What's Next For Higher Ed: Control Costs or Lose Federal Funding?

President Obama's State of the Union address included a gauntlet of sorts for the higher education community: Control tuition costs or face consequences.

The next day I spoke with Amy Laitinen, formerly a a former policy advisor for the U.S. Department of Education, who is now senior higher education policy analyst for Education Sector, a nonpartisan think tank in Washington, D.C..

Laitinen said she had expected Obama to talk about college costs "But I didn’t expect him to be so bold ... I didn’t expect him to pull out the financial aid guns and tell colleges he was putting them on notice to get tuition costs in line."

Just how much is at stake here? The figure might surprise you. There's over $150 billion in federal student aid awarded annually.

"That's a huge lever for change that’s really been underutilized," Laitinen said. "In a lot of ways he really dropped a bomb. It will be interesting to see what happens with that and how colleges and universities respond."

Obama had more details to share when he spoke at the University of Michigan at the end of the week, including a proposal for specialized student loans that will depend on an institution's willingness (and ability) to keep costs in line, and to demonstrate "value." He also suggested a "college scorecard" to make it easier for parents and students to judge the overall performance of the campus, and determine whether the tuition fits a family's budget. The twin goals should be to maintain affordability without sacrificing quality, Obama said. (Click here for the official White House fact sheet on Obama's Blueprint to College Affordability.)

Criticism of his proposal has been fast and furious among higher education officials and some experts, who argue the president's plan doesn't address the serious fiscal and programatic issues facing colleges and universities, including decreased state funding.

Inside Higher Ed writer Libby A. Nelson has a comprehensive story looking at the potential impact of Obama's proposal an the "unintended consequences" of colleges and universities doing whatever it takes not to risk losing federal funding. Among them, Burton Weisbrod, a professor of economics at Northwestern University, told Nelson, could be universities reassigning costs once included in tuition as separate "fees," such as library privileges. 

“That begins a kind of cat-and-mouse game, which is the sort of thing that goes on in the whole regulatory environment all the time when organizations look for some way around regulatory constraint,” Weisbrod told Nelson. “It’s how to succeed without really succeeding.”

For the better part of a decade, we've seen aspects of that game of cat or mouse over in K-12 system. Some states figured out how to elude some of the more rigorous demands of No Child Left Behind by finessing statistical categories. Others enacted regulations that met the letter of the law while fall far short of the underlying spirit. The threatened loss of federal funding and takeover of failing schools rarely happened, and thus turned out not to be much of a motivator. 

It's too early to know whether the president's higher ed blueprint will be embraced. In the short-term, at least it is forcing conversation on complex topics that deserve attention.

Have a question, comment or concern for the Educated Reporter? Email EWA public editor Emily Richmond at erichmond@ewa.org. She also tweets @EWAEmily.