to turn to Arne, but rather his experts who've crafted nuanced accountability systems with anti-creaming provisions. We've tried the voucher approach to financial aid-- it's time to get serious.  

When Title IV began, there were relatively few seats in higher education in the public sector and relatively few students. Today there's enormous capacity in the public sector and tons of students.   We can't afford to make every current institution Title IV eligible, and the ones that should re-compete for their eligibility are the ones who have created the current crisis: 

(a) the selective, elite private non-profits whose admissions criteria mean they do not serve any kind of public good while they establish "standards" for college quality that are conflated with great expense, and 

(b) the for-profit institutions that set their tuition according the availability of federal aid.  

If you reign in those two players, the rest will begin to fall in line.

President Obama needs a do-over. He made a mistake.  Pull back on the wasteful ratings plan, and instead say "let's do this thing right."  Prioritize putting public resources into public institutions of higher education.  Fund them and their students well, for once.  Time to degree will go down, and quality of instruction will rise.  Next, create accountability metrics intended to lower costs and open access at the private non-profits (else cut them out of Title IV), and to lower costs and increase completion rates at the for-profits (again, or else they're out).  

Such a plan will not require massive behavioral changes on the part of millions of college students or require big informational campaigns.  It will not leave students to attend colleges designated "bad" or have no local option at all-- the community colleges will remain and do their jobs better by having a decent amount of money to spend.  What it will do is focus squarely on the problem at hand, and go straight at it.

There, now get to work.

  *****

But really, who am I kidding?  Arne and his big money men in Congress (mainly grads of private colleges and universities) will never let this happen. They'll ensure we get a ratings system that protects no one,  least of all the students. There's simply too much money to be made.

Senator Warren, Director Cordray --- are you listening?

0 What We Need to Hear from the President

Reviewing the range of responses to President Obama's plan to reduce college costs, and the questions that are being raised on Twitter, it seems important that the Administration clarify a few things sooner rather than later.

1. This effort to reduce college costs is a first step and thus it is not intended to solve all problems.  The President should say something more specific about the ultimate goal and what it would look like in practice. Are we working towards a free community college education? Are we trying to close achievement gaps?  What is the intended outcome down the road?

2. This is not NCLB for higher education.  The President needs to assure the public that he is not calling for standardized testing, the end of professorial tenure, or a focus on specific fields or majors.  He is trying to help more Americans access the quality post secondary education they seek, not water down quality or redefine what matters.

3. This is an effort to protect public higher education, not destroy it.  This needs to be said loud and clear, and the President's commitment to community colleges in particular must be emphasized.  Too many community college leaders are distressed at the roll-out of these plans, and I did not think that was intended.

4. This is also not an attempt to end for-profit or private higher education.  The purpose is to ensure that Title IV is spent in ways that support national needs, not to define the entire range of opportunities that can exist.  It is certainly possible to support private and for-profit educational providers without insisting that the federal government should also subsidize them.

5.  The President is not insisting that everyone must go to college-- he is  trying to help make the American Dream a reality by decoupling family income from educational opportunities.

Now, if I'm correct that these are all statements the President and his Administration can agree with, let's move on to figuring out how to take aim at the underlying inefficiencies in the current financial aid system using institutional accountability.

I think it would be a mistake to subject all institutions to metrics anytime in the near future. Most colleges and universities are good actors, keeping college costs down as long as states do their part. What we need to do as a starting point is to get a handle on (a) the bad actors and (b) federal investments that are ineffective and unnecessary.

Which schools fall into those categories? Here's a start.

BAD ACTORS

1. Institutions whose primary revenue source is Title IV.  Let's say those who get at least 75% of funding from Pell and/or student loans, for example.  These schools aren't operating based on market demand but rather are propped up by federal aid.

2. Institutions with selective admissions (say less than 75% admitted) and low average graduation rates (less than 50% over 5 years).

INEFFECTIVE, UNNECESSARY INVESTMENTS

1. Institutions with large endowments per student.

2. Institutions serving very few Pell recipients (regardless of whether this is due to admissions practices, costs, or a decision to simply be small).


If we could ensure that federal student aid no longer supported these schools, we would see fewer students attend these schools, their prices would likely fall (or they would close), and/or at minimum we'd save money that could be spent elsewhere.

If that were the first stage, then the Department of Education could begin by publishing these lists of problematic schools, issuing a warning that they have three years to get off the list or lose Title IV.


The other big issue is how to get states back to the table.  There could be a separate list of states that are put on probation based on a failure to match federal investments in higher education with state investments.  All colleges and universities in those states should be put at risk of losing Title IV-- including the privates and for-profits-- and given 5 years to address the problems.

None of this is perfect, of course, but they get us thinking about a more targeted, incremental approach to reform.  What do you think? What would you include?

0 Beware the New "Education Sector"

Over the years, Kevin Carey and I have had our tussles, most recently over whether some of his recent stances on education reform were too faithful to a business model, which I called "neoliberal."  But throughout it all, I have remained a fan of both Kevin and his shop, Education Sector, since both are known for asking hard, data-driven questions about whether higher education is meeting the needs of students from disadvantaged families.   So I am extremely disappointed to see that Education Sector has been hijacked by the conservative Right, and now clearly represents the interests of business elites, pushing free-market principles on all of education.  Kevin, to his credit, is getting the hell out of there, moving to the New America Foundation, accompanied by his talented colleagues Stephen Burd, Amy Laintinan, and Rachel Fishman.

Within a few days the change at Education Sector will be complete.  The leadership includes several consultants to the Romney campaign and members of the Hoover Institution, such as John Chubb, Macke Raymond, and Bill Hansen, who seem to believe that markets have magical powers, and that educating students is akin to making hamburgers or sauerkraut. Worse yet, Hansen is a former Bush appointee who lobbies for the Apollo Group, and has worked against every effort to contain corruption in for-profit schools.  He was president of Scantron, of the "fill in the bubble" testing industry, and has worked to advance the cause of student loan providers. And his jobs have been described as things like "creating a new education line of business...and  integrating the education services activities throughout the company into a strategic product portfolio." Stephen Burd's long been on to this guy- he is trouble.

No doubt about it, these folks will use Education Sector to advance an agenda aimed at ensuring the federal government stops helping students afford college.  They'll start by telling us that college isn't really necessary, and that financial aid is ineffective-- but they'll also do nothing to ensure public higher education becomes free. Instead, they will push free-market solutions -- mainly online education-- for other peoples' children, while probably sending their own kids to elite private schools.

So next time you see a report from Education Sector, give it a second look.  Theirs are no longer "Charts You Can Trust."  They are acts of political manipulation pushed by the hard Right.

Consider yourself warned.

Updated at 11:16 am CST. Gee, Google is so much fun.

0 Chart of the Day: The REAL Pell Grant Issue

Thanks to Nate Johnson for a fantastic new chart that clearly illustrates who's to blame for the incredible growth in Pell Grant expenditures: private for-profit higher education. Switch the settings from "all institutions" to "for profits" and watch the red line (for-profits) pull dramatically away from the grey (national average).  Now Nate, please do this for federal student loans!