Photo: Illustration by Jim Stoten
Here's Why Obama's Last Grand Plan to Control College Costs Flopped
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Here's Why Obama's Last Grand Plan to Control College Costs Flopped

By Photo: Illustration by Jim Stoten

Updated, August 22, 2013: President Obama this week plans to announce an ambitious plan to control college tuition costs. Earlier this year, TNR wrote about the last grand plan to do thata plan, as it happens, that is barely a year old. At the time, the media paid little notice, and the plan flopped because, as popular as the idea is, it never found a Washington constituency.  

You can be president of the United States and have the best, most bipartisan-seeming idea in the world. But if it doesn’t have a constituency, you might as well be town clerk of Toad Suck, Arkansas. This is the sad lesson of President Barack Obama’s boldest attempt to control the cost of college education, which has been rising inexorably for a decade.

The statistics are astonishing. Controlling for inflation, tuition and fees have risen 26 percent during the past ten years at private four-year colleges, 47 percent at public two-year colleges, and 66 percent at public four-year colleges. The most plausible explanation for why this is so, offered by Richard Vedder, a gadfly economist at the American Enterprise Institute, is “because they can.” A college degree is such an obvious necessity in this economy that people will pay nearly anything for it, and colleges know that. Yes, price increases have been mitigated by needs-based grants and loanssome from the colleges, more from the government. But subsidies merely transfer the cost of inflation to taxpayers, while loans burden students with unprecedented levels of debt.

 A college degree is such a necessity in this economy that people will pay nearly anything for it, and colleges know that.

The root problem, which the administration set out to solve, is price. “Let me put colleges and universities on notice,” President Obama said in his 2012 State of the Union address. “If you can’t stop tuition from going up, the funding you get from taxpayers will go down.” By all accounts, it was his own idea to leverage federal higher-education subsidies to impose limits on tuition increases. It went nowhere.

The first constituency that failed to take notice was the news media. Practically speaking, the president was asking Congress to impose price controls on a sector that accounts for 3 percent of GDP. But in an election year, the media (exempting the trade press) was primarily interested in spotlighting those policies likeliest to get a rise out of Obama’s opponent, and Mitt Romney wasn’t much interested in education issues. Later, when Obama revived his call for tuition price controls in subsequent speeches (including his convention speech and this year’s State of the Union), the press downplayed what was then “old” news. Another obstacle was the press’s (accurate) perception of Obama as, in general, a strong supporter of higher educationdoubling, for instance, funding for low-income Pell grants. That Obama also favored punitive action against some colleges was the sort of complication reporters don’t easily digest.

The next constituency that ought to have taken interest washear me out!the House Republicans. Back in 2003, Republican Representative Buck McKeon of California introduced legislation similar to Obama’s proposal. Among the bill’s co-sponsors was future House Speaker John Boehner. Republicans don’t like tinkering with the private sector (even the nonprofit part), but neither do their hearts bleed for America’s institutions of higher learning, which they regard, accurately, as mostly hostile territory. And McKeon had plausibly framed the issue as accountability in government spending. But McKeon and Boehner subsequently backed away from the idea under pressure from fellow Republicans and One Dupont Circle (shorthand for the higher-ed lobby in Washington, because much of it resides there).

Reviving support among Republicans seems unlikely. The party has a history of repudiating its own ideas whenever Democrats adopt themremember Obamacare?and government tuition curbs are no exception. Federal education dollars “should not be used as bargaining chips to impose federal price controls,” a spokeswoman for the (GOP-controlled) House education committee told me. The Republicans of 2013 are never going to support anything that can be labeled “price controls.”

The Senate was, and remains, Democratic, but Obama’s proposal didn’t generate much interest there, either. The Senate Health, Education, Labor and Pensions (HELP) Committee and its chairman, Democrat Tom Harkin of Iowa, were preoccupied with an investigation of abuses by for-profit colleges. Obama’s proposal was also sent to an appropriations subcommittee on education, chaired by Harkin as well; its report on the subject expressed polite support for the administration’s goals and principles, but said they required “more deliberation in Congress.”

Yet in three HELP committee hearings on college affordability held after Obama laid out his proposal, no such deliberation took place (unless you count a brief mention in prepared testimony by an Education Department undersecretary). One likely factor was that One Dupont Circle, which holds particular sway over Democrats, opposed the plan. “The answer is not going to come from more federal controls on colleges or states,” said David L. Warren, president of the National Association of Independent Colleges and Universities, a consortium of private schools that has muscle in Washington.

The Obama administration can certainly be faulted for not thinking its plan through in greater detail. Early staff deliberations struggled over the question of which federal funds to withhold. Research grants seemed a logical target, but research funds tend to concentrate in a few elite schools that aren’t necessarily the worst offenders when college-based financial aid is taken into account. There was also some reluctance to undermine spending that might improve America’s economic competitiveness. And going after student aid risked punishing the very people the administration was trying to help.

In the end, the administration decided to focus on the relatively narrow slice of student aid that’s awarded not directly to students but indirectly through the colleges themselveswork-study grants, Perkins loans, and Supplemented Educational Opportunity Grants. These “campus-based aid” programs follow federal eligibility formulas that aren’t always very logical, and the thinking was that the formulas could be updated to take into account tuition levels and growth rates (and alsoto make sure these colleges weren’t keeping prices low by admitting only the wealthythe proportion of students eligible for federal Pell grants). But no such formulas were spelled out.

The likeliest vehicle for implementing some version of the president’s plan is the Higher Education Act, due for reauthorization in 2014. But reauthorizations have a way of not occurring on timethe No Child Left Behind law is six years overdueand One Dupont Circle will surely resist being fitted with the kind of choke chain necessary to solve this problem. An Association Against Colleges That Fleece Students might provide a counterweight, but no such organization exists (perhaps because college students don’t have any money left over to fund one). The few advocacy groups that champion student interests are mainly focused on keeping federal student aid flowing, a cause that allies them with, rather than positions them against, One Dupont Circle.

A well-established principle of political science is that a diffuse, unfunded majority typically has little chance against an organized, moneyed minorityeven when the president sticks up for the former. If Obama wants to succeed, he’ll need to help fashion something resembling a political movement. Without one, all he’s got is a talking point.

 

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