The Corner

Return to Obama 1.0 on Higher Ed

If you were listening for new higher-ed ideas in the State of the Union last night, you probably felt like it was 2009 all over again.

In his first State of the Union, President Obama set out a higher-education agenda that was largely in keeping with the traditional federal approach to higher-education policy. To encourage every American to get at least one year of college, the administration promised to spend more money on student-aid programs.

He backed up his promise by spending record amounts on the Pell Grant program—doubling the outlay in just three years—creating a new tuition tax credit, and sending additional billions in stimulus money to the states to “stabilize” their public-education systems. A year later he expanded an existing income-based repayment program to make it more generous, providing a “windfall” of loan forgiveness to people with graduate degrees.

It was a simple, naïve strategy: give people and institutions more money, and those people and institutions will do more of what we want them to do. To be fair, it was a super-sized version of the same flawed strategy that has governed federal higher-education policy for the past half-century, one that has been aided and abetted by both Left and Right.

It was also unsuccessful. The massive infusion of Pell Grant cash only temporarily brought out-of-pocket costs down before they were swallowed up by further tuition increases. The purchasing power of Pell is now at an all-time low. Enrollments swelled during the recession, but completion rates declined.

Fast-forward four years, during which 2009-era Obama seemed to have learned some hard lessons. The 2012–13 version wasn’t happy about endlessly subsidizing colleges only to watch states cut funding and institutions jack their prices even further. And he let them know that in his 2012 SOTU, putting colleges “on notice” that if they didn’t control their tuition they’d get less federal money. A year later he told colleges that we couldn’t just subsidize tuition increases year-in and year-out, that we’d run out of money. To put a stop to the charade, he proposed a set of college ratings that would eventually determine the flow of federal aid to campuses.

You can certainly disagree with the administration’s specific ideas about how to tame this beast—as I have, often vigorously. But it is hard to disagree with their overarching conclusion: that the old federal approach to higher education—subsidize, watch tuition rise, subsidize again—is failing. The move from a no-questions-asked access agenda to one where we acknowledge colleges’ flawed incentives was long overdue. I’ve applauded the administration for this shift in rhetoric before, and still believe it has changed the politics of higher education for the better.  

But now it’s 2015, and the old Obama—who believed we could raise attainment with federal largesse—is back with a vengeance. Earlier calls for empowering students and families to make good choices in the higher-education market, for colleges to do more with less, or to allow new, lower-cost competitors into the market—all were absent last night.

Instead, we’re supposed to believe that a bigger and more generous tuition tax credit, coupled with free, federally governed community college, will serve middle- and working-class Americans best. We’re to believe this despite multiple studies showing that tuition tax credits do little to change college-going behavior, and the often-bleak track record of public community colleges. Most striking: The same colleges that were “on notice” just a few short years ago would now be rewarded, but the incentives won’t have changed much.

Last night the president said it was time to “turn the page.” But on higher ed he risks turning the page backward instead of forward.

— Andrew Kelly is a resident scholar at the American Enterprise Institute, whose Center on Higher Education Reform he directs.


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