President Obama’s summer barnstorming tour got off to a less than robust start. What was billed as the latest, greatest pivot to the economy in which the president would unveil new plans to jumpstart the stalled economy, simply didn’t deliver. It was more of what we’ve come to expect from an Obama speech: pointed attacks on Republicans mixed with warmed-over and vague policy proposals with no chance of bipartisan support.
Unsurprisingly, Obama’s poll numbers dipped and the public’s trust in his economic stewardship waned. Sensing things did not go as planned Obama regrouped and set out to try again. Mark Felsenthal reports for Reuters:
“Shadowed by turmoil in Egypt and domestic controversies, President Barack Obama will again seek to regain political momentum on a bus tour during which he will push his plans for stoking the U.S. economy and taming the high cost of college tuition.”
We were intrigued, but not optimistic. After all, most of President Obama’s past attempts to reduce college costs simply involved pumping more federal dollars into the system, a move that economists will tell you only serves to fuel the acceleration of tuition costs. But then Obama surprised us. He admitted that the federal government’s decision to pump money into subsidizing higher education hasn’t worked.
“The problem is that even if the federal government keeps on putting more and more money into the system, if the cost is going up by 250 percent, tax revenues aren’t going up 250 percent – and so at some point, the government will run out of money,” Obama said.
It was an amazingly refreshing statement if for no other reason than it was pure honesty stripped of any partisan veneer. It was a reminder that things can still get done in Washington. For although ideological polarization has furthered the partisan divide over the last few years, there is broad policy consensus among economists if only we take the time to listen.
And in the case of college tuition it sounds like we’re finally turning our collective ears. As liberal Matt Yglesias recently wrote: “The liberal idea of pumping more federal dollars into the system – something [Obama’s] administration has done enthusiastically – has failed to deliver affordability.” This is not a point that is up for debate. Federal subsidies, along with other factors like administrative bloat, salary competition for teachers and decreased teaching efficiency, have caused tuition costs to soar over 1,100 percent since 1978.
That deserves its own paragraph: College tuition has risen 1,100 percent in the 25 years.
That’s a problem that screams for a solution. Republicans have answered that call. Governor Rick Perry (R-TX), for example, has proposed that public colleges and universities adopt plans for a $10,000 bachelor degree. Governors Bobby Jindal (R-LA) and Scott Walker (R-WI) have led the way in proposals tying funding for public education to performance standards like graduation and employment rates. And Sen. Marco Rubio (R-FL) has a bill that would repeal the federal ban on collection of student-level college data to allow prospective students to be able to find and compare colleges based on certain statistics.
Although President Obama may be a little late to the tuition-taming party, at least he’s arrived. David Wilezol writes for National Review:
The most meaningful of these reforms is the introduction of a ranking system that will tie federal money to affordability and academic outcomes. Just how much money will be tied to these factors is in question. But this is the idea that conservatives want to see more of; Bill Bennett and I have written so in our book.
The idea is laudable. The president sees the merits of getting colleges to start competing on the basis of price and quality, not on a perception of prestige. In the past half-century, schools have pumped hundreds of millions of dollars into building lavish student centers, recruiting star faculty, and expanding sports programs, all to make their campuses attractive to students who can pay full price. For everyone else, there’s a student loan. Linking aid to academic outcomes and affordability will help tighten the money spigot that federal student loans opened decades ago.
Conservatives are all about allowing free market mechanisms to do their work by reducing price and increasing quality. Why should higher education be exempt? After all, the value of differing degrees received from different institutions varies immensely and yet to this point consumers (in these case, would-be students) have had no way to access that information. Obama’s proposal would begin to address that so consumers can make better choices.
Obama’s proposal is far from perfect however. The information he proposes to grade institutions on, like graduation rates, are easily manipulated and may create perverse incentives for colleges. Most problematically, Obama proposes to tie the rankings system to the federal student loan program while also pumping more dollars into Pell Grants. If the goal is to get prices to go down, or at least be tied to the quality of the education given, then Washington needs to get out of the business of heavily subsidizing college costs. Not only does this distort market signals, but it needlessly inflates the cost of higher education.
Overall, President Obama’s proposal is an interesting first step towards rethinking the archaic liberal approach to higher education. Although it definitely needs some substantial tweaks our hope is that it begins a much-needed conversation about the cost of college.