Delivering an Influx of Federal Dollars, Obama Administration Wants Results

Brendan Smialowski for The Chronicle

October 10, 2010

President Obama campaigned on a promise to provide billions more dollars to students and colleges, and he has delivered.

Since he took office, almost two years ago, spending on student aid has grown by nearly 50 percent, to $145-billion, while aid to colleges has exploded. Much of the new money has come with no strings attached, including $36-billion for Pell Grants in a student-loan bill he signed in March.

But the president has also sought to use federal funds as leverage, offering carrots to colleges and states that embrace his goals, and sticks to those that hinder them. More than any of his predecessors, he has demanded results in exchange for federal dollars, requiring grant applicants to set benchmarks for improvement and threatening to withhold aid from programs that fail to prepare students for jobs.

That approach has rankled some higher-education leaders, who accuse the administration of meddling in academic affairs, but it has won praise from advocates of greater accountability and assessment for colleges.

Secretary of Education Arne Duncan says the administration sees itself as a "partner" in a nationwide effort to improve schools and colleges. In a speech he gave a year ago, Mr. Duncan sought to reassure state education leaders that he was not seeking to seize control of the education agenda.

"Education reform starts locally, ... and my job is to help you succeed," he said. "I want to be a partner in your success, not the boss of it."

Still, he continued, "I'm not willing to be a silent partner who puts a stamp of approval on the status quo."

"I plan to be an active partner."

It's too soon to say whether the president's accountability agenda will succeed. Though Congress has embraced his ideas, his proposals have run into budget constraints. So far lawmakers have provided only a fraction of the money the president has sought for new incentive grants to states and community colleges.

He has also faced significant pushback on his plan to tie federal aid to graduates' debt levels and employment. While the administration is unlikely to abandon the proposal, it is under intense pressure from for-profit colleges to soften the so-called gainful-employment rule, and it recently postponed putting out the regulation until after the midterm elections.

An Ambitious Agenda

The president set ambitious goals for the nation's colleges early in his presidency, calling for the United States to lead the world in college-completion rates by 2020 and asking every American to obtain a "year or more" of higher education.

To make college more affordable for the millions of Americans without degrees, he proposed ending subsidies to student lenders and using the savings to significantly expand federal support to students, states, and colleges.

The president put community colleges at the center of his plan, asking Congress to give the institutions $12-billion over 10 years to educate five million more students. Much of the money would have come with conditions: To qualify for federal support, community colleges would have had to set goals tied to program completion, work-force preparation, and job placement. Grantees would have chosen their own benchmarks, but those would have had to be approved by the U.S. education secretary.

The proposal represented a significant shift in the way federal aid has been awarded to community colleges, requiring them to negotiate individual goals for the first time. It also broke from the tradition of distributing aid based on enrollments, instead tying awards to students' graduation.

The administration also sought to enlist governors in its goals, proposing a $2.5-billion College Access and Completion Fund to support states' efforts to improve college attendance and completion rates. The money, which was to be competitively awarded, would have rewarded states that embraced the administration's vision of reform, much like the new Race to the Top grants for elementary and secondary schools.

Both the community-college and state-grant proposals sought to change the incentive structure for higher education, encouraging colleges to focus on graduating students, not just enrolling them. As Mr. Arne Duncan explained to reporters in a 2009 briefing on the president's budget, "there have been very few incentives on the graduation side."

"There's been a lot of push to get students in the door, but not to graduate," he said. "We really have to change the status quo."

An 'Activist' President

Not surprisingly, the plans met with skepticism from colleges. Some community-college leaders worried that benchmarking could shift the balance of power from state and local governing boards to Washington, setting the stage for federal meddling in curricula. Private colleges, meanwhile, objected to the plan to funnel the Access and Completion grants through the states, arguing that it would be inefficient and could compromise their cherished independence. While public colleges must answer to state higher-education offices, private colleges are independently governed.

"We couldn't have states setting benchmarks for private colleges," said Sarah A. Flanagan, vice president for government relations and policy at the National Association of Independent Colleges and Universities.

Colleges were also ambivalent about the president's plan to expand the Perkins Loan program and award a portion of the new aid to colleges that held down their tuition and did a good job graduating Pell Grant recipients. While college officials welcomed the money, they warned that the plan would penalize public colleges in states whose legislatures set tuition, often raising it to offset budget cuts.

Terry W. Hartle, senior vice president for government and public affairs at the American Council on Education, said Mr. Obama has taken a more "activist" and "expansive" approach to higher education than his predecessors, "both in terms of investing in education and moving the industry in ways it wants it to go."

"The good news is that they think higher education is important," Mr. Hartle said. "The bad news is that they would like more say over it than any other administration has had."

So far, though, Mr. Obama has had limited success in advancing his accountability agenda. Though Democrats included the president's proposals in legislation that ended the bank-based student-loan system, they were forced to scale back many of the programs when the bill yielded less savings than expected.

In the end, the measure provided only $750-million of the $2.5-billion Mr. Obama had sought for grants to states that advance his agenda on college completion. It included just $2-billion of the $12-billion the president was seeking for community colleges, and nothing for the program that would have required recipients to set benchmarks for improvement.

A 'Free Pass' for Colleges?

The president got another opportunity to shape education policy with the passage of the economic-stimulus bill, a multibillion-dollar bailout for cash-strapped states. The bill, which doubled the size of the Department of Education's budget, gave Mr. Duncan more money than any previous education secretary and the power to distribute it as he saw fit.

Though much of the bill's education aid, some $48.6-billion, was distributed by formula, governors had to provide four "assurances" to receive awards, including having "national college and career-ready standards" and tracking students from pre-kindergarten through college and careers.

The goal, said MaryEllen McGuire, who served until recently as Mr. Obama's senior adviser for education, was to leverage federal dollars for reform and build state capacity in the process.

"We weren't just giving money away," she said. "We had assurances in place."

But it was the bill's Race to the Top fund that gave the administration the most influence over education policy. Though only $4.35-billion in size, the fund has driven significant change at the state level, prompting governors and state legislatures to adopt common standards in elementary and secondary education, lift caps on charter schools, and begin to evaluate teachers based on their students' performance. Secretary Duncan recently credited the program with driving a "quiet revolution" of education reform.

Critics of the Race to the Top program see it as an example of federal micromanagement of education.

"This is the federal government telling states that if you want this money, you have to make your priorities Washington's priorities," said Neal McCluskey, associate director of the Center for Educational Freedom, at the Cato Institute.

But supporters of the program say it's a model that should be extended to higher education. Kevin Carey, policy director of Education Sector, and a frequent contributor to The Chronicle, says colleges got a "free pass" in the stimulus bill, receiving millions of dollars with virtually no strings attached.

He argues that colleges would be better off if they accepted more federal oversight in exchange for more federal aid.

"There should be a Race to the Top for colleges," Mr. Carey said. He suggests, among other things, that the money go only to states that are open about their colleges' graduation rates, provide evidence of student learning, and publicly report their job-placement rates.

Regulatory Changes

Meanwhile, the president has pursued an aggressive regulatory agenda, proposing a slew of rules aimed at safeguarding the federal student-aid program from fraud and abuse. The most controversial of these is the "gainful-employment rule," which would cut off federal student aid to programs whose graduates have high debt-to-income ratios and low loan-repayment rates.

While the rule is aimed at for-profit colleges, some nonprofit colleges fear it could set a precedent for evaluating all colleges based on their graduates' earnings. That could hurt programs in regions with high unemployment and discourage colleges from offering degrees in low-paying fields, lobbyists say. "They're fairly well crossing the Rubicon," said David S. Baime, senior vice president for government relations at the American Association of Community Colleges. "You're not that many steps away from forgetting about debt and just looking at earnings."

Other rules the Obama administration has proposed would apply to all institutions, including a plan to establish a federal definition of credit-hour and expand state-authorization requirements for colleges. Colleges say the proposals invite federal intrusion into academic and state affairs and would limit innovation in higher education.

With the first round of rules due out at the start of November, the Education Department is under intense pressure from colleges to soften its proposals.

But it's clear that President Obama hasn't given up on using federal dollars to push for change in higher education. In his budget for the 2010 fiscal year, the president proposed putting schools of education in direct competition with alternative-certification programs like Teach for America when seeking federal grants. And he's also expected to use $2-billion in grants to community colleges to reward programs that emphasize reform and innovation.

Mr. Carey, of Education Sector, sees signs that the days of free money to colleges are over.

"In the future, if colleges expect to get additional investments, they're going to have to make the case for what that money will buy," he said.