Dear Barack – Why you got a C for your higher education budget proposals

Since I haven’t heard from him yet, I guess President Obama is too polite to challenge the low grades I gave him recently on his budget proposals for higher education. Just in case, however, I prepared a rationale. Here is the first of two parts.

First some background. I conducted an experiment over the several days spanned by President Obama’s speech to the joint session of Congress and the release by the OMB of his budget overview for fiscal year 2010. You can read about the experiment here.

Based on that experiment, I graded President Obama’s budget proposals for higher education along two dimensions. He got a solid C for the analysis that supports his proposals and a weak D for the emotional impact of the story used to justify the proposals. I know it’s his first try, but these grades are not worth telling his kids about.

The remainder of this post is addressed directly to President Obama. It only concerns the C grade. I’ll discuss the more serious D grade in another post, which hopefully will happen in the next couple days.

Dear Barack,

So, why did I give you such poor marks? The simple answer is that the patient (higher education) is sick. You got that part right, but your prescription will only make matters worse. Some people believe this might be a good thing, but it’s probably not the effect you intended.

Before explaining what I mean by this, I need to back up a bit and state what I heard you say in your speech and in your budget overview. If I get this wrong, please let me know because everything that follows is predicated on the accuracy of my understanding of what you meant.

Here’s the gist of your argument as it relates to higher education. The economy and its perfect storm take center stage. So it’s no surprise that many of your educational proposals are draped with economic significance for individual citizens and for the country. You set a goal that by 2020 the United States will have the highest proportion of college graduates in the world. You assert this will happen by improving education at all levels and making higher education more accessible by lowering the cost to students and their families. Specifically, you propose increasing Federal Pell grants and indexing them to inflation plus 1 percent. You also recommend originating all new Federal student loans in the direct lending program, thus ending the entitlements for financial institutions that now lend to students and making the savings available to increase loans to students. You propose an incentive fund to help states improve the retention and graduation of low-income students enrolled in colleges. You propose making permanent the $2500 American Opportunity tax credits that are part of the Recovery Act. You propose investing in innovative programs proven by research and evaluation to improve student learning. And you propose to triple the number of graduate fellowships in the sciences to support the still nascent industries of tomorrow. You also exhort individuals to avoid quitting on themselves and their country, but rather to commit to at least one year of higher education.

Your diagnosis is spot on. Higher education is too expensive. This illness presents itself in the various ways you describe … flattened participation rates, large student debt upon graduation, systemic problems that drag on the economy, skills mismatched to job requirements, uncertainty that individual opportunity and social mobility can be maintained, rising inequality between the haves and the have-nots, lack of transparency that befuddle family decisions about college attendance, and poor accountability for student learning and achievement so that families cannot properly assess what they’re actually purchasing.

Emphasing access to higher education, as you do, seems perfectly reasonable. And on one level your proposals make intuitive sense. Basically you argue the Federal government should intervene directly with tax incentives and grant and loan aid to students and their families. It sure seems like this would lower the cost of attending colleges and universities.

Unfortunately you don’t understand the etiology of the disease. Your proposals will actually increase the net price of higher education for students and families. How you ask? Well, there’s the rub. It’s a bit of a mystery, locked away in the thousands of individual decisions that colleges and universities make about pricing. But examine the decades long run-up of the net price of higher education. It is directly related to the degree that the Federal government tries to keep the prices lower! Isn’t that just the biggest bite in the butt?

I hear your lawyer’s mind ticking. And, of course, you’re right. I’ve only presented circumstantial evidence. It is correlation rather than causation. But it is nonetheless compelling even while it is counterintuitive and embarrassing to the Federal govenment.

Many stories might be concocted to explain this phenomenon. I’d guess that most will be unflattering to colleges and universities in some fashion. So I don’t think I’ll raise the hackles of my friends in higher education by suggesting any possibilities. Your own instincts here will be as good as anyone’s. Just follow the money.

It would be nice if we better understood the mechanism of the disease, but you don’t have the luxury of waiting for that to happen before you need to act. I cannot help you much here. But I’ll mention two possibilities for you to gnaw on. First, you could anticipate that colleges and universities will increase their net price as a result of your budget proposals, so you could provide a brake or governor mechanism on the rate of that increase. Colleges and universities and their lobbyists will scream bloody murder, but maybe you have the political strength to prevail.

Or, second, you could halt the Charge of the Light Brigade that the Federal government has made for these many years at high casualty to the educational dreams of Americans. Instead of a direct assault, how about trying something more subtle? Feint one way and simultaneously do a pincers movement. Or, let’s use a basketball analogy. It’s like the Federal government has been playing basketball for 40 years against a team that has a 7 foot 3 inch behemoth clogging up the lane, but persists in having pint-sized guards drive for layups. Ok, I’m way over my head here and best stop. But you get the idea.

So that’s why you got a C. Your diagnosis was right, but you jumped on a superficial and flimsy explanation of what was happening. Which lead you to offer proposals that will exacerbate rather than ameliorate. Do no harm is good advice in medicine. It works for higher education policy also. At that point you can take your 12 foot fade-away jump shots.

Sincerely,

Gary