By TAMAR LEWIN
President Obama plans to announce a set of ambitious proposals on Thursday aimed at making colleges more accountable and affordable by rating them and ultimately linking those ratings to financial aid.
A draft of the proposal, obtained by The New York Times and likely to cause some consternation among colleges, shows a plan to rate colleges before the 2015 school year based on measures like tuition, graduation rates, debt and earnings of graduates, and the percentage of lower-income students who attend. The ratings would compare colleges against their peer institutions. If the plan can win Congressional approval, the idea is to base federal financial aid to students attending the colleges partly on those rankings.
“All the things we’re measuring are important for students choosing a college,” a senior administration official said. “It’s important to us that colleges offer good value for their tuition dollars, and that higher education offer families a degree of security so students aren’t left with debt they can’t pay back.”
Mr. Obama hopes that starting in 2018, the ratings would be tied to financial aid, so that students at highly rated colleges might get larger federal grants and more affordable loans. But that would require new legislation.
“I think there is bipartisan support for some of these ideas, as we’ve seen in states where the governors have been working on them,” said the administration official, who spoke on condition of anonymity in order to disclose information not yet made public.
Ohio, Tennessee and Indiana have made moves toward linking aid to educational outcomes. But in the divisive Congressional atmosphere, it is not clear how much backing there would be for such proposals.
In February, the administration introduced an online college scorecard, making public some of the information to be included in the ratings, to help families evaluate different colleges. Graduates’ earnings, however, will be a new data point, and one that experts say is especially tricky to make meaningful.
“There are all kinds of issues, like deciding how far down the road you are looking, and which institutions are comparable,” said Terry W. Hartle, senior vice president of the American Council on Education, a group representing colleges and universities. “Ultimately, the concern is that the Department of Education will develop a formula and impose it without adequate consultation, and that’s what drives campus administrators nuts.”
Almost all of the federal government’s $150 billion in annual student aid is distributed based on the number of students a college enrolls, regardless of how many graduate or how much debt they incur. Under the new proposal, students could still attend whatever college they chose, public or private, but taxpayer support would shift to higher-ranked schools.
With rising tuition and declining state financing, students and families are assuming a growing share of college costs. Tuition revenues now make up about half of public university revenues, up from a quarter 25 years ago. And with colleges facing larger pensions, health care and technology costs, the pressure to keep raising tuition is intense.
The average borrower now graduates with more than $26,000 of debt. Loan default rates are rising, and only about half of those who start college graduate within six years.
Mr. Obama has focused on these concerns for some time, exhorting colleges and universities, and state legislators, to make higher education more affordable.
In his 2012 State of the Union address, he said he was putting colleges on notice that if tuition did not stop rising faster than inflation, financing from taxpayers would drop. And in this year’s State of the Union speech, he urged Congress to consider affordability and value in awarding federal aid, and followed up with a policy plan recommending that those measures be incorporated into the accreditation system.