On Higher Ed, Will Legislators Choose the ObamaCare Approach?

This week in the Wall Street Journal, columnist William McGurn had an excellent piece on higher education (subscription required). He wrote mostly about federal policy—and on that point he quoted my friend Michael Poliakoff, a former Pennsylvania Deputy Secretary of Education—but his points are quite applicable to the debate currently taking place in our state.

McGurn wrote:

“Right now the incentives for our colleges and universities are all wrong,” says Ohio University economist Richard Vedder, who runs the Center for College Affordability and Productivity. “It’s wrong for colleges, who have no incentive to keep down costs. It’s wrong for students, whose needs are ill-served by loans and grants that go directly to the school. And it’s wrong for taxpayers, whose dollars are making education more expensive without expanding opportunity for those who most need it.”

Translation: If you are a mom or dad with college-age kids and you think the system is rigged against you, you’re right.

The way it works now is that people the universities deem rich pay the full sticker price. This might be thought to help subsidize the poor, says Mr. Vedder, but the college population today in fact has a lower percentage of people from the bottom income quintile than it did in 1970 (notwithstanding a massive increase in federal aid).

Meanwhile, those in the middle scrounge for subsidies—like Pell Grants and federal loans—that are not keeping up with the tuition inflation they are causing.

What a waste of human talent….In almost every other aspect of American life—media, communications, shopping—our institutions today offer Americans more options and flexibility than they did two decades ago. In higher ed, by contrast, we’re stuck on the same one-size-fits all model that worked back in the decades when only the very privileged went to college.

A good start would be a new structure for college financing that promoted genuine opportunity without feeding the inflation it is supposed to solve. President Obama, alas, seems wed to the same government-heavy approach he had for health care….

That’s unfortunate because with a little imagination and the right incentives, the possibilities are endless. Take Pell Grants. Right now, a college student who graduates in four years with a perfect 4.0 grade point average gets less money than a student who takes six years and squeaks by with a 1.9. A more competitive—and imaginative—Pell Grant might tie it to performance, and maybe even give a cash bonus to a student who graduates in three years.

The principles laid out there are exactly what Pennsylvania policymakers should adopt: Stop subsidizing institutions, which makes college more expensive, and start tying any funding to students and performance. That sounds a lot like what Gov. Tom Corbett and Budget Secretary Charles Zogby have been saying. The alternative—continued large subsidies to institutions that are not delivering the results taxpayers deserve—is, as McGurn suggested, what you might call the Obamacare approach. And we all know how well that’s working.