No College Left Behind?
In the summer of 2013, President Obama traveled to Henninger High School in Syracuse, New York, to talk about education. But the president was not there to discuss high schools or K-12 reform. His subject was college, and more specifically a new federal ratings system for colleges and universities that his administration was proposing. Existing rankings, ratings, and data sources were insufficient, the president argued, because they didn't reflect priorities his administration deemed important, such as the proportion of students at a given school who received federal need-based grants and alumni earnings after graduation. And so he was advancing "a new ratings system for colleges that will score colleges on…whether students are graduating with manageable debt; whether they're actually graduating in the first place; [and] whether they have strong career potential when they graduate."
The concerns the president raised were reasonable enough. Higher education has climbed the national agenda as voters have grown more anxious about the cost of college. Gallup reports that parents are now more concerned about paying for college than saving for retirement, while young workers rank college costs and student debt as their top concerns. There is bipartisan enthusiasm for helping students analyze the costs and benefits of different schools and for demanding more of colleges that subsist on federal dollars.
As so often happens in Washington, however, sensible intuitions about transparency and accountability were transformed into a technocrat's fantasy: The Obama administration's original plan would have had the Department of Education use federally designed metrics to measure the public value of colleges, and then use those measurements to allocate federal aid. The president suggested that students who attended colleges that Washington rated highly would get larger Pell Grants (the federal vouchers that help low-income students afford the college of their choice) or better loan terms; those who went elsewhere would get less.
Ultimately, this ambitious venture crumbled under its own weight. The administration conceded that it couldn't figure out how to build these ratings or rank institutions. Instead, it opted to release a substantial amount of new information about student outcomes to the public. One might have thought this setback would make the administration hesitant to push grander solutions, but it seemed to have the opposite effect. While the department struggled to build a ratings system, President Obama proposed a free-community-college plan that would dramatically extend Washington's power over the cost and organization of community colleges.
In January 2015, the president announced a plan to provide two years of community-college tuition for free but at a cost to taxpayers of $60 billion over 10 years. It would have been one thing if he had merely proposed spending that money on Pell Grants. But he had something much bigger in mind. Obama proposed that new funds go directly to schools rather than to eligible students as a voucher. Such a change would mark a tectonic shift in higher education. For a half-century, Uncle Sam has empowered low-income college students to choose from a range of offerings — public or private, religious or secular, for-profit or nonprofit. The new plan would funnel federal money directly to one type of public college, taking a first step away from the existing voucher model and toward one that looks more like America's K-12 system.
Direct funding would also enable a second change: greater federal control over community colleges and states. Indeed, the fact sheet that accompanied the president's announcement read like a federal reform agenda for community colleges. Participating institutions would be required to "adopt promising and evidence-based institutional reforms to improve student outcomes" (though the administration was vague about just what Washington might require). Participating states would have to "coordinate high schools, community colleges, and four-year institutions to reduce the need for remediation and repeated courses; and allocate a significant portion of funding based on performance."
Free community college was just the left's opening bid. During the 2016 Democratic primary, eventual nominee Hillary Clinton and her rival Bernie Sanders wound up offering plans that were much more ambitious. Sanders promised four years of free public college at a cost of $750 billion over 10 years. Those new federal dollars would come with plenty of strings attached; Sanders's "College for All Act" specified that at least 75% of instruction at public colleges be provided by tenured or tenure-track faculty. Clinton proposed "no-loan" tuition at four-year public colleges at a price of $350 billion. Her "New College Compact" would funnel federal dollars to states that "commit to a combination of reinvestment and reform over the next four years and beyond." Federal regulators would hold participating colleges accountable for cost containment and student outcomes. After locking up the nomination, Clinton tacked even further to the left, promising free tuition at public four-year colleges for families earning up to $125,000 by 2021.
This "free-college" recipe will likely be the left's higher-education agenda for the foreseeable future: More federal funds will flow to public colleges in states that agree to abide by new federal rules governing how much states must spend, how much public colleges charge, and what reforms states and schools must adopt when their performance doesn't meet the Department of Education's standards.
Most of the media coverage of all of this has focused on the "free" part of these plans, with some rightly questioning whether Uncle Sam should be footing the bill for affluent families. Meanwhile, the Republican reaction has tended to focus on the cost of these proposals. Such concerns are valid, but they miss a more fundamental problem. Having identified a pressing middle-class concern, Democrats have decided that the best way to fix it is to move America's mixed-market system of higher education toward a publicly controlled system effectively governed from Washington. While this course has some obvious appeal given the palpable anxiety about tuition prices and conservative contempt for the state of so many colleges and universities, it would be a mistake.
After all, the nation is only now emerging from a 15-year experiment with this model of educational improvement: No Child Left Behind. Those who have observed the consequences of Washington's micromanagement in K-12 should readily grasp the potential problems with free-college plans.
Yet this political moment could well tempt conservatives to sign onto another ill-fated compromise, much as occurred with NCLB back in 2001. In 2017, Republicans will likely be groping for ways to signal to middle-class voters that they want to help, and the pressure to "do something" will be great. Some may support plans that promise to lower tuition prices, demand more of colleges, and quell the hysteria over student debt — especially if those plans pledge to "partner" with states. Others may take this as a chance to punish what they see as bloated and ideological higher-education institutions.
Similar frustrations — with rising costs and mediocre achievement, politically powerful teacher unions, and a lack of accountability — helped lead conservatives to sign onto the NCLB compromise back in 2001. But that support quickly turned into a keen case of buyer's remorse. Conservatives would do well to learn from the mistakes of NCLB so as to avoid a similar outcome in the looming debate about the federal role in higher education. This is especially true given that policy missteps have the potential to wreak even greater havoc in higher education than they did in K-12.
WHAT WAS NCLB?
Nearly two decades ago, policymakers both right and left were urgently talking about the need to reform K-12 education. A new Republican president's desire to find common ground with influential Democrats and claim a landmark triumph helped yield the sprawling and intrusive No Child Left Behind Act. NCLB would go on to become so toxic that by 2015, large bipartisan majorities voted to pass the Every Student Succeeds Act that rolled back many of NCLB's key provisions. That hardly solved the problem, however. By that point, NCLB had permanently extended Uncle Sam's reach into schools and states, shifted the center of the K-12 debate toward Washington, and undermined formerly broad-based support for educational accountability.
NCLB failed on account of three incorrect assumptions: that educational quality could be precisely measured across the whole of the nation with a few simple metrics; that those measures were reliable enough to then guide important determinations about rewards and sanctions; and that Washington could offer recipes to "fix" struggling schools. These same assumptions are prominent in the college-ratings and free-college proposals being discussed today, and policymakers championing these plans seem to have already forgotten the lessons of NCLB.
NCLB could have been a happy story of conservative policy innovation. Suffice it to say, it didn't turn out that way. In 2000, George W. Bush ran for president as a "compassionate conservative." A critical electoral challenge for Bush was the need to reassure swing voters that Republicans weren't just the party of the "haves," that they were sincere in their concern for the impoverished and disadvantaged. In what became a signature feature of his campaign, Bush touted his education record, where he had embraced Texas's bipartisan reform tradition and the twin pledges to end the "soft bigotry of low expectations" and to "leave no child behind." It worked. During the election, Bush erased what had been a massive Democratic lead on education throughout the 1990s.
The Texas school-accountability model, with its emphasis on regular testing and the use of the results to gauge school performance, formed the backbone of Bush's federal education agenda. When Bush took office, the nation's primary federal law dealing with K-12 schooling was overdue for reauthorization. That law, the Elementary and Secondary Education Act of 1965, had first been adopted as a pillar of Lyndon Johnson's Great Society. ESEA's primary aim was to steer a modest amount of federal funding to schools serving children in poverty. That mission was embodied in Title I of the law. While Title I spending has never amounted to more than about 5% of national K-12 spending per student, it would nonetheless become highly visible and politically significant.
Within days of his 2001 inauguration, Bush issued a 30-page blueprint labeled "No Child Left Behind" that sketched several key reforms to ESEA. The proposal sought to address the longstanding concern that Title I was not boosting student achievement, to illuminate how schools and students were faring, and to provide options for students trapped in low-performing schools. That initial blueprint reflected a reasonably restrained and coherent vision. In order to receive their Title I funding, states would have to test students regularly in reading and math. If the state determined that a school performed unacceptably for two years in a row, students would be permitted to take their share of Title I funding and use it to attend the public or private school of their choice. The proposal also included an ambitious new commitment to rigorous educational research and the opportunity for states to use federal aid to experiment with teacher compensation and regulatory reform.
The proposal's watchwords were transparency, public accountability, choice, and flexibility. Those quickly got lost in the political give-and-take that ensued. Bush's proposal had to get through a narrowly divided Congress, and the compromises demanded by his negotiating partners, primarily Democrats Edward Kennedy and George Miller (the chairman and the ranking member of the Senate and House education committees, respectively) transformed Bush's initial proposal into something quite different. For all the glowing press and Bush's enthusiasm, key compromises yielded a bill that super-sized LBJ's Great Society ambitions. Yet, reassured by talk of transparency, accountability, and competition, conservatives joined the overwhelming bipartisan majorities that supported NCLB in late 2001. Where did the legislation go wrong?
NCLB ultimately included a remarkably intricate system of federal oversight that emphasized dividing children into a raft of "subgroups" based on race, socioeconomic status, gender, language proficiency, and special-needs status. More important, NCLB did not stop at the defensible step of requiring states to disaggregate and report student-achievement data by these groupings. Rather, it imposed an explicitly race-based system of accountability, in which schools were judged not on the performance of all children, but on the separate performance of white, black, Hispanic, Asian, and Native American students. Schools were labeled as "failing" if particular demographic groups at any given grade level did not make "adequate yearly progress." This ultimately required states to label many reasonably well-performing schools as "failing" for reasons that many parents and educators deemed capricious.
In the course of negotiations, lawmakers decided to write aspiration into statute, requiring 100% of the nation's students to be "proficient" in reading and math by 2014. States were to peg their performance targets accordingly. While NCLB's architects said that the goal was symbolic and that the law would be reauthorized long before the target started to pinch, things turned out otherwise. The unachievable 100% target led to all manner of gamesmanship. States sought to make it easier for students to be deemed "proficient" and adopted accountability systems that looked like balloon mortgages, with modest goals up front and giant anticipated gains later on. Even so, by the Obama years, nearly half of the nation's schools were at risk of being flagged as "in need of improvement."
When it came to remedies for children in low-performing schools, Republicans abandoned the proposal to voucher-ize Title I for low-income students when they realized they did not have the votes. What emerged instead was a prescribed series of interventions for schools deemed "in need of improvement." The federally mandated "cascade" of remedies included the opportunity for students to transfer to another public school after two years, the ability to use Title I funds to purchase "supplemental services" (e.g., tutoring) after three, the adoption of a corrective-action plan by the school in year four, and the eventual requirement to "restructure" the school after five. In practice, this all amounted to a lot of bureaucratic box-checking and little actual change. There was no obvious logic to the sequence of remedies; they were a mishmash assembled by lawmakers who wanted states to do something about low-performing schools.
The law also adopted new federal language intended to boost teacher quality. A personal cause of George Miller, the provision defining "highly qualified teachers" opened the door to federal meddling in teacher training and assessment. It placed a heightened emphasis on education-school credentials. It encouraged states to restrict charter-school autonomy on staffing matters. It also stifled innovation, as opponents of alternative licensure programs sued under this provision in an attempt to shutter programs like Teach for America in California.
Finally, the Bush administration agreed to dramatic increases in both authorized and proposed spending on education. From 2000 to 2005 alone, federal appropriations for K-12 rose 70% — from $22.6 billion to $37.5 billion (in nominal dollars). This rapid spending increase under a Republican president served to set a new baseline for federal outlays. Despite this torrent of new spending, however, Democrats attacked Bush for "underfunding" NCLB, pointing out that he had agreed to set the authorized spending levels even higher. The result was that Democrats could complain year after year that Bush was shortchanging the nation's schools — and enjoyed much success blaming him for the law's problems.
All of this served to make NCLB, at best, a Pyrrhic victory for education reformers. Conservatives got "accountability," but it was of a race-based, intrusive, inchoate variety. They took the education issue off the table for a cycle, but at the cost of owning an ill-constructed, tarnished policy. Before too long, parents of students in tens of thousands of schools, many of which seemed to be performing reasonably well, were told that their schools were failing. The educators in those schools were compelled to adopt a series of ineffectual, federally mandated remedies. Testing and school accountability became kitchen-table controversies. By 2006, 19 states had filed suit charging that NCLB was an unfunded mandate, had prohibited the use of state funds for NCLB implementation, or were considering legislation to opt out of the law. On Capitol Hill, Representative Pete Hoekstra and Senator Jim DeMint collected scores of Republican co-sponsors for legislation allowing states to opt out of NCLB.
Worse, NCLB invited federal interference from any future administration eager to meddle. As luck would have it, one took over in 2009. The Obama administration's Department of Education used the "highly qualified teacher" provision to pressure states to craft federally approved plans for ensuring the "equitable distribution" of such teachers. When state leaders blanched at the prospect of labeling most of their schools as "failing," Obama made governors an offer they truly couldn't refuse — offering to waive the 100% proficiency requirement if they agreed to adopt a series of Obama administration priorities, including the Common Core.
NCLB's failings were not just a matter of miscalculation or inevitable implementation challenges. They were baked into the law, thanks in large part to the compromises needed to pass it. Yet, conservatives enamored of accountability and the chance to sock it to the teacher unions wound up helping to enact a compromise that sounded conservative (and was considered conservative in the public mind) but that proved to be a significant expansion of federal power and reach.
FIVE CAUTIONARY LESSONS
The story of NCLB should alarm those engaged in the higher-education debate, where many of the calls for accountability, transparency, and quality can beguile right-leaning policymakers with their pleasingly conservative intimations. The NCLB experience suggests that future reformers should take five key precautions when it comes to higher education.
First, reformers must keep in mind that measuring educational quality is much more difficult than it may first appear, and that tying imperfect measures to consequences can create unfortunate distortions. Education yields an array of meaningful outcomes, from the civic to the vocational. These can be difficult to measure precisely or reliably. Moreover, because educational success is intertwined with things like socioeconomic status, a sure-fire way for schools or colleges to look good is to recruit promising students, which can make it hard to accurately gauge an institution's actual added value. When Uncle Sam gets involved in trying to measure quality across thousands of institutions, he will wind up using whatever measures he can get his hands on, whether or not they are well suited to the job.
With NCLB, Washington's relentless focus on proficiency in reading and math created severe distortions. It bred gamesmanship, marginalized particular students and academic subjects, and led to pervasive over-testing in elementary and middle schools. Because NCLB made "proficiency" rates the coin of the realm, teachers wound up spending more time and attention on students just below the proficiency threshold (social scientists took to calling these children "bubble kids") at the expense of their peers.
The Obama administration's proposed college-ratings plan featured many of these same problems. Implicit in the ratings idea were two claims. One was that policymakers can measure a college's quality by calculating how many poor students it enrolls, what students pay, and how many graduate and go on to be successful. The second was that regulators can do all this with such precision that federal aid could be disbursed based on those measures. The distortions that such a system would create are easy to foresee. Take proposed measures of access for low-income students — such as the share of students who receive a Pell Grant. University of Virginia economist Sarah Turner has termed the idea of including such a measure "dangerous and irresponsible." Among other problems, it would discourage colleges from enrolling the "near poor" — those just above the Pell eligibility standard — since these students would not count in the rating but would also not be able to pay full tuition.
The value that colleges deliver is not an easy thing to define, let alone measure. Some colleges may enroll only a handful of low-income students and charge high tuition, but provide a place where those students blossom into tomorrow's civic and business leaders. Others may enroll lots of poor students at low tuition rates but graduate very few of them. Should Washington be confident that the first institution is inferior to the second?
The government can and should play a useful role in providing information to help inform the judgments of students and their families. To its credit, this is where the Obama administration ended up with the ratings proposal. Conservatives can, in good faith, support federal efforts to boost transparency. But talk of "transparency" often morphs into something much more ambitious. Reformers should avoid proposals that call on Washington to decide the one "right" way to measure quality if those metrics are linked to federal funds or consequences.
Second, reformers must beware of conscripted federalism. Free-college proposals are premised on a "partnership" between Washington and the states. The states would be required to do certain things — primarily spend more money, but also often adopt particular reforms. In return, they would receive additional federal funds. In theory, the states would retain the freedom to govern their public college systems as they see fit. Such "partnerships" can appear to be a bipartisan compromise: more support coupled with respect for state autonomy.
Unfortunately, NCLB showed how hollow the promise of partnership can ring when it comes to education. The Bush administration's broad guidelines for standards and accountability turned into a prescriptive regime that entangled states and school leaders in endless federal rulemaking. NCLB's "federalism" turned out to be polite language for inviting the U.S. Department of Education to, in the words of Senator Lamar Alexander, play the role of "national school board."
Plans for federal-state partnerships in higher education envision a similar approach: coerce states into participating and use them as instruments of Washington. New America, an influential progressive think tank, has proposed replacing federal student aid with direct federal funding of states. In return, states would get a strange sort of "flexibility" — one that would require them to distribute funds to colleges that "enroll at least 25 percent low-income students, meet student financial need, and comply with the back-end accountability measures." States could opt out of the plan, of course, but only by forfeiting all federal higher-education subsidies.
Those calling for such "partnerships" see this tactic as a way to appeal to conservatives who care about federalism. Even aside from the laughable notion of a federalism that regards states as little more than outposts of the federal government, the NCLB experience illustrates the perils of this course. The Obama administration used NCLB as an open invitation to extend Washington's role, casually "waiving" provisions of the actual statute for those states that promised to adopt its K-12 agenda. However much actual federalism exists in the first blush of federal-state partnerships — and there is often less than there appears to be — reformers can bet that it will diminish with time.
Higher-education reformers shouldn't mistake conscripted federalism for devolution. To remain eligible for the federal funds, states will have to do all the things Washington asks for, and then do even more later to get waivers from cumbersome federal rules.
Third, conservative reformers should beware of the often illusory promise of public accountability. Those championing federal-state "partnerships" presume that sending federal funds directly to states or institutions, rather than to students, will make it easier for federal regulators to get tough with underperforming schools. They argue that data-driven bureaucratic accountability will be more effective than whatever competition may result from student choice. In practice, however, even aside from concerns about metrics and system design, public officials are far more inclined to talk about the wonders of accountability than to stand firm when it pinches.
Under NCLB, pie-in-the-sky performance requirements yielded all manner of machinations around accountability. States adopted balloon-mortgage targets, lowered standards, and adopted toothless "remedies." The exercise turned into a charade, with federal officials issuing dictates on process and educators focusing on compliance. Federal funds continued to flow unabated, while even truly awful schools went about their business — ramping up test preparation, sending letters home to parents, adopting new improvement plans, and occasionally replacing principals.
It takes a giant leap of faith to imagine things playing out differently in higher education. After all, under current policy, federal regulators already have a number of ways to make a given college ineligible for federal grants and loans. It's just that they almost never choose to use them. Take the "Cohort Default Rate" (CDR), which is supposed to end eligibility for colleges at which more than 40% of former students default on federal loans within three years of leaving (or where more than 30% default for three consecutive years). When schools run afoul of these standards, they are offered a series of grounds for appeal. Even when the appeals fail, no one wants to lower the boom. In 2014, the Department of Education made an 11th-hour "adjustment" to the CDR calculation to save schools facing sanctions. The result: The Congressional Research Service estimated that just 11 of 7,000 schools lost eligibility due to a high CDR between 1999 and 2015.
Why would these same officials suddenly take a hard line with colleges when the money is flowing directly to schools? If anything, when they're directly funding states and colleges, the politics will get more intense, as governors and members of Congress do all they can to maintain their states' or districts' shares of the federal kitty.
Further complicating matters, officials currently in office might agree to state and federal partnerships. But there's no assurance that the governor who embraces the New College Compact in 2017 will be there when the next recession hits, sending state budgets into a tailspin and higher-education enrollments through the roof. Grand bargains between Washington and the states are difficult to enforce when the stars no longer align. Indeed, the only viable enforcement mechanism is to further increase federal control over state decisions.
When it comes to accountability for results, it pays to be skeptical of airy promises that direct funding and centralized control will embolden regulators to police affordability and outcomes. A better bet is to insist on — and enforce — basic fiduciary standards and then do more to facilitate the one accountability pressure that is insulated from politics: the free movement of students to better schools.
Fourth, reformers must remember that Washington is hard-pressed to fix schools. The architects of NCLB believed that Washington could improve schools by imposing a set of cascading remedies. There is some evidence that suggests reading and math scores did improve in the NCLB era, albeit modestly. On the whole, though, researchers have struggled to find evidence that NCLB's remedies had any consistent effect on performance in those schools.
The Obama administration took the experiment a step further in the 2009 stimulus bill by mandating federally approved turnaround models for low-performing schools. The School Improvement Grant program provided more than $5 billion in federal grants to 2,000 of the country's lowest-performing schools. In return, schools were required to employ one of four federally approved turnaround models. After spending a million dollars or more in additional federal funds, more than one-third of the participating schools performed the same or actually saw declining student performance. "You can't help but look at the results and be discouraged," former Department of Education official Andy Smarick told the Washington Post.
The point, of course, is not that schools can't improve. It's that such improvement is hard, complex work that is difficult to encourage with cookie-cutter prescriptions from Washington. Reforming colleges is likely to prove just as challenging. For instance, "Achieving the Dream," a privately funded effort to apply evidence-based reforms to more than 200 community colleges across 35 states, has largely failed to drive improvements in performance. A 2014 study by MDRC of 26 participating colleges found that student outcomes were largely unchanged after five years.
These complexities, of course, haven't deterred free-college advocates. President Obama's free-community-college plan calls on institutions to implement "evidence-based" reforms, pointing to a multifaceted, homegrown program at the City University of New York as an example of the kind of solutions struggling institutions might pull off the shelf. The problem? CUNY's Accelerated Study in Associate Programs (ASAP) evolved over time to serve a distinctive student population, with faculty basing the model on years of experience in a particular context. ASAP isn't just one intervention, but a web of activities: Students enroll full time in block-scheduled courses and receive a tuition waiver, subway pass, books, and access to counseling. To think that the answer to our higher-education ills is for Washington to instruct colleges to hurriedly implement this or that reform runs counter to years of experience in K-12 reform — as well as common sense.
Washington isn't very good at telling complex organizations how to do their jobs better. It may be tempting to insist that "evidence-based" policy will improve schools or colleges, regardless of needs, particulars, or context. But federally mandated organizational change rarely delivers. While it's wholly appropriate for Washington to support research examining "what works" in education, there's a big difference between supporting such inquiry and empowering federal bureaucrats to impose preferred "fixes" on schools or colleges.
Fifth and finally, reformers should remember that "modest" expansions of the federal role rarely stay that way. It's hard to open the door just a crack when involving Washington in educational accountability. After all, it's tough to talk about accountability without addressing how performance is measured, how funds are spent, or what remedies are imposed. Given the commingled nature of state, local, and federal funds, federal involvement can prove to be a very slippery slope. For the left, this poses no problem — giving Washington more authority is a perfectly satisfactory outcome. For the right, it's a different story. Tackling education reform in Washington poses a dilemma for conservatives who want accountability and also deference to families, states, and communities.
NCLB should serve as a caution flag for those who hope that a more carefully constructed compromise can hem Washington in, or that future Department of Education appointees will carefully respect the terms of any compromise. It turns out that when Congress opens the door to new ventures by federal education officials, there's an excellent chance they will seek to open it wider. And even when policymakers on both sides conclude that they've gone too far — as happened with the recent reauthorization of ESEA — it turns out that the existing bureaucratic and legal superstructure is difficult to unwind.
Now, clarity about what not to do is only so helpful. With the American public looking for help with college affordability, lawmakers have a healthy desire to do something. That's natural and understandable. It's important, though, that that something reject the false allure of a federally governed public option and offer an alternative that builds on the strengths of our dynamic mixed market while acknowledging its flaws.
TRANSFORMING THE HIGHER-EDUCATION MARKET
As problematic as one-size-fits-all federal micromanagement has been in K-12, the costs would be greater still in higher education. That's because higher education already boasts a diverse array of institution types, programs, and price points, and students have a variety of choices. Students' decisions to attend certain schools rather than others create a modest baseline of competition and market accountability.
This system doesn't work nearly as well as it should. Today's higher-education market suffers from key flaws that encourage tuition inflation, stack the deck against consumers, and limit competition. Ignoring these flaws, as some Republicans are wont to do, isn't productive. Unlike those on the left who see these flaws as evidence that the voucher model is irreparably broken and needs to be discarded, however, conservative policymakers should embrace higher-education reforms that help our mixed system more fully deliver on its promise.
The price distortions introduced by federal policy are manifest. Federal loan programs lend money to students and families to attend any program at almost any price with almost no regard to their ability to repay. Graduate students and parents of undergraduates can borrow up to the cost of attendance with no annual or lifetime limit, provided they have not defaulted or declared bankruptcy in the recent past. Well-intentioned income-based repayment programs, which allow students to tie payments to their income for 20 years and have the remaining balance forgiven, deliver the largest benefits to students who borrowed for graduate school, relaxing incentives to borrow prudently and encouraging institutions to charge more. Colleges, meanwhile, bear only limited responsibility if their students are unable to repay their federal loans.
These distortions would be less acute if consumers could effectively "vote with their feet" in a way that rewards institutions that provide a quality education at an affordable price. Unfortunately, the value of particular post-secondary options can be difficult for students or families to evaluate in meaningful ways. That's true, in part, because they are hampered by a lack of comparable data on actual college costs, student learning, and post-graduation success. This means students can't readily evaluate whether it's worth borrowing a given amount to attend a particular program in accounting or criminal justice, for instance. Meanwhile, federal rules that govern eligibility for financial aid constrain institutions that wish to do things differently and exclude new models of post-secondary education that can deliver a quality education even though they may look nothing like a traditional college. All of this serves to blunt market competition.
For all those failings, moving to a model where Washington directly funds states or institutions is promising only for those who think bureaucrats are well equipped to drive innovation or hold schools accountable. We've already been to this movie. We know how it ends: standardization, compliance, and paper consequences. After decades spent fighting to increase choice in K-12, reformers should regard calls for a retreat from the voucher model in higher education as downright bizarre.
So what should reformers do? The first step is to shore up the ability of students to choose by replacing the poorly designed, inflationary federal loans and tax credits with a dramatically simplified and streamlined system of student aid. Capping PLUS loans and reforming the income-based repayment program to contain its costs and avoid perverse incentives would be a good start.
A more transformative proposal, offered by Governor Jeb Bush in his ill-fated 2016 presidential run, would replace the multitude of federal loans and tax credits with a single $50,000 line of credit that high-school graduates could draw down at their discretion. Students who used the line of credit would, for 25 years, repay a percentage of their income proportional to how much they drew down (1% for every $10,000 used; for more on this idea, see our colleague Jason Delisle's work). Borrowers would repay the amount borrowed when paying their federal income taxes. Students from low-income families would still qualify for need-based grant aid, but that funding would accumulate in an account over the course of high school based on information their families provide on their tax returns. Students would know, up front, how much grant and loan money they would have to finance their post-secondary careers, and would have more flexibility to invest that money as they saw fit.
Washington should also take a more proactive role in boosting transparency and empowering prospective students by providing them with better information about the value of competing options. Federal law currently prohibits the collection of the kind of student-level data that could reveal things like how many students who transfer to an institution from another go on to complete a degree and how much they earn 10 years after graduating. While Uncle Sam has spent half a billion dollars helping states build longitudinal data systems that connect secondary and post-secondary education with the labor force, only some states use those data to report on the employment outcomes of graduates from particular programs. Washington ought not be giving orders, but facilitating state-level consortia — or repealing the ban on student-level data — would provide some much-needed sunlight.
We also need policies that better align the interests of schools, students, and taxpayers. Institutions currently encourage their students to take on debt, adding federal loans to their financial-aid packages. Taking on debt to finance human capital is often a good investment. But colleges bear little risk if their students do not pay those loans back. Unless and until their graduates trip the default-rate trigger, institutions are largely held blameless. The result: lots of bad loans going to finance low-quality programs. Federal lending should require institutions to share in the risk that their students won't repay their loans, by holding the schools financially responsible for a portion of the amount when loans go unpaid. Policymakers could couple risk sharing with rewards for institutions that successfully educate students. Such a policy would be simple and transparent, and would allow schools to come up with their own solutions.
Finally, higher-education reformers should learn from their K-12 counterparts, where school-choice and alternative-teacher-licensure advocates have successfully created space for new organizations to deliver publicly funded education in different ways. In higher education, that means freeing existing institutions from federal rules that reify the traditional time-based model of higher education. It also means allowing students to use their federal aid on a broader variety of programs and institutions, so long as they meet fiduciary and outcome standards. Expanding the number of options would not only help students find the ones that best fit their goals, but would drive much-needed innovation and competition.
LESSONS LEARNED THE HARD WAY
Higher education has taken K-12's place in the hierarchy of federal policy issues — due both to weariness with what well-intended federal efforts have wrought in K-12 and to public concerns about tuition prices and student debt. In other words, 2017 may be to higher education what 2001 was to K-12 policy: a wide open policy window for those pursuing federal reform. Conservatives need to lead with their own ideas and be on guard against ill-conceived proposals.
Often overlooked in the wholly justified critiques of federal higher-education policy are the benefits of the current market-based approach and the potential costs of moving away from it. The higher-education system boasts far more variety and diversity than the K-12 sector, where most schools — public, charter, and private — tend to look pretty much the same. In more than a few ways, American higher education continues to be a world leader. Now, it's true that a non-trivial amount of the "variety" in higher education hasn't served students or taxpayers well, and that the system is inefficient and prone to saddling students with debt they can't repay.
But in addressing the incentives that give rise to such outcomes, reformers should be mindful of the costs of centralization and standardization. Attempting to make college more affordable through the brute force of direct federal funding and additional federal rules will, at least in the short term, lower tuition prices. The consequences for the vitality of the system and its ability to meet new demands from students, employers, and citizens will take years to emerge, but, if NCLB is any guide, they will make reformers wish they'd been much more careful about studying the fine print.
NCLB's unfortunate legacy included moving the center of the nation's K-12 conversation to Washington — inevitably shifting authority to distant regulators, ideologues, and lawyers. In the age of NCLB, appointment to even a junior post at the Department of Education became a grand prize, a ticket to influence and respect, and a chance for young bureaucrats to give marching orders to state leaders and superintendents. If one deems this the recipe for improving America's colleges and universities, all well and good. But for those who believe that higher-education improvement is more likely to result from the efforts of educators, communities, and entrepreneurs than from the dictates of officials in Washington, NCLB's legacy should serve as a cautionary tale.