President Barack Obama is proposing the most sweeping changes to the federal student aid program in decades. His plan would link federal dollars to new Education Department ratings of colleges and universities, providing students at better-rated schools with less expensive loans or bigger grants.
If Congress approves Obama’s plan, schools would lose federal financial aid for their students if the Education Department decides they aren’t doing enough to control costs, deliver quality education or open their doors wide enough for students from low- and moderate-income families.
Here’s a look at the president’s proposal:
Q: What does Obama want to do?
A: He wants to collect data on each school and use that to rate colleges. Schools would qualify for dollars based on the results they achieve: the percentage of students who graduate, for example. The White House says the overhaul would reward outcomes, not head counts.
Q: How, specifically, will the administration judge which schools are best?
A: That isn’t clear, which makes colleges nervous. Obama introduced the plan Thursday and said schools would be rewarded if they help students from low-income families, keep costs low and have large numbers of students who earn a degree. Obama said the Education Department would track graduation rates, transfer rates, graduates’ incomes and the numbers of students who earn advanced degrees.
Q: How would a community college compete with an Ivy League institution?
A: They wouldn’t have to compete. Schools would be judged against similar schools, so they would be competing on a level playing field. The ratings also would take into account schools that enroll students from poorer families and schools that show improvement. But even within the same college, there remains a wide array of majors, and it isn’t clear how the ratings would account for differences between highly selective programs and more general studies.
Q: When would this start?
A: Obama wants to publish college ratings before the 2015 academic year. He wants those ratings to start determining eligibility by 2018 so that the problems and quirks in the new program can be resolved.
Q: Why would colleges embrace this?
A: If Obama gets his way, he would be putting $1 billion on the table as part of a college version of the administration’s Race to the Top competition for k-12 schools. Those funds are designed to be an incentive for states to maintain their higher education budgets. Colleges also can earn a bonus if they enroll a larger number of low- and moderate-income students.
Q: What if the college or university still doesn’t want to go along?
A: Students at schools that don’t comply could see their federal student aid cut or denied. The federal government provides $150 billion each year in student aid, and without that, many students could not afford college. If a college lost all access to student aid, there is no way many could keep their doors open.
Q: So will students have fewer options?
A: The White House says no. Students still would be free to pick their schools, but schools that have the best results would get the first tax dollars. Students going to better schools would receive larger grants and cheaper loans.
Q: Can Obama do this on his own?
A: No. He can ask the colleges for the data and the education secretary can publish ratings based on those figures. But any substantial changes to the student loan program would require congressional approval.
Q: Will Congress go along?
A: Maybe. College costs are a concern for lawmakers from both parties, and the typical partisan divide is less obvious here than with other subjects. For instance, a bipartisan agreement emerged this summer to overhaul student loan rates, and Obama signed into law changes that make borrowing cheaper for students in the next few years. But initial reaction to Obama’s new plan from Capitol Hill was not enthusiastic, and some Republicans criticized the proposal as too government-centered.
Q: What is the timeline for Congress to do this?
A: As quickly — or as slowly — as lawmakers want. The major law that governs K-12 education, No Child Left Behind, expired in 2007. The Republican-led House has once again passed its version of a rewrite of this law, while the Senate Education Committee has finished its work and awaits a vote in the full chamber. The Senate committee this fall plans to start its rewrite of the Higher Education Act, and the panel’s Democratic chairman, Sen. Tom Harkin of Iowa, has scheduled the first hearings for September. But he’s also waiting for a Government Accountability Office report on federal student loans that isn’t due back until December.
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