I’m just back from Washington DC and now unhappily certain that President Obama is headed in the wrong direction with his efforts to get a handle on college costs. The winds have shifted and Arne Duncan has taken the lead on the planning– and well, you know what that means. We’re going to get yet another quasi-market solution that fails to grapple with the real problems and destroys any hope for a good result.
Here’s the thing:
The current financial system hinges on the actions of students, prioritizing their consumer choice in the hopes that those choices will be well made. It assumes that any problems with schools will be resolved by students turning away from them. But this assumption is deeply flawed, not only because students do not (and cannot, and will not) make informed choices, but also because a segment of selective schools (and states) have manipulated aid policy for so long that the incentives are now distorted and they can do whatever they wish. And what they want is to maximize their own interests, which are rarely aligned with those of their students. So the problem, in other words, is really the behavior of schools and states. Yes, students and families are an issue too, but their lack of information is just a fraction of the overall college cost problem.
Creating a ratings system for all of the nation’s colleges and universities will do absolutely nothing about institutional and state behavior because:
Senator Warren, Director Cordray — are you listening?