President Obama Announces Higher Education Plan

President Barack Obama announced Thursday a set of federal higher education proposals focusing on the issues of college performance, cost, affordability, and innovation.

According to a fact sheet released by The White House early Thursday morning, the President’s plan will connect student aid to college and university outcomes.   The President is directing the U.S. Department of Education to develop and publish a new college rating system focused on performance, which is intended to go live prior to the 2015 school year.  These ratings will compare colleges with similar missions and will be based on measures such as access, affordability, and outcomes.  By 2018, the President hopes to be able to allocate federal financial aid in part based on these college ratings—a change that would require legislative action on behalf of Congress.  The President announced the change as one of his goals for the upcoming reauthorization of the Higher Education Act.

The President has requested $1 billion in Race to the Top funding to spur higher education reforms in the states.  Noting the typical higher education funding model that allocates dollars based on enrollment rather than success at graduating students, the President specifically highlighted the State of Tennessee as a forward thinking exception to this general practice.  Tennessee changed its funding formula to focus on institutional outcomes via the Complete College Act of 2010.   Innovation will be a key competitive factor for colleges and universities under the President’s proposals, which cite recent innovations in higher education such as Massive Open Online Courses (MOOCs), hybrid classrooms, three-year accelerated degrees, competency-based learning, technologically advanced student services, and the ramping up of dual enrollment opportunities.  To assist colleges and universities with such innovation, the President has directed the Department of Education to issue regulatory waivers for “experimental sites” that promote high-quality, low-cost innovations in higher education.

The President will include in his legislative package incentives for enrolling and graduating Pell-eligible students, including a potential “Pell Bonus” for colleges based upon the number of Pell students they graduate.  The fact sheet makes clear that student accountability, too, is an area where the administration intends to propose legislation, perhaps making significant changes to current academic progress requirements for student aid programs.

Wrapping up his plan with a look at student debt, the President is proposing an expanded version of the existing income-driven repayment plan (commonly known as Pay as You Earn).  The average borrower in the United States now graduates with over $26,000 in debt.   In Tennessee, the average amount of undergraduate student debt at the time of graduation is lower, just under $20,000.  Lower still are the average debt levels for undergraduate students enrolled in the UT System, at roughly $17,000.  System-wide, approximately 53 percent of UT undergraduates have taken out loans, a figure well below the national average.

Although the federal Higher Education Act is up for reauthorization this year, it is unlikely that Congress will be able to address the legislation until 2015.  To watch the President’s remarks from Thursday morning, click on the embedded video below.