Last Thursday, President Barack Obama unveiled a plan that would judge universities based on their affordability and performance and then distribute federal aid with the goal of making college more affordable.
The proposed rating system would rank colleges based on affordability, average student loan debt and tuition. Prospective students could thus use the rating system as a “buyer’s guide.”
According to a College Board survey, over the past five years the price to attend a public four-year college has risen 27 percent beyond overall inflation and 13 percent for private four-year colleges.
Student debt in the United States now totals more than a trillion dollars.
The plan would also rank and give “bonuses” to universities based on graduation rates and the number of Pell Grant recipients.
“There are also schools out there that have higher default rates than graduation rates,” Obama said. “Taxpayers shouldn’t be subsidizing students to go to schools where the kids aren’t graduating. Our ratings will… measure how successful colleges are at enrolling and graduating students who are on Pell Grants.
N.C. State economics professor Douglas Pierce pointed out some potential flaws in the president’s plan.
“The goal is to improve the education of students, but you have to be careful that if you put in incentives that reward you for observable things like graduation rates, instead of improving education, you lower standards to get that goal,” Pierce said.
Pierce said that if the funding criteria change, then colleges’ behavior could change to maximize funding—and perhaps lead to unintended consequences.
“We think that a college is supposed to accurately rate students and give them signals if they are doing well or not,” Pierce said. “If students aren’t showing a degree of mastery, they will fail that class. If we say we will reward instructors for not failing students, then grades will go up.”
Other aspects of the plan include distributing aid to colleges with high dropout rates over a period of time rather than all at once at the start of the semester.
“They are trying to give an incentive for the college to monitor and improve the performance of the student, so there is a cost to them if the student drops out. Normally, if a student gets a loan and then drops out, the student still has to pay off the loan, but the university gets to keep the money,” Pierce said.
Krista Domnick, director of N.C. State’s Scholarships and Financial Aid office, said it was too early to tell how the president’s plan would affect the University and its students.
“Overall it sounds like a good idea, but we need the details. [The Obama administration] hasn’t laid out specifics, so we don’t really know what the impact will be locally until they flesh everything out,” Domnick said.
The college ratings plan drew some criticism, since the rating system will not require Congressional approval. However, in order to use the ratings as a basis for federal financial aid, the president will still need support from Congress.
The White House plans to set up the ratings plan by the 2015 school year.
“We don’t have specifics for how colleges will be rated, so it’s difficult to know what might happen if we don’t know what the standards are,” Domnick said.