Obama’s New College Ranking System

The Federal Reserve Board of New York reports that over 38 million Americans have outstanding student loans. Two-thirds of borrowers are under the age of 39. These individuals are often burdened with crippling monthly payments that reduce their ability to afford a home, raise children, and cover other basic expenses. In the fourth quarter of 2012, Americans owed a collective $966 billion in student loans, with an average student loan burden of $24,000.

The reason students take out thousands of dollars in loans? Skyrocketing education costs. In-state tuition costs at a public college cost an average of $13,600 for the 2010-2011 academic year, while not-for-profit private schools had an average sticker price of $36,300, according to the National Center for Education Statistics. This represents an astonishing 42% increase for public schools and 31% rise for private schools over the past decade.

The combination of rising post-secondary education costs and lackluster employment opportunities has created a perfect storm for college graduates: many feel they were sold a bill of goods that they will spend the rest of their lives paying off. Education advocates argue that colleges do a poor job of informing prospective students about costs and the potential payoff — or lack thereof — for a college education.

Obama’s Proposal for a College Ranking System

The idea of ranking colleges is not a new one. Organizations such as the U.S. News and World Report release yearly rankings based on data collected from schools, including characteristics about faculty, students, standardized test scores, and graduation rates. The result is a list that many argue is elitist; Ivy League schools rise to the top, while other high-quality, affordable options sink lower.Obama's New College Ranking System

Obama’s proposed ranking system is designed to focus on practical metrics that give potential students more information about the areas that matter most. Potential factors that will be incorporated into the algorithm include student debt ratio upon graduation, tuition rate, four-year graduation rate, default rates on student loans, average salary of recent graduates, percentage of low-income students enrolled and matriculated, and employment rate among graduates. How these factors will be weighted in the final model remains a mystery, but Obama argues that these practical metrics give students vital information missing in today’s ranking systems.

The ranking system is something that the Department of Education can develop without the need for legislation or Congressional approval. The president has called on the ranking system to be in place by 2015. The second part of Obama’s proposal, however, calls for the federal government to link student loans to an institution’s ranking. Higher ranked colleges would get a larger chunk of federal financial aid, thus funneling students into more affordable institutions. This would require an overhaul of the federal student loan system, something that a gridlocked Congress may find tough to swallow.

Proponents of the Ranking System Say It Will Lower Costs and Raise Quality

Education advocates argue that increasing the data available to prospective students is always a good thing. Currently, applicants must seek information from each individual college about tuition, graduation rates, and post-graduate employment. Some institutions choose not to make these metrics public, making it challenging for students to get the best possible information. Peter McPherson, president of the Association of Public and Land-Grant Universities, applauded Obama’s proposal, stating that it will “help ensure that students and families get the best value for their education dollars.”

Proponents of the president’s system say that it will slow the exponential growth of college tuition while raising the quality of education. If a college continues to increase tuition prices but has a low graduation rate and poor post-graduate salaries, it will fall in the rankings. Faced with the prospect of fewer federal aid dollars and less student interest, universities will be forced to reexamine how their tuition money is spent.

Critics Argue that Obama’s Ranking System is Fundamentally Flawed

Despite popular support among cash-strapped students, Obama’s plan has drawn criticism from Republican lawmakers, universities, and other quarters.

Some opponents claim that forcing all post-secondary institutions into a one-size-fits-all ranking system simply doesn’t make sense. With a rise in online colleges, for-profit institutions, colleges designed for adult learners, and non-traditional degree programs, pretending that all universities can be ranked in the same way is short-sighted, according to critics. For example, comparing a large, public research institution to a small fine arts college may not be helpful for students.

Several Republican lawmakers have used the president’s proposal to launch a broader attack on the role of the federal government in higher education. Rep. John Kline of Minnesota stated that the proposed plan is “arbitrary” and could “even lead to federal price controls.” Many opponents of the plan believe that the federal government should stay out of the higher education debate and focus on the sluggish economy instead. They argue that the government can do more good by boosting employment opportunities for recent college graduates, allowing Americans to chip away at the nearly $1 billion of student loan debt they owe.