Published: Friday, February 3, 2012
Obama’s plan to control tuition costs would put public colleges at disadvantage
There is one big difference between President Barack Obama's college tuition plan and a bad made-for-TV movie aired at 3 a.m.
A shoddy, made-for-TV movie is, at worst, a disappointment for the shut-ins and insomniacs who might choose to watch it instead of the vacuum cleaner infomercial. The president's college tuition plan, though, has the capacity for real mischief that could do lasting damage to higher education in our country.
There have been some great made-for-TV movies … and then there are the others. The others are easy to recognize because no matter what the plot, the costumes or the setting might be at the beginning, the basic storyline remains unchanged.
Obama's college tuition plan is definitely an "other." He announced the plan during his State of the Union speech and in an address to University of Michigan students. The president's plan certainly contains enough ingredients to prompt applause – nobody likes high tuition bills – and it must have sounded great in the White House writers room. Not everyone is applauding.
At first, it sounds like a good idea. College and university tuition costs have been rising at unconscionable rates for decades, and academia has shown little interest in slowing them down.
The first problem is that it puts the federal government in charge of higher education in our country. Its management would be indirect, through budget control, but it would be no less decisive. Budget control, about which the federal government clearly knows nothing, will give Washington, D.C., the ability to reshape colleges and universities by resetting priorities -- without being responsible for the outcome.
According to the White House, "To keep tuition from spiraling too high," the government will "shift aid away from colleges that fail to keep net tuition down, and toward those colleges and universities that do their fair share to keep tuition affordable, provide good value and serve needy students well."
Anyone ever touched by a federal program recognizes this as a minefield of vaguely defined terms. What exactly is a college or university's "fair share?" What does "affordable" tuition mean when so many students already depend on loans to pay for their education? Who will decide if a college or university is serving needy students well, and on what basis will the decision be made?
The president's plan has drawn some criticism, mostly from state universities that are struggling to adjust to their new economic realities. Many of them, including those in Washington state, are being cut loose by their legislatures because states lack the funds to continue subsidizing tuition.
University of Washington President Mike Young is very concerned about the president's program and fears that its effects would hurt the very students that it is supposed to help. If the availability of student loans is cut, it will reduce lower-income students' access to higher education – especially at the institutions that are trying to stay competitive with national and global schools.
The new federal plan to control tuition growth would throw a monkey wrench into state university plans to replace the dwindling subsidies from state taxpayers with student tuition, essentially putting them on the same playing field with their private school competition. The new plan could easily end up relegating public higher education to second or third rate status, not a smart move in an increasingly competitive world.
When looked at as an economic sector, or an industry, it is clear that suppliers, our colleges and universities, are grouped into three tiers based on their reputations. Increasingly those reputations are reinforced by an expanding array of rankings and lists published by sources, some reputable and some questionable.
The distinctive economic characteristic of these tiers, and rankings in general, is that they are not really price-driven. Costs at our elite institutions are high, of course, but a student can end up paying just as much at lesser known, even second-tier institutions. Tuition costs at any given time do not reflect "marginal cost" the way they would in most other competitive markets.
The complex cost structure as well as the tier system and the rankings attached to it are just a few reasons why it is difficult to predict the outcome of the president's plan and why it could use more thought and less rhetoric.
To be fair, maybe we shouldn't take the president's plan too seriously. Maybe it is just another crackpot idea floated in an election year that has already seen a few and will very likely see a lot more.
If somehow it escapes from the White House and is approved by Congress, though, we will wish that we paid more attention to those vacuum cleaner infomercials … because there will be a big mess and we'll have to clean it up.
James McCusker is a Bothell economist, educator and consultant. He also writes a monthly column for the Snohomish County Business Journal.
A shoddy, made-for-TV movie is, at worst, a disappointment for the shut-ins and insomniacs who might choose to watch it instead of the vacuum cleaner infomercial. The president's college tuition plan, though, has the capacity for real mischief that could do lasting damage to higher education in our country.
There have been some great made-for-TV movies … and then there are the others. The others are easy to recognize because no matter what the plot, the costumes or the setting might be at the beginning, the basic storyline remains unchanged.
Obama's college tuition plan is definitely an "other." He announced the plan during his State of the Union speech and in an address to University of Michigan students. The president's plan certainly contains enough ingredients to prompt applause – nobody likes high tuition bills – and it must have sounded great in the White House writers room. Not everyone is applauding.
At first, it sounds like a good idea. College and university tuition costs have been rising at unconscionable rates for decades, and academia has shown little interest in slowing them down.
The first problem is that it puts the federal government in charge of higher education in our country. Its management would be indirect, through budget control, but it would be no less decisive. Budget control, about which the federal government clearly knows nothing, will give Washington, D.C., the ability to reshape colleges and universities by resetting priorities -- without being responsible for the outcome.
According to the White House, "To keep tuition from spiraling too high," the government will "shift aid away from colleges that fail to keep net tuition down, and toward those colleges and universities that do their fair share to keep tuition affordable, provide good value and serve needy students well."
Anyone ever touched by a federal program recognizes this as a minefield of vaguely defined terms. What exactly is a college or university's "fair share?" What does "affordable" tuition mean when so many students already depend on loans to pay for their education? Who will decide if a college or university is serving needy students well, and on what basis will the decision be made?
The president's plan has drawn some criticism, mostly from state universities that are struggling to adjust to their new economic realities. Many of them, including those in Washington state, are being cut loose by their legislatures because states lack the funds to continue subsidizing tuition.
University of Washington President Mike Young is very concerned about the president's program and fears that its effects would hurt the very students that it is supposed to help. If the availability of student loans is cut, it will reduce lower-income students' access to higher education – especially at the institutions that are trying to stay competitive with national and global schools.
The new federal plan to control tuition growth would throw a monkey wrench into state university plans to replace the dwindling subsidies from state taxpayers with student tuition, essentially putting them on the same playing field with their private school competition. The new plan could easily end up relegating public higher education to second or third rate status, not a smart move in an increasingly competitive world.
When looked at as an economic sector, or an industry, it is clear that suppliers, our colleges and universities, are grouped into three tiers based on their reputations. Increasingly those reputations are reinforced by an expanding array of rankings and lists published by sources, some reputable and some questionable.
The distinctive economic characteristic of these tiers, and rankings in general, is that they are not really price-driven. Costs at our elite institutions are high, of course, but a student can end up paying just as much at lesser known, even second-tier institutions. Tuition costs at any given time do not reflect "marginal cost" the way they would in most other competitive markets.
The complex cost structure as well as the tier system and the rankings attached to it are just a few reasons why it is difficult to predict the outcome of the president's plan and why it could use more thought and less rhetoric.
To be fair, maybe we shouldn't take the president's plan too seriously. Maybe it is just another crackpot idea floated in an election year that has already seen a few and will very likely see a lot more.
If somehow it escapes from the White House and is approved by Congress, though, we will wish that we paid more attention to those vacuum cleaner infomercials … because there will be a big mess and we'll have to clean it up.
James McCusker is a Bothell economist, educator and consultant. He also writes a monthly column for the Snohomish County Business Journal.
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