Legacy

By Terry W. Hartle

As the new president takes office, it’s reasonable to assess the Obama administration’s higher education record and to ask what its legacy will be and how long it will last.

Among the most obvious blemishes on the 44th president’s record is this: His administration will be the first that did not manage to reauthorize the Higher Education Act (HEA). In their single-term presidencies, Jimmy Carter and George H. W. Bush were able to renew the framework for federal higher education policy. Even in his limited term, Gerald Ford in 1976 signed a higher education reauthorization bill, the Education Amendments of 1976. Congress, of course, is at least as responsible for this failure, but the fact remains that reauthorizing the HEA was never really a significant priority for the Obama team, and they never advanced serious, definite proposals to make it happen. Despite this dubious distinction, federal higher education policy has changed in five fundamental ways over the last eight years:

Money

Perhaps the most important, if rarely discussed, part of the administration’s legacy is that federal spending on higher education has increased dramatically. That is a notable achievement in an environment where most other areas of federal spending remained relatively flat or saw cuts. When the Obama administration took office in January 2009, funding for Pell Grants stood at $17 billion. Today it is roughly $30 billion, a 77 percent increase. It wasn’t just more students that raised the program costs—in another sign of the administration’s commitment to increasing student aid, the maximum Pell Grant award went from $4,731 in 2009 to $5,815 today. Federal student loans also increased, going from $78 billion to $116 billion in 2010–11, a growth of almost 50 percent in four years. For several reasons, loan volume has declined in recent years to about $96 billion, but that is still an increase of nearly 25 percent in eight years.

But it’s not just student aid that matters to colleges. Federal spending on scientific research conducted on our campuses has grown from $25.9 billion in 2008 to over $30.2 billion, a gain of 17 percent. That amount may increase further when the fiscal 2017 spending bills are finalized and if, as seems likely, Congress agrees to significantly boost research spending at the National Institutes of Health as part of the administration’s “war on cancer.”

Federal tax provisions to help families meet college expenses have almost doubled from $18.3 billion to $35.1 billion. Much of this is attributable to the enactment of the American Opportunity Tax Credit in 2009. Today, this tax benefit alone totals $16.6 billion.

Federal spending on veterans’ higher education benefits also has grown markedly. The legislation that facilitated this growth was enacted in 2008 and therefore the Obama administration can’t claim full credit for the increase. Still, spending in this area went from $3.6 billion overall in 2009 to an expected $15.2 billion that is expected to be awarded to veterans in the current academic year—a more than threefold increase.

Student Loans

Second, federal student loans changed dramatically during the Obama years. Prior to the 2008 election, the majority of federal student loans were made by banks: The government paid a subsidy to financial institutions, which in turn made loans to students. Loans were repaid to the banks. In the case of a default, the banks were paid off by the federal government and the federal government went after the defaulters.

The Obama administration concluded that it would be cheaper and more efficient if the government made all loans directly to the students because there would be no subsidy to private financial institutions and other middlemen. The administration used most of the savings from this change—some $68 billion over ten years—to finance an expansion of the Pell Grant program. Without the adoption of 100 percent direct lending, the expansion of the Pell Grant Program noted above would have been seriously constrained.

But it wasn’t just the cost savings that are notable; the administration managed the movement to 100 percent direct lending smoothly. One of the primary concerns about a student loan program totally dependent on the Department of Education had long been that the agency would not be able to deliver the millions of loans representing billions of dollars that are distributed every year. In fact, the switch to 100 percent direct lending was seamless—few institutions or borrowers experienced significant problems.

To be sure, the loan program faces challenges. Most notably, some of the department’s contractors have experienced major problems with collecting loans, and this has caused untold frustrations and problems for many borrowers and has been a steady source of criticism leveled at the department. But the initial implementation went well and the department continues to provide funds in a smooth, effective way. Indeed, one only need consider the botched rollout of the Affordable Care Act website in 2013 to understand how badly things could have turned out.

Still another major issue related to educational loans is that student over-borrowing is seen as a much bigger problem now than it was eight years ago. The administration has recognized this challenge and has made numerous and extensive efforts to expand repayment options to help students better manage their debt. While there is no doubt that many student borrowers who left school during or in the immediate aftermath of the 2008 economic downturn faced serious difficulties finding good jobs and experienced real hardships paying their loans, the percentage of students who borrow and the average amount borrowed have both increased only modestly in recent years. By contrast, in the years preceding the Obama administration, student borrowing both in terms of number of students and amount borrowed shot up more dramatically. While total outstanding debt grew by 13 percent between 2004 and 2009, it grew only by 8 percent between 2009 and 2014. This is somewhat contrary to the narrative that has developed around student debt. Indeed, the recent decline in the total volume of student loans every year suggests that the widespread attention to the problem of over-borrowing may be affecting consumer behavior.

Changing the Goals

A third part of the Obama legacy is that it changed the federal government’s goals in higher education policy. From the beginning, the administration emphasized that it wanted to boost college completion. In February 2009, President Obama promised that the United States would again have the highest proportion of college graduates in the world by 2020. From the start, it was clear to most observers that the goal was unlikely to be achieved. And it won’t be. In 2008, according to the Organization for Economic Co-operation and Development (OECD), 41 percent of Americans over the age of 25 had a college degree, and the United States was in fourth place internationally. Today, the nation stands at 44 percent and is now in fifth place.

Not surprisingly, that goal was quickly and quietly abandoned. But the emphasis on graduation or completion or “success” has remained a central priority of the president’s Department of Education. The effort has been complicated because federal graduation rate calculations are widely understood to be inaccurate, making it hard to measure precisely how well institutions are doing. Moreover, determining how to ensure that institutions improve their commitment to graduation—whether by forcing accreditors to be more active or doing it through executive branch actions—has been an ongoing and unfinished challenge. No matter—where the goal of federal higher education policy was once simply “access” (sometimes it was “access and choice”) before the Obama administration, henceforth the goals will be access and completion (or “access and success”).

Tackling For-Profit Institutions

A fourth major element of the administration’s higher education legacy is an effort to hold for-profit colleges and universities to higher standards. From its earliest days, the Obama administration believed that too many for-profit institutions were failing to serve their students. Starting with a negotiated rulemaking process in late 2009—an undertaking that dramatically limited the ability of schools to use incentive compensation for its recruiters and admissions personnel and began the creation of the controversial gainful-employment regulations—the administration sought to tighten the screws on proprietary institutions.

While many of these changes were aimed at the for-profit sector, the impact of the new standards was by no means restricted to them—traditional colleges and universities have also been affected by many of the changes put in place. But the impact on the for-profit sector has been sharp and dramatic. Between 2013 and 2014, the number of for-profit institutions declined by 5 percent, representing the closure of 171 campuses. Even more dramatically, for-profit enrollment for the 2014–15 academic year dropped by 10.6 percent from the previous year, representing a decline of over 300,000 students. Corinthian Colleges, a major chain of 91 for-profit campuses, closed in 2015 after the federal government slowed the reimbursement of federal student aid going to the institutions. In 2016, ITT Technical Institute, a chain of 130 campuses serving some 40,000 students, shuttered after years of problems with various federal agencies and its accreditors. Other major for-profit institutions are under a cloud of suspicion and a large accreditor of such colleges and universities seems likely to lose its federal “recognition”—potentially leaving hundreds of them without an accreditor and therefore without access to federal student aid funds.

The steps were not without their critics. Congressional Republicans adamantly opposed most of these efforts but were unable to muster enough political support to block them. Even the media has raised concerns—in September 2016, The Washington Post editorially accused the administration of having waged an “ideological crusade” against for-profit institutions that has driven some “to the brink of ruin.”

Regulation

Yet another major part of the administration’s legacy is a vast increase in the number of regulatory requirements facing institutions. It often seems that the Obama administration has never met a regulation that it didn’t like. Over the course of eight years, the administration produced nearly two dozen major new regulations affecting colleges and universities. In 2016 alone, the administration produced (or will issue) new regulations dealing with state authorization, borrower defenses, financial responsibility, and teacher preparation. Some of the still-to-come unissued regulations are extraordinarily complex and have been in preparation for more than five years. They seem certain to present serious implementation difficulties.

Legally, imposing new regulations requires public notice and the opportunity for comment. This means the regulatory process allows affected parties to offer criticism, raise questions, and make suggestions for improving the mandates. But in several notable cases, the Obama administration has simply imposed requirements in the form of legally binding “guidance” without the opportunity for questions or comments. Most notably, in April 2011, the Department of Education’s Office of Civil Rights (OCR) vastly expanded requirements on campuses regarding sexual assault cases under Title IX of the Higher Education Act without asking for or accepting comments about whether and how to do this. Many questions have been raised since 2011 by institutions seeking to better understand the requirements, but the department has declined to provide clarification, leaving institutions in the dark about how to handle what can be very thorny cases. A similar process was used in 2016 to issue requirements for all educational institutions—from kindergarten through graduate school—regarding transgender students. Not surprisingly, questions and controversy soon followed.

There is a growing recognition that such a process may not be permissible under the requirements of the Administrative Procedure Act. Indeed, in August 2016, in response to a suit filed by 13 state attorneys general, a federal district court judge blocked OCR’s “guidance” regarding transgender students, ruling that the administration failed to comply with federal law because it didn’t follow the Administrative Procedure Act’s notice and comment requirements and issued “directives which contradict the existing legislative and regulatory text.”

It goes without saying that federal regulation is appropriate and necessary, especially when so much public money is involved. But it’s also true that regulation always imposes costs. It’s a basic law of economics that externally imposed increases in the cost of doing business will be passed on to consumers. In higher education that means higher tuition charges, but it can also affect the services provided to students if college administrators divert time and energy to regulatory mandates and paperwork rather than to providing services to students. Too often, the Obama administration has over-promised what its regulations would accomplish and downplayed the costs that would be imposed.

Taken together, this five-part legacy represents significant and imposing changes in the federal government’s role in higher education, so the failure to reauthorize the HEA did not seriously impede the administration’s efforts to change the federal role in higher education. In the twenty-first century, major changes in government policy and practice, it turns out, do not require Congressional action.

But the failure to rewrite the higher education law is troubling. The 2008 reauthorization reflected the state of higher education as it existed in the first years of this century. But higher education institutions and learning modalities have changed rapidly and dramatically since then and the framework created by existing federal law is increasingly obsolete. Adaptations to new or rapidly changing educational approaches­—such as online learning, hybrid courses, and competency-based education—criteria for identifying the most effective and appropriate ways to assess institutional eligibility for federal student aid programs, and decisions about whether Title IV funds should be extended to very nontraditional providers such as coding boot camps and massive open online courses (MOOCs)—need to be incorporated into federal policy. That can only be done carefully and thoughtfully through the legislative process where all parties have a chance to influence the outcome.

Will the Obama administration leave a permanent legacy in higher education? Yes, most of the changes discussed here are very likely to be permanent. The new administration will have its own regulatory and policy goals, of course. Congress, at least in theory, will have something to say about future changes, but in light of the current paralysis on Capitol Hill, the chance that it will exert significant influence—outside of a reauthorization of the Higher Education Act or other major legislative initiatives—is probably minimal. So the bottom line is that the framework of federal higher education policy has changed significantly, and it’s here to stay.

This article is a preview of the Winter 2016 edition of ACE’s flagship magazine,The Presidency.