Obama’s Audacious Education Plan: What It Actually Means

Jewel Samad, AFP/Getty ImagesPresident Obama speaking Thursday at the University of Buffalo. For the last few days, President Obama has been hinting about a new education plan that, he claims, will improve the quality — and affordability — of college. On Thursday, in a speech at the University of Buffalo, he finally unveiled the proposal. In a nutshell, it’s going to be a rating system that will rank colleges based on their cost-effectiveness. Among other things, it will factor in graduation rates, tuition costs, graduate debt, graduate earnings, and the percentage of lower-income students among the student body.

For the president, one of the most attractive aspects of the new plan is likely to be the fact that it doesn’t require congressional approval. Speaking to reporters before the event, Education Secretary Arne Duncan noted that, while the administration will likely seek input from Congress, it plans to create the ratings system on its own. The first version of the system would likely roll out in 2015.

This is fine in the short run, but the White House will need congressional support if it hopes to progress to the next step, in which it plans to link student aid to university performance. While it is unclear how, exactly, this would work out, the general outline is that the government would offer larger loans and better rates to students attending higher-ranked schools. Assuming that the president can get Congress to agree, this portion of the plan would go into effect in 2018.

While colleges have yet to weigh in on the new proposal, it seems likely to ruffle some feathers: for years, colleges and universities have worked on finding ways to manipulate U.S. News’ yearly college rankings, currently one of the top tools that parents and students have for choosing a school. Given the huge economic impact that the federal college list would have, it seems likely that the development of the ranking system will be heavily politicized, with colleges fighting to have their strengths more heavily weighted than their weaknesses.

The president’s political opponents have already started to weigh in. Rep. John Kline (R-Minn.), chairman of the House Committee on Education and the Workforce, cautioned that Obama’s plan “could curtail the very innovation we hope to encourage -– and even lead to federal price controls.”

It remains to be seen if the president’s plan will be able to balance its rating of educational outcomes with the potential costs of government intrusion into the educational marketplace. Even so, for students and parents looking for a better return on their educational investment, Thursday’s announcement is definitely a ray of light.

Bruce Watson is DailyFinance’s Savings Editor. You can reach him by e-mail at This email address is being protected from spambots. You need JavaScript enabled to view it. , or follow him on Twitter at @bruce1971.

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