Sun. Dec 5th, 2021

Rhetoric and policymaking are two different skills with two different aims. Though politicians need both, it can be tempting to substitute one for the other.

President Obama has never had a problem with the rhetoric. It’s what made him such an effective campaigner. Unfortunately, in playing to his strengths, Obama is inclined to continue to craft ideas that sound more like the attractive watercolor of a campaign platform than the unglamorous blueprint of real policy reform.

The new college affordability plan the president unveiled at the start of his recent Northeast bus tour is a perfect illustration of the problem.

“Higher education cannot be a luxury,” Obama said at the University of Buffalo unit of the State University of New York. “It’s an economic imperative. Every American family should be able to afford to get it.” (1)

In the transition from “what” to “how,” the stirring rhetoric gave way to fuzzy policy. The president proposed to create a ratings system for universities that would eventually tie federal financial aid dollars to the schools’ performance and value. The idea is to create an incentive for colleges and universities to limit costs without sacrificing the future success of their students.

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Another component of the plan is to ease student loan burdens by expanding the existing “pay as you earn” system, allowing more borrowers to cap their monthly payments at 10 percent of their discretionary income and, in many cases, to have the balance of their loans forgiven after 20 years (10 years if the borrower is employed full-time for a public service organization).

Almost everybody wants to get college costs down, but Obama’s plan displays a flawed understanding of what is driving them up. We will not rein in costs by enabling more students to borrow more money, more cheaply. And how do you create responsible, cost-effective borrowing by telling the borrower that the less economic return she earns on the money she borrows, the less of it she has to pay back?

Making borrowing easier up front and less risky down the line will postpone the day that students and their parents finally abandon the most expensive schools as out-of-reach. When students find it easy to borrow the cost of tuition, schools can raise those costs without experiencing any substantial dip in their admission pools.

Further, you can’t put more people through school, or keep them there longer, by limiting the number of schools at which you will finance their educations. All this will do is create more competition to get into the schools that are favored by the president’s rating system. As Andrew Kelly points out at AEIdeas, the American Enterprise Institute’s blog, capacity in existing institutions is finite, and schools are already rewarded for selectivity; the more people apply, the better for the perception of the institution’s desirability. (2) These slots will become the focus of even fiercer competition if they also become the only ones offering federally subsidized aid.

What happens to everyone who can’t get into a top-tier school? How, specifically, would the top-tier schools even be determined? Campaigns don’t bother with specifics; the president hasn’t said.

By rahul