Obama’s Legacy: An Unlikely Hawk on Higher Ed

On a late August morning in 2013, President Barack Obama approached a podium at the University at Buffalo and made a provocative proposal: What if the federal government could determine which colleges were good and which were bad? And what if taxpayers gave less money to the bad ones?

The president would soon find that the concept, while elegant in its simplicity, was frustratingly difficult to put into place. The proposal would send his administration up and down blind alleys, searching for answers about academic quality that have long eluded scholars, lawmakers, and administrators. But the college-ratings plan, as it would come to be described, did something more than challenge the president’s team: It marked an important moment in Barack Obama’s unlikely evolution as a hawk on higher-education accountability.

The Obama Issue

In this special issue of The Chronicle Review, we turn our attention to the accomplishments and disappointments of the past eight years. See the whole issue here.

• Barack Obama’s Imprint on Higher Education
• Obama’s Imprint on Higher Ed: Responses
• Obama’s Betrayal of HBCUs

How did it come to this? Mr. Obama had all the makings of academe’s dream candidate. The liberal former law professor had a reputation for nuance, and he seemed to effortlessly link the prosperity of the nation with the need for a better-educated citizenry. Yet over the course of his tenure, President Obama would reflect, if not amplify, growing national skepticism of higher education, tempering his praise for the sector with deep concerns about college costs, bad actors swindling the disadvantaged, and an opaque system of oversight that denied students and families helpful information about what graduates could expect as a return on their investments.

The story of Mr. Obama’s higher-education legacy, as told through the eyes of his lieutenants in the Education Department and at the White House, is a tale of an administration driven to test the limits of federal power over a sector that often strenuously resists accountability and vigorously guards its independence. His attempts to assess college outcomes and to crack down on for-profit institutions were met with considerable resistance, revealing both the entrenchment of academe and the seemingly unsolvable problem of measuring quality across a diverse collection of institutions.

The path that brought the president to that stage in Buffalo starts well before 2013. It goes back to the beginning, weeks before he first took the oath of office, in early 2009. As with so much of his presidency, Mr. Obama’s higher-education agenda was rooted in and shaped by the economic crisis that loomed over his administration from the start.

In his first weeks at the Department of Education, Robert M. Shireman received a skeptical letter about the lack of diversity in his office. It was true, as the letter said, that the office was all white and all male: Mr. Shireman was the only one in it.

It was the start of the president’s first term, and the world seemed to be falling apart. Unemployment was near 8 percent. Banks were failing. No one was paying too much attention to Mr. Shireman, a deputy under secretary of education who had spent the past decades working on higher education as a congressional aide, economic adviser in Bill Clinton’s administration, and think-tank fellow, among other posts. But in a small department that leaned toward K-12 experts, Mr. Shireman had an uncommon opportunity to shape the administration’s higher-education agenda.

He was a darling of consumer advocates and student-aid groups who wanted more regulation of colleges, and he finally had the wheel.

In the weeks before the president’s inauguration, Mr. Shireman took meetings with most of Washington’s big higher-ed lobbying groups. Over the course of just a couple of days, his notes from that period show, Mr. Shireman met with private-college advocates, land-grant representatives, community-college leaders, student-aid activists, lenders, financial-aid experts, business officers, and a for-profit-college association that would in a very short time come to despise him.

The meetings reflected a malaise hanging over the higher- education establishment, which felt pilloried by the previous administration’s accountability efforts. They had endured Secretary Margaret Spellings’s Commission on the Future of Higher Education, whose efforts to make college more accessible and affordable often felt like attacks.

Private-college leaders said they were ready for a national effort around higher education, one that would press state and federal governments to invest more in colleges that agreed to lower tuition and increase need-based aid. Others stressed the need for “voluntary approaches for addressing quality,” pleading with the Education Department to “not try to micromanage … the way the previous administration was trying to do,” Mr. Shireman’s notes show.

But one group stood out as upbeat: for-profit colleges. Mr. Shireman’s November 20, 2008, meeting with the Career College Association felt like a pep rally for reviving the economy through work-force training.

“It sounded great,” he says, “but it also sounded to me like what I’d heard in 1989-90 — a lot of things that sound good but turn out to not be true.”

Twenty years earlier, he had been legislative director and chief education adviser to the late Paul M. Simon, a Democratic U.S. senator from Illinois. Mr. Shireman recalled when Congress had passed new regulations aimed at proprietary institutions plagued by fraud and high student-loan default rates.

Beleaguered as many colleges were by the recession, there was good reason to believe that help was on the way. Before President Obama even took office, there was a growing consensus in the forming administration that an economic-stimulus plan should include increases in Pell Grants, which are designated for low-income students. Congress could be assured that recipients would spend the money quickly — Pell was the ultimate “shovel-ready” project — and the plan had the additional benefit of serving a cause close to liberal hearts.

“Our view was that there were certain kinds of expenditures that would provide stimulus and substantial ongoing benefit; the increase in Pell was one of them,” says Lawrence H. (Larry) Summers, who was the first director of the National Economic Council under President Obama. “The need for stimulus created a political window to establish a very important principle.”

By exploiting that opportunity, however, the administration created a political liability. If proprietary colleges benefited from the Pell Grant largess, only to later be exposed for fleecing poor students, the Obama administration risked appearing as the sector’s enabler, according to several former officials. The carrot needed a stick.

The American Recovery and Reinvestment Act of 2009, as the stimulus was formally titled, provided $31 billion to help students and families pay for college, including $17 billion for Pell Grants.

“We felt pressure to demonstrate those dollars were being well spent,” says James Kvaal, who advised Mr. Summers as assistant to the president for economic policy before later replacing Mr. Shireman as deputy under secretary.

It was within this pressure cooker that Mr. Shireman helped to develop what would become known as the “gainful employment” rule, which would penalize or close career-oriented college programs, such as those in culinary arts or automotive repair, whose graduates failed to get good jobs. The regulation amounted to a war with for-profit institutions, many of which graduated students with high debt and few lucrative employment prospects. But the rule also managed to offend community colleges, where more-affordable career-focused programs would be subject to voluminous reporting requirements.

It is difficult to overstate the headaches this measure caused across the administration, which was besieged by charges of overreach and criticized for punishing institutions that educated the working class. But gainful employment was but a piece of a larger set of regulations and legislation that suggested the administration’s emerging philosophy for governing higher education, which blended taxpayer watchdogging with consumer protection.

The first of these measures was to end bank-based student lending, making the government the sole provider of federal student loans. The savings accrued from the move were designated for Pell Grants and other education-related programs.

“It opened up a new way of thinking about the federal government’s relationship to higher education,” says Kevin Carey, director of the education-policy program at New America and a contributor to The Chronicle. “The whole premise was ‘We can’t trust the system as it exists.’”

These were not the same colleges Congress had pushed around in the 1990s. By President Obama’s second year, the nation’s nearly 3,000 for-profit colleges were already educating about 7 percent of the 19 million students at degree-granting institutions in the United States, and were growing considerably faster than the rest of higher education. They were bankrolled for battle, too. In 2010, as the debate over gainful employment heated up, the industry spent more than $7.4 million on lobbying, up from $2.7 million the year before, the Center for Responsive Politics reported.

In the middle of the fight was Harris N. Miller, then president of the Career College Association, which is the primary lobbying organization for for-profit colleges. (The group has since changed its name to Career Education Colleges and Universities.) Mr. Miller was an old political hand who, in 2006, had made a failed run in Virginia’s Democratic primary for U.S. Senate. His members were convinced that gainful employment would go well beyond catching a few bad actors, and instead punish a prospering sector that could play a legitimate role in “upskilling” the nation’s work force. The rule, which went through numerous revisions, would cut off federal aid to programs whose students had the highest debt burdens and the lowest repayment rates. For those ensnared, it would effectively be a death sentence.

Pushing back, the for-profits hired Washington lobbyists and put a heavy emphasis on wooing congressional members in their local districts. But Mr. Miller discerned that giving lawmakers campus tours was no substitute for furnishing hard data about how far-reaching and punitive the rule might be.

“We have plenty of cute puppies because there are lot of successes,” says Mr. Miller, reflecting on how for-profit colleges promoted themselves to Congress. “But you can’t convince a congressman that a few cute puppies means you’re not running a puppy mill.”

In the spring of 2010, Mr. Miller thought he had an answer. The association had hired Jonathan E. Guryan, an economist from Northwestern University, to conduct an analysis of the proposed gainful-employment rule. Mr. Guryan estimated that about 18 percent of programs would fail to meet the department’s standards. The two arranged a meeting with Mr. Shireman, thinking he’d be moved by their data. He wasn’t.

By Mr. Miller’s account, Mr. Shireman all but dismissed Mr. Guryan as a company shill, barely looking the researcher in the eye and describing the findings as dishonest.

“I would have come across the table at that point,” Mr. Miller says. “It was such an unnecessary and unprofessional insult. I was aghast. Bob sounded like some kid from Young Democrats in college.”

Mr. Guryan declined to comment on the exchange, but he affirmed Mr. Miller’s general characterization. Mr. Shireman says he recalls being “skeptical.”

The under secretary’s growing reputation as a man on an ideological crusade was creating a problem for the Obama administration. Arne Duncan, secretary of education, and Mr. Shireman were pulled into a meeting at the Capitol Hill office of Harry M. Reid, the Democratic senator from Nevada, who was then majority leader. He wanted to know what the department was up to and why he was hearing such horror stories, Mr. Shireman recalls. The senator had a family relative, he explained, who had benefited greatly from a career college. They weren’t going to deny his constituents such experiences, were they?

In May 2010, Mr. Shireman announced his plans to resign, a decision in keeping with his stated intention to work in Washington for only a short time before returning to the West Coast. But Mr. Shireman’s departure did not allay the concerns of the for-profit colleges, the private-equity firms that owned them, or the lawmakers to whom they provided campaign contributions. A public-comment period on the rule netted more than 90,000 responses, most of them negative.

The intensifying pressure on the administration was made manifest in a September 14, 2010, meeting in the Roosevelt Room of the White House. The meeting, which has not been previously reported, was a veritable who’s who of the administration. A list of attendees, obtained by The Chronicle, included Melody C. Barnes, assistant to the president and director of the White House Domestic Policy Council; Secretary Duncan; Austan D. Goolsbee, chairman of the Council of Economic Advisers; Mr. Kvaal, then deputy under secretary of education; Eugene B. (Gene) Sperling, counselor to the treasury secretary; Mr. Summers; and Jeffrey D. Zients, acting director of the Office of Management and Budget.

The White House wanted to know how confident the department was in its analysis, which suggested that only a handful of bad apples would be targeted. If that was the case, why was the opposition from career colleges so unanimous?

Pressed for answers, the Education Department officials laid out their case. There was evidence that students at for-profit colleges paid more, borrowed more, and defaulted more on loans than their counterparts at nonprofit institutions. A handout from the meeting detailed “troubling anecdotal evidence,” including “a New York Times story about a $41,000 culinary program that a local employer described as useless.”

Department officials also identified the source of the plan’s opposition: The worst offenders were spending the most to stop it from happening. Included in the handout was a bar graph showing that many of the for-profit colleges whose students had the most trouble repaying loans were among the institutions with the biggest recent increases in their lobbying expenditures. Among them: Corinthian Colleges Inc. and ITT Technical Institute, both of which have since closed amid heightened federal scrutiny of the industry.

The meeting in the Roosevelt Room did not kill the gainful-employment rule, but it led to changes that gave for-profit colleges more opportunities to redeem themselves. Within days of the high-level discussions, the department announced that it would delay final publication of its regulation.

What followed was nearly five years of redrawing the rule, sometimes to the disappointment of consumer advocates, who sought a tougher crackdown. In the ensuing years, legal challenges from for-profit colleges threatened to derail the regulation entirely. But the rule finally took effect in July 2015, and the Department of Education estimates that about 1,400 programs will fall short of its standards. The worst offenders, where graduates’ income levels are determined to create unmanageable debt, will become ineligible to receive federal financial aid. Several colleges have cited the rule as a reason for closure. The shuttering of two of the largest chains, Corinthian and ITT, speaks to a dramatically shifting landscape for for-profit colleges.

The regulation was aimed at a relatively small sector of higher education, one that nonprofit-college leaders tend to dismiss. But the fight over gainful employment was a preview of what an Obama presidency had in store for academe. No one was safe from federal scrutiny.

The president was polite, but he did not like the options in front of him.

In the spring of 2013, he’d summoned advisers to the Oval Office, asking for proposals on college costs. Wasn’t there a way, the president implored, to tell people which colleges had a proven record of ushering students toward good-paying jobs and which ones didn’t? Wasn’t there a way to restrain tuition growth?

Two people in attendance, who asked for anonymity to describe the private meeting, say this was the moment when President Obama’s college-ratings plan was born. The president let the meeting run long, and brainstormed to the point that one official felt they had let the boss down, forcing him to think through possibilities that should have been decided beforehand.

Before the meeting concluded, there was discussion about the fact that college leaders were likely to respond negatively to this sort of evaluation. President Obama said he did not mind shocking the system. Perhaps that was what was called for.

“If people had not been complaining about it, he would have felt we had not gone far enough,” says Mr. Kvaal, who in the second term served as deputy director of the White House Domestic Policy Council.

The president was driven to act in part by heartrending letters he had received from constituents. That July he read a note from a 29-year-old man in Bloomington, Ind., who was “married to the most beautiful and amazing girl in the world.” The letter, which the White House provided to The Chronicle, detailed the couple’s struggles to pay down $80,000 in collective student debt when each of them earned less than $30,000 a year.

For two years, the letter said, the man had worked two jobs from morning until midnight, until the “stress and sleep deprivation finally got to me.” It had taken his wife four or five years to find a job connected to her degree in criminal justice, and she had taken a pay cut to do it.

“Hindsight being 20/20,” he wrote, “I never would have gone to college. … We were young. We made a mistake. We borrowed money based upon the promise of good work afterward, and we’ll be paying for that mistake for the rest of our lives.”

Within weeks of reading the letter, Mr. Obama gave his speech at Buffalo, pledging to “shake up the current system.” The plan’s most controversial component was a suggestion that students attending higher-rated colleges receive larger Pell Grants and more-affordable student loans. That provision indicated that Washington was prepared to pick winners and losers based on its own judgment of which metrics mattered most. It would have been a sea change in student-aid policy, which has historically given students broad discretion about where to spend their federally awarded dollars and has intentionally kept the government out of the business of influencing those decisions.

The proposal intimated that colleges should be judged in part by how much money their graduates earn — an assertion that picked at a sensitive question about whether a student’s early-career salary says anything about the long-term value of postsecondary education.

“It is time to stop subsidizing schools that are not producing good results,” Mr. Obama said, “and reward schools that deliver for American students and our future.”

As the president delivered his remarks, Jamienne S. Studley was aboard a small boat along the Inside Passage of Alaska, vacationing with her husband. Cellular service was patchy on the boat, limited to a few hours a day, and Ms. Studley hurriedly read the president’s remarks on her phone, concerned she’d lose the signal.

Putting the phone down, she told her husband, “I have feeling that’s going to be my future.”

Ms. Studley had little desire to return to Washington; she’d built a life on the West Coast, where she led a civil-rights law firm and advocacy group. A former president of Skidmore College who had worked as the Education Department’s top lawyer during the Clinton administration and served in the Carter administration as well, she saw Barack Obama’s election as a natural time for a new generation of wonks to give it a go. But she got pulled back in, realizing that higher education was becoming a front-burner issue in the president’s second term.

As deputy under secretary of education, Ms. Studley spent much of her time crisscrossing the country to meet with college leaders of all stripes. They all told her the same thing: The data you have are terrible, and you can’t possibly use them to evaluate us. Graduation rates don’t prove anything. They don’t account for transfer students; they depend greatly on the wealth and preparation of the incoming student; these ratings will only encourage colleges to admit fewer poor kids.

Internally, the department was looking for a way to describe what the president wanted. Ms. Studley started talking about a Consumer Reports-style evaluation that would be aimed at “disaggregating characteristics” among colleges. Others were likening the proposal to evaluating fuel efficiency in cars.

“We didn’t mean to say there’s one best of something,” she says.

But the analogy that Ms. Studley chose in late 2013, speaking to a group of private-college presidents, was the one that stuck: You could evaluate colleges just as you might a “blender.” By likening colleges to kitchen appliances, Ms. Studley had played right into the hands of critics, who argued that the Education Department mistakenly viewed colleges as more or less the same, rather than as unique institutions with different goals that defy easy comparison.

When Charles L. Flynn Jr., president of the College of Mount Saint Vincent, heard the “blender” comment at the meeting, he says he felt it was “more confirmation than it was revelation.”

“They had characterized their own foolishness in a way that made it obvious to anyone who heard it,” says Mr. Flynn, who leads a college in the Bronx where about half of the students are considered low-income.

The department solicited plenty of input, but the ratings system was described as a fait accompli. Speaking to the National Association of Independent Colleges and Universities, or Naicu, which vigorously opposed the plan, Secretary Duncan began by declaring: “Don’t tell us not to do it. Tell us how it can be done well,” Mr. Flynn recalls, “which was an announcement to the room that he didn’t want to hear what we had to say, because it could not be done well.”

Higher-education advocates sometimes cringe when they are described as “lobbyists,” but Naicu and other groups were forceful in their efforts to turn lawmakers against the ratings plan. David L. Warren, president of the group, urged his members to push back on “an overreaching executive branch.”

“Tell your story to your member of Congress why this is an ill-conceived notion,” said Mr. Warren, whose comments were included in a Washington Monthly article about groups lobbying against the proposal. “No congressman wants an ugly rating for an institution in his district.”

The critics had a point, and the Education Department knew it. Every formula contained some unintended consequence. If you wanted a low-cost institution with comparatively high postgraduate earnings, you should send your sons and daughters to mining schools. Did that make those colleges “better” than rabbinical schools or merely affirm that most rabbis aren’t rich?

Many of the men and women behind the college-ratings plan, some of whom who had put academic careers on hold to work on the project, had decided early on that it was unwise to tie federal funding to any of the ratings they conceived. But there was still the central question of whether to rate colleges at all; affixing grades or numerical scores to Institution X meant that a government bureaucrat was going to have to decide whether what a student earned after college meant more or less than whether a college kept tuition low. And there was a collective queasiness about whether the “scorecard,” as it came to be known, made the feds look like participants in the fraught college-rankings complex.

Even the name “scorecard” carried with it an uneasy suggestion of competition among diverse institutions. But it was part of a broader effort to cast the data warehouse as a user-friendly tool for everyday people.

“I never wanted to call it a scorecard,” says Martha J. Kanter, another former under secretary of education. “I wanted to call it a value profile. But scorecard is sports.”

As with the gainful-employment rule, which was still being challenged in court as the Obama administration developed its ratings plan, the college scorecard was a drawn-out fight that tested the will and patience of its architects. The team had already been grappling with the scorecard for a couple of years by the time President Obama and Vice President Joseph R. Biden Jr. called its members into the Roosevelt Room.

Jason Furman, chairman of the Council of Economic Advisers, laid out several options, one of which looked a lot like what the president had described in his Buffalo speech. But a strong argument could be made, the president was told, for a website that would contain lots of information — including new data on postcollege earnings — without putting the government in the position of assigning letter grades to colleges. Once this information was easily accessible, the case followed, academic researchers and news organizations could slice and dice it, assigning their own values.

The president interrupted.

“He said we shouldn’t be afraid to walk away from what we initially planned and pursue the better option,” recalls Jordan D. Matsudaira, a former chief economist at the council.

Mr. Matsudaira, who had overseen the creation of the scorecard, was relieved. He had never been able to get past the perverse incentives that ratings system might create for colleges, which could game the results by lowering graduation standards or by cutting majors unlikely to produce high earnings.

There were limitations in the data, too. There is evidence that individual college outcomes and postgraduate earnings correlate strongly with a student’s academic background and test scores on entrance exams, but the federal government does not collect that information. Absent such data, Mr. Matsudaira says, it is difficult to tell whether a college’s completion rate or postgraduate earnings are evidence of strong programming or merely a byproduct of selective admissions standards.

The data are limited in part by Congress’s 2008 “unit record” ban, which forbade any federal attempt to track individual students through college and beyond. Many of the very college presidents who criticized the ratings plan for flawed data had supported the unit-record ban, arguing that a tracking system violated student privacy.

“That is a set of critiques that I find particularly galling,” Mr. Matsudaira says. “The reason the government doesn’t have better data on a lot of things is because of the student unit-record ban that the higher-ed associations really lobbied for.”

The decision to back away from an aggressive ratings system may have made good intellectual sense, but it was arguably bad politics. When the Education Department eventually unveiled a scorecard website that did not explicitly rate colleges, it was widely described as a retreat. The Chronicle called the plan “a ratings system without any ratings.” The New York Times declared, “Obama Abandons Ranking System.”

In a way, the perception of the scorecard compromise as a political defeat was better than the truth as the economists saw it. They hadn’t backed down, in their view, from a throng of angry higher-education lobbyists. Rather, they had accepted the conclusion that they could not develop an accountability system that would not potentially create more problems than it fixed. Instead, they resorted to informing consumers, who’d be left to vote with their feet.

“It’s a more difficult pill to swallow,” says Betsey Stevenson, a former member of the Council of Economic Advisers. “They would much rather think about it as having lost a political fight, because then you just get up and fight another day.”

Barack Obama’s presidency has been one long and vexing calculation of what is both politically possible and technically achievable in the realm of higher-education accountability.

His administration has made the business of higher education ever more the business of the federal government, taking control of the student-loan system, expanding oversight of the for-profit sector, and threatening to strip federal funds from colleges found ineffective in responding to sexual assault.

To varying degrees, college leaders have found reasons to oppose these measures. In turn, the Obama administration has at times painted higher education as unnecessarily recalcitrant. In the fight over ratings, Secretary Duncan labeled his opponents “more than a little silly” and cautioned against allowing points of disagreement to become a “discussion-ending excuse for inaction.”

Mr. Carey, of New America, says the response from academe has been unsurprising.

“They want federal money to go directly from the U.S. Treasury to them with no questions about how it’s spent or whether students succeeded,” Mr. Carey says. “That’s the way it’s always been, and their agenda is to preserve that.”

It can be argued that few presidents since Lyndon B. Johnson, who signed into law the Higher Education Act of 1965, have talked more about colleges and universities. Indeed, Barack Obama stands out for having made the case forcefully and frequently that the future of the country depends on the accumulation of more college credits. In staking out this claim, however, the president has simultaneously questioned the value proposition of the very sector upon which he routinely showers praise.

Mr. Obama has been a cheerleader and critic in often equal measure, subverting early expectations that he would be the full-throated supporter whom higher education had been waiting for. On the issue of accountability, he has looked a lot like what came before. Rather than reflect the values of the higher-education establishment, he came to mirror the anxieties of his time — a time of declining faith in institutions, including higher education, and weariness with spiraling costs and stagnant wages. The closest observers of his administration describe the president not so much as an individual actor, but rather as part of a surging wave of accountability that will only strengthen when he is gone. For higher education, the end of Mr. Obama’s tenure may mark the beginning of what’s to come.

Jack Stripling covers college leadership, particularly presidents and governing boards. Follow him on Twitter @jackstripling, or email him at jack.stripling@chronicle.com.