College costs: Obama's top-down plan
President Obama on Thursday announced his plan to make college in America more affordable. Naturally, it involved a complicated evaluation system by which federal bureaucrats would rate college “perfomance” and reward higher-ranking institutions with more taxpayer money — because if any institution can be trusted to reduce costs and improve accountability, it’s the federal bureaucracy.
Obama would have colleges measured on such critera as how many students graduate on time, how much debt they have when they graduate, and how many find employment. He acknowledged that colleges game existing ranking systems. Obviously, colleges will game these rankings too.
They will admit more students who receive grants and fewer who receive loans. They will boost the ranks of finance and business majors and reduce the ranks of liberal arts majors. They will not have to actually cut costs to do well on many of the criteria.
In his speech, Obama hit on the real problem. “It is time to stop subsidizing schools that are not producing good results,” he said. But his sentence could have ended after “schools.” As in health care, the big problem is that someone else pays for far too much of the costs, making students and families less sensitive to prices. Obama’s plan will do nothing about this third-party payer problem. It therefore will do just what he said it would not do: tinker around the edges rather than provide a fundamental change.
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