Professor Obama's Higher Education Plan

President Obama yesterday unveiled his plan for containing college costs, and as Ezra Klein notes, it's applying Obamacare's "bend the cost curve down" theory to college tuition inflation.

The core of President Obama’s plan to cut higher-ed costs is “pay-for-performance.” The idea is to use federal financial aid to move colleges away from the current pay-for-enrollment model and toward a model in which they make more money if they graduate more students, hold tuition costs down, etc. (This is, in a sense, bringing the cost-control theories of Obamacare to the higher-ed sector.)

So how does it work?

The fact sheet is pretty clear on this: “Before the 2015 school year, the Department of Education will develop a new ratings system to help students compare the value offered by colleges and encourage colleges to improve.” Look ma! No Congress!

Linking the new ratings system to financial aid does require congressional action. But it doesn’t come till much later. “The President will seek legislation allocating financial aid based upon these college ratings by 2018, once the ratings system is well established,” the fact sheet continues. That’s two years after the end of Obama’s second term. That means that even if Obama did get legislation passed to link aid to performance, the law could be altered or undone by the next president before it even went into effect.

So what Obama is really promising to get done in his second term is to create the infrastructure necessary for a pay-for-performance system: the definition of performance and the routine collection of the underlying data. He doesn’t need Congress for that. When that’s are done, Obama can try to get legislation passed through Congress to tie them to financial aid by 2018. But even if he fails, he will have set the next president up to finish the job, as the technically hardest and most time-consuming task will be complete.

Seems like a good plan to me, especially when the big losers in the plan are those profiting off of college loans.  Going to a pay-for-performance, "Race To The Top" program approach puts the responsibility on colleges, universities, grad schools and trade school to turn out people who actually graduate, not drop out.

Naturally, Republicans are going to trash the plan.  And as usual, they've got nothing better.