Obama Plan to Rate Colleges Makes Them Even More Expensive

June 6, 2014

While the justification for the Obama administration's plan to create a federal scorecard to rate colleges is to provide more accountability and affordability, the plan is just a welfare scheme that expands an entitlement and will result in less cost-effective institutions, according to Shikha Dalmia, senior analyst at the Reason Foundation.

Universities receive a whopping $150 billion in federal aid each year -- twice as much as the federal government gives to all 50 states. Independent, national standardized testing would allow lawmakers to measure the impact of the aid and whether parents are getting value out of the dollars they are putting into these schools. Colleges, however, have resisted these efforts.

  • Only 200 of the U.S.'s 1,700 colleges participate in the Collegiate Learning Assessment exam, which tests reading, writing and critical thinking of incoming students to produce a "value added" measurement for each university. Of those 200 participants, hardly any make results public.
  • Years ago, colleges lobbied for a federal law barring the collection of individualized data that would allow student transcripts to be linked to earnings data, in order to see what colleges provide the best return on investment.

If the Obama administration wants to improve colleges, it should allow data gathering and administer tests similar to the College Learning Assessment. Instead, the proposed federal scorecard will rate schools based on accessibility and affordability, granting federal aid based on the ratings. Colleges that admit more Pell grant recipients (a form of federal aid) will receive a higher ranking, leading to even more federal aid.

Moreover, the plan's loan forgiveness program allows students to borrow according to their needs, but repay only according to their ability. Taxpayers are left to foot the rest of the loan bill.

With college costs already growing 27 percent beyond inflation over the past five years, expanding student loans in this way only reduces incentives for students and colleges to be cost-conscious.

Source: Shikha Dalmia, "Obama Just Found a Way to Make College Even More Expensive," Reason, June 3, 2014.

 

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