Can Obama’s Higher Education Reform Pass?

Obama’s higher education reform is ambitious. In fact, one could call it ambitious if the Democrats controlled both houses of Congress. With the current, divided Congress, it looks like something between wishful thinking and a kamikaze crash. Some might wonder why Obama bothered to introduce this plan, or any plan for anything ambitious really. There is little to no chance these proposals will survive in the House of Representatives. Obama’s plan calls for more government oversight, with complicated caveats, which conservatives can’t stand. Plus, agreeing with Obama on almost anything can have political consequences for red-state representatives.

Obama, edtech, higher education reform

Obama’s Higher Education Reform Faces Challenges in Congress

So why did he do it? Well, looking more closely, we can see that many of his proposals don’t actually require Congressional approval. For example, he asked the Dept of Education to create a new university ranking system based on value, affordability, and other factors by 2015. By 2018, he wants to tie those ranks to the distribution of financial aid. For the first task, he doesn’t need approval. For the second, he does, but not until 2018, more than a year after he leaves office.

By that time, the rankings system will have been in place for a few years. Maybe if it works well, Congress will go for it. Maybe they won’t. If not, Obama will lose a key element in his reform plan, but some important goals are still likely to be accomplished. Schools will hopefully begin paying attention to these issues in the same way, or even more carefully, than factors like selectivity and average test scores that improve standing in US News & World Report’s annual ranking.

It is a bit like one of those diets where they ask you to write things down. Even if you don’t consciously change your behavior, the fact that you are writing it down and paying attention influences your habits. Check it out here, if you don’t believe me. Hopefully, the Education Dept’s rankings can bring this sort of awareness to the nation’s colleges and universities. Earlier this year, the Dept website already began publishing more information about colleges and universities on its College Scorecard webpage.

On loan repayment, the President’s administration can make some significant progress, even without Congress. Obama cannot automatically make all borrowers eligible for the pay-as-you-earn program without Congress. He can extend eligibility to all direct loan (from the Education Dept) borrowers, though, just not those that borrowed through the FFEL program, which was discontinued in 2010. And those in the FFEL program can generally convert loans into direct loans, so in a sense, most borrowers are eligible, if they take the time and effort to make themselves so. The Education Dept does not need approval for its awareness program, which basically educates students and recent grads about their eligibility for benefits.

Finally, for the new emphasis on technology, discussed in our last post, the Obama administration has few congressional hurdles. Of course, many of the bullet points on the plan are simply statements of support, so it is tough to stop measures that are not specifically spelled out yet. In terms of announced funding, Obama will need congressional approval for his $260 million “First in the World” program promoting innovation, but not for the Labor Dept’s $500 million program for accelerated degree programs at community colleges and some four-year universities.

For the competency-based credit system and the re-design of courses and student services through technology, all areas which are important for Rukuku and its business, the administration is free to begin launching experimental programs. We’re excited about that and looking forward to joining in. Let the innovation begin.

Down with Technology? Yea, You Know Me!

edtech, white house, dept of education, support

President Obama and the Department of Education  Say Technology is Cool. We Agree.

In our most recent posts, we’ve discussed the student debt and cost control measures in Obama’s recent higher education reform proposal. The most exciting part of the reform, at least for non-traditional educational suppliers such as Rukuku, is its emphasis on technology and innovation. Some of that emphasis shows up in funding initiatives, and the rest of it shows up in general statements of support.

A few of the highlights:

  1. The Department of Education will promote programs that award learning based on competency rather than class time. That means that independent learners, such as those on Rukuku, can earn credit for what they learn even if they learned it outside the traditional classroom setting.
  2. The administration has introduced a $260 million dollar fund, called First in the World, for testing and evaluating new approaches to higher education. A cooperation with Rukuku could be an excellent example for this one, hint, hint.
  3. The Department of Labor is also offering $500 million for community colleges and some four-year colleges. A portion of that money will be dedicated to programs that accelerate progress along the educational track and reduce costs for students.
  4. The White House will try to reduce some regulatory barriers, which seems to mean they will let more people qualify for financial aid for doing less traditional stuff. My guess is that they will keep a pretty tight rein on this starting out, offering some financial assistance with competency test fees and that sort of thing, but hopefully we can eventually look at financial aid for classes on media such as Rukuku.
  5. The announcement included several other statements of support for tech stuff, many of them related to course design and student skill evaluation. These are all pretty general, but they do highlight some of the successes of recent programs involving technology and seem to say, “hey, we’re down with technology and will be open-minded about this.” Once again, good news for Rukuku.

In our next post, the final one related to this higher education reform, we’ll look at the chances that any of this reform will survive in Congress and the consequences if it doesn’t. Also, the White House has a full rundown of the plan here.

Rank and File: Education Reform and College Ranking

In our most recent posts, we looked at Obama’s proposed higher education reform and its provisions for limiting student loan payments and in some cases forgiving debts. Those policies are relatively straight forward, despite a few challenges we highlighted.

College ranking, obama higher education reform

Obama’s Educational Reform Ties Federal Funds to College Ranking

The most central and more complicated part of Obama’s education plan relates to its college ranking system. For this, the Department of Education will rank universities and colleges based on several factors including graduation rate, loan default rate, average debt loads, and graduate employment rates.

Eventually, these rankings will influence the awarding of federal money for student tuition. In other words, schools that offer better deals for students will get more investment from the federal government.

It sounds reasonable enough for an investor to evaluate the potential returns. In this case, that investor is the federal government, on the one hand, and the incoming student, on the other. In both cases, knowing more about these rates should be important. This reform will make that information widely available, something that is not the case currently, as we’ve discussed in previous posts.

The more challenging part of the ranking process will be determining the proper weight of each element of the criteria without making them vulnerable to manipulation or disadvantaging schools that may be doing good things that are tougher to quantify. For example, low income students, even those with high test scores, are less likely to complete college.

Check out this graphic below, taken from this excellent 2012 blog post by Elise Gould, of the Economic Policy Institute:

College Completion by Income Group

College Completion by Income Group

Colleges then will have to weigh the advantages given in the ranking to assisting low-income students against the disadvantages of a possible decrease in the graduation rate. That could discourage universities from recruiting lower income students or really any students with higher risks of dropping out.

This doesn’t have to be the case, but the Department of Education must be careful when it evaluates and assigns values to the various pieces of the magical equation that will determine rankings.

That being said, the most influential aspect of this plan, at least early on, will likely be its emphasis on transparency. It is important to have this information easily available and just as important that colleges are aware that it is easily available. That will give them incentive to improve in these categories.

Taking the next step, though, and using that information to come up with a specific rank for each school could result in some unintended consequences, especially when tied directly to funding. Schools will have strong incentives to massage their numbers, and the Department of Education must be very careful to minimize the possibilities for them to do so.


To Borrow is Human; to Forgive, Divine.

In our last post, we talked about Obama’s plan to cap student loan payments at 10% of monthly income. Today we’re looking at another part of program, the loan forgiveness clause. When student debt payments drag on until the 20 year mark, the government automatically erases the debt. For those working in the public sector, the government takes over the debt after 10 years.

Student Loan, Obama Higher Education Reform

Uncle Sam forgives the remaining student loan debt after ten years for those working in the public sector.

The challenge with such a program is, as with anything anywhere, preventing people from taking advantage of the rules. Politico brought one such case to light recently, related to the 10 year forgiveness plan for public sector employees. Law schools at Georgetown and other universities advertised programs requiring no student loan payments ever, partly because of government programs.

In a sense, it is a generous program. Georgetown offers to make ten years of loan payments for law graduates that work in the public sector. But then, the government takes care of the rest, and this is even advertised on the program website. Check it out here.

With income-based payments, borrowers obviously make less progress on the underlying principal, meaning a larger amount is still outstanding after ten years. For professional school graduates, that amount can easily reach beyond $100,000.

For reference, here’s the politico story:

It is not quite as scandalous as an iPhone pic of a private part, but it is hard to believe this is what lawmakers were hoping for when they passed the original law in 2007 or when Obama shortened the time limits and lowered the income caps last year. (nor what Apple was hoping for when it created the iPhone).

When the government caps the payments at 10% of income, one would assume it is the borrower making those 10% payments, not their former university or anyone else. Does that count as extra income, for example? If so, do they have to recalculate the 10%? This is only one case, of course, and not an egregious one, but my guess is there will be more, especially as the program expands.

All that being said, an average participant in the program does get a lighter load in leaner times and still has responsibility for the loan. That’s what the program should do. Graduates don’t get out of the debt by making lower payments. They just extend the amount of time they will be paying on the loan, which of course means more interest payments long term. But they get a break, when they need it.

While the government will forgive the loan after 20 years (10 years in the public sector, as I mentioned above), 20 years of paying 10% of your income and still being in debt does not seem like getting off that easily. People are creative, though. Going forward, we’ll see how many more stories come up involving imaginative ideas for offloading loans at that ten or even twenty year mark. Feel free to share any such ideas in the comments section.

In our next post, we’ll look at the cost control aspects of Obama’s plan.