President Obama: Dean of Higher Education Reform?
Posted By Derek Johnson on August 22, 2016 at 7:50 pm
After President Obama leaves office, historians will debate his legacy. Much of the discussion will center on health care, LGBTQ rights and foreign policy. Flying under the radar to some extent is his commitment to higher education reform. But Obama could go down as one of the most influential higher education presidents in modern history—one who oversaw some of the biggest changes since the GI Bill and set the stage for successors to implement even more major reforms.
To be fair, Obama’s record on higher education reform is largely a product of time and circumstance. Take student loan debt: From Ronald Reagan’s administration to the end of George W. Bush’s term, cumulative student loan debt rose steadily but never exceeded $600 billion. Higher education wasn’t a major 2008 campaign issue, and neither Obama nor opponent John McCain proposed serious or systemic reforms. Obama’s 2008 campaign platform included only three mentions of higher ed policy: increasing Pell Grant funding, simplifying FAFSA and instituting a $4,000 tax credit to college students for performing public service.
The 2008 financial collapse changed all that, accelerating the modern student debt crisis in two major ways: by pushing thousands of newly unemployed Americans out of the workforce and onto college campuses and by hammering the coffers of state governments, forcing many to cut higher education budgets to the bone. Those trends simultaneously boosted the number of Americans in the higher education system, thus increasing borrowing, while increasing the overall price of a college degree, forcing students to borrow even more.
Stanford economist Caroline Hoxby, author of How the Financial Crisis and Great Recession Affected Higher Education, laid out this dynamic last year in a Q&A session promoting her book. “What happens is that the opportunity cost of going to college – the job opportunities a person forgoes while in college – drops very dramatically during recessions. It is harder to find a job, to keep a job or to get a promotion,” Hoxby said. “Thus, some people who would not enroll do enroll. People who would drop out stay enrolled. And people who would have taken some time off between undergraduate and graduate school decide to go straight to graduate school.”
When Obama took office, cumulative student debt sat at $600 billion. When he leaves office, that number will be more than $1.3 trillion, representing the largest form of consumer debt among millennials, according to Pew Charitable Trusts. That growth comes despite executive actions and support for congressional moves that will make him one of the most influential presidents when it comes to higher education reform.
The list of accomplishments is long and varied. In 2010, his administration pushed to make student loan reform part of the Affordable Care Act, removing private banks as middlemen and making the federal government a direct student-aid lender. The move helped shore up a shaky market where the recession caused private banks to pull back from student loans.
The administration has promoted a series of tax benefits tied to higher education, including the American Opportunity Tax Credit, which provides up to $10,000 in tax relief for college-goers. Pell Grant awards were increased by $1,000, and changes were made to simplify and increase access to the notoriously complex FAFSA form required of federal financial aid recipients.
Higher education reform: Second term, first priority
During Obama’s second term, he solidified his legacy of higher education reform. Since 2012, his administration has made major reforms in three areas of higher ed policy: sexual assault on campus, increased oversight of for-profit universities and promotion of income-based repayment.
To combat sexual assault on college campuses: the administration instituted the “It’s On Us” campaign to raise awareness of sexual assault and promote change in the way universities handle incidents on campus and lent support for the Campus Safety and Accountability Act, a bill that further ties robust enforcement of sexual assault rules to access of Title IV federal funds.
As a response, many colleges moved away from the higher standard of “beyond a reasonable doubt” and toward “a preponderance of evidence” to justify administrative actions such as suspension and expulsion of students accused of sexual assault. Critics contend that colleges are not properly equipped to investigate or adjudicate sexual assault allegations. Emily Yoffe took to Slate.com in 2014 to articulate some of the concerns: “… Procedures are being put in place at colleges that presume the guilt of the accused. Colleges, encouraged by federal officials, are instituting solutions to sexual violence against women that abrogate the civil rights of men.”
Other critics also have taken aim. Judith Shulevitz noted in the New Republic in October that many schools allow the accuser and accused to have legal representation at hearings but ban the lawyers from speaking to their clients (only notes can be passed). To protect the accuser, the government bans cross-examination. As for changing the burden from “beyond a reasonable doubt” to “preponderance of the evidence,” Shulevitz notes, “… just a 51 percent certainty is all that’s needed for a finding that can permanently alter the life of the accused.”
Taking a bite from the profit margins of for-profits
While for-profit colleges existed before Obama took office, enrollment spiked during his tenure, reaching a high of nearly 2 million students in 2010 before dipping slightly over the next four years.
This spike represents a problem on multiple fronts. For-profit schools on aggregate charge higher prices and produce lower outcomes than public and private nonprofit institutions. Students at for-profits generally take out more loans, are at higher risk of default and delinquency and are more vulnerable to predatory practices. A pair of economists published a paper for the Brookings Institute in 2015 arguing that despite representing only a small fraction of total college enrollment, students at for-profit schools play an outsized role in the growth of total student loan debt.
Co-authors Adam Looney and Constantine Yannelis cited weak economic outcomes and poor loan performance concentrated in sectors where school weren’t being held accountable. “… A fraction of existing borrowers, mostly non-traditional borrowers, appear mired in a system where they are unlikely to have the resources to repay their loans in full, and yet generally have no way to have those loans discharged,” they said.
The Obama administration targeted the for-profit sector for greater oversight, with varying degrees of success. It instituted the first major loan forgiveness program for defrauded students and has since opened investigations into dozens of other for-profit schools. It attempted to create a comprehensive, publicly available data system to track student outcomes and job placement rates at all universities. When the higher education lobby balked, the administration settled for a watered-down version of the idea with The New College Scorecard.
In 2014 the Department of Education instituted rules on gainful employment, essentially forcing for-profit colleges to prove their degrees lead to a steady job for the average enrollee. When colleges challenged the regulations, the White House fought multiple battles in court to keep them in place. It worked with allies in Congress this year to close a loophole allowing for-profit universities to accept more federal aid dollars than the law currently allows by targeting military veterans.
The administration also this year scored perhaps its biggest victory, shutting down the accrediting agency responsible for approving many of the worst performing for-profit schools. Hundreds of for-profits must seek approval from tougher accrediting bodies in the next 18 months or lose access to federal funding.
The bottom line: Obama will leave office having instituted a far more robust system of oversight and accountability in the for profit sector.
Income-based repayment: short-term relief, long-term pain
Perhaps the Obama administration higher education reform with the highest potential for lasting impact is income-based repayment. The policy was used sparingly by graduates before 2008, but enrollment has surged in the last four years.
The program ties student loan payments to a percentage of a graduate’s monthly income and has helped millions of students stay current on payments. Again, though, the practice has critics, with some arguing that these programs trade short-term financial relief for higher amounts of debt and longer repayment terms.
While the positive economic impact of reducing payments to a manageable level should not be underestimated, the dangers of kicking the can down the road likely won’t be fully realized until well after Obama leaves office. Experts warn that “Generation Debt” will deal with student loans well into their 40s and 50s, and that high amounts of student debt over long periods of time can negatively affect a graduate’s ability to start a business, build wealth and save for their children’s college expenses.
Higher education reform on the horizon
As impactful as the Obama administration’s record on higher education reform has been, the greatest changes may be just over the horizon. Student loan debt is now a full-blown crisis in the political world, and the two major candidates vying to succeed Obama in the Democratic Primary made debt and tuition-free college a centerpiece of their campaigns. In contrast to the three paragraph section on higher education in Obama’s 2008 campaign platform, Hillary Clinton’s New College Compact is a voluminous document.
Republican nominee Donald Trump has been less detailed and ambitious, but his advisers have floated proposals to reprivatize student lending and decouple federal student aid from accreditation, reserving federal dollars for majors and programs that lead to good paying jobs.
But regardless of who wins in November and what they propose once taking office, there’s little argument that Obama leaves office having reshaped the higher education status quo.