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A Chance to Address Unfinished Business


Libby A. Nelson


Few subjects were as teasingly elusive during the 2012 campaign as higher education. Every few months, for a few minutes, the candidates would seem on the verge of a substantive debate about federal policy and financial aid: in May, weeks away from a scheduled increase in the interest rate on federally subsidized student loans; in September, when President Obama accepted his party’s nomination for reelection with a campaign promise to make college more affordable; even in the waning days before the election in October, when both Obama and rival Mitt Romney vied to outdo each other in promising to support the Pell Grant. 

In the end, higher education played its usual role: simple stump-speech shorthand for the American dream. (“If you’re willing to work hard,” Obama said often, “a college education in the 21st century should be available to everybody.”) But Obama and Romney’s clash of political philosophies was evident in their attitudes toward colleges and universities. Obama favored increased federal spending, but with more regulatory strings attached; Romney envisioned fewer regulations, less federal largesse, and a larger role for the private sector.

Obama’s election night victory means that, at least for the next four years, his vision will prevail. But the status quo in the presidency doesn’t mean nothing will change. Obama’s first term ends with plenty of unfinished business on higher education. Many questions remain, but the basic shape of federal policy toward colleges and universities for the next four years is already beginning to emerge.

In the first days after the election, Washington observers had already begun to speculate that higher education will be a more significant focus of Obama’s second term than of his first. It’s not that it was neglected before. Obama’s first term saw an unprecedented level of federal activity on higher education: an overhaul of the federal student loan program, including repayment plans; a big increase in Pell Grant spending; a new emphasis on consumer protection and disclosure; and a controversial new framework for regulating for-profit colleges based on whether graduates of those colleges can repay their federal loans.

In some areas, the president’s re-election mainly ensures the current trajectory of federal policy will continue unimpeded. As Congress confronts a series of financial crises affecting federal financial aid and research budgets—from the “fiscal cliff” of tax increases and spending cuts in January to a projected $6 billion shortfall in federal money for Pell Grants at the beginning of the 2014 fiscal year in October—higher education will have a president who has historically stood up for federal funding on their side.

The federal education loan overhaul, which in 2010 made the Education Department the sole lender for federally guaranteed student loans, will remain in place. (Romney had said he would once again involve the private sector in issuing federal loans.) The Consumer Financial Protection Bureau, which Romney would have eliminated or at least stripped of much of its power, will continue to play a watchdog role on private student loans. A more generous income-based repayment program, under which financially strapped students pay 10 percent of their discretionary income toward federal loans, will soon go into effect. The administration, which stepped up enforcement of Title IX and civil rights regulations almost immediately after taking office in 2009, will continue its focus on sexual harassment on college campuses. New regulations on fraud in distance learning, as well as additional rules on teacher preparation programs, are likely to be issued in the coming year. And since Obama’s appointees will continue to be in the majority on the National Labor Relations Board, the board is more likely to rule in favor of greater unionization rights for both graduate assistants and faculty members at private universities.

But the Obama administration has more ambitious plans than maintaining the status quo on higher education policy in a second term. Education Secretary Arne Duncan, virtually certain to remain in his job for at least part of the next four years, has focused more on elementary and secondary education, his area of expertise, in the past four years. But with No Child Left Behind effectively neutralized through waivers and the state grant competition Race to the Top in place, Duncan is said to be planning a shift in focus. And the president himself, not just his policy advisers, is said to be personally interested in college affordability and tuition prices, spending an hour discussing the issue with university presidents a year ago.

The most obvious focus of a second-term Education Department: Following through on a campaign promise the president first made almost a year ago. During the State of the Union address in January 2012, Obama put colleges and universities “on notice.” “If you can’t stop tuition from going up, then the funding you get from taxpayers each year will go down,” he said. The administration has elaborated on the plan, which involves increasing federal spending on work-study and campus-based aid, and awarding more money to colleges that keep tuition increases low and provide “good value.” In his acceptance speech at the Democratic National Convention, Obama quantified the effect he said his plan would have: halving the rate of tuition increases over the next 10 years.

Whether the plan would work at all is unclear; previous federal efforts to force colleges to keep tuition prices low, last attempted by now-House Speaker John Boehner and Senator Buck McKeon in 2003, drew skepticism and resistance and later failed to gain support. But there’s little question that the Obama administration plans to try, turning its regulatory focus from for-profit colleges it argues were giving students a bad deal to private nonprofits and public colleges it worries are quickly becoming unaffordable.

The biggest question in the affordability plan: What, exactly, is “good value”? In defining “gainful employment,” and writing regulations that attempt to measure whether vocational programs truly prepare students for careers, the Education Department was working from legislative language in the Higher Education Act. It settled on using student-loan repayment rates and debt-to-income ratios as a proxy for career preparedness. A similar definition for “good value”—which the administration has unofficially described as students being able to get jobs and pay off their loans—seems in the works, and seems equally likely to draw fierce resistance from colleges and universities because it appears to narrowly define the benefits of a college education as employability.

Other unanswered questions: Whose vision will drive the administration as it attempts to put its heretofore vague plan into action? The Education Department is widely seen as lacking someone in the role of policy visionary and political animal, the type of appointee or staffer who drove the student loan overhaul and the regulations on for-profit colleges. Will Congress—which so far, even in the Democrat controlled Senate, has declined to fund portions of the president’s proposal—show more interest than it has in the past?

The Obama administration has other domestic policy issues to contend with—beginning with the “fiscal cliff” that threatens many programs important to colleges and universities. A comprehensive immigration overhaul, which would affect students and graduates at many colleges if not the institutions themselves, is also likely to proceed in the next few years. But given the president’s reported interest in higher education issues, and his administration’s efforts to change national policy, he is also likely to want to influence the renewal of the Higher Education Act, the most significant legislation governing financial aid.

The results of his administration’s attitudes and policies are likely to linger. In its aggressive regulation of for-profit colleges, and its proposal to mimic those regulations at private nonprofit and public colleges as well, the Obama administration has broken new ground. Such a shift in federal attitudes is difficult to reverse: Just as a straight line can be drawn from President George W. Bush’s Spellings Commission to the Obama administration’s efforts on college accountability and affordability, so too will the ideas and policy positions on higher education that emerge in the president’s second term influence his successors. As the efforts to reform higher education policy begin to take shape after Inauguration Day, the question is not whether they will influence the next four years, but rather the next forty.


Libby A. Nelson is a reporter for Inside Higher Ed, where she covered the 2012 presidential campaign.