Advocates of disruptive college business models and carrot-and-stick accountability measures were excited Thursday to hear President Obama back their work in his effort to curb the rising cost of college.
The president, in a speech on college costs, praised a new public-private partnership  between the Georgia Institute of Technology and a Silicon Valley start-up, name-checked a performance-based college funding formula in Tennessee  and praised programs that award degrees to students based on how well they test  rather than how much time they spend in a classroom. All of this, Obama said , could help “shake up the current system, create better incentives for colleges to do more with less and deliver better value for students and their families.”
Paul LeBlanc, president of Southern New Hampshire University, said Obama’s message was clear and simple: The federal government will stop subsidizing increasingly expensive semesters of college without demanding better results.
Obama’s remarks ensure more and perhaps increasingly pitched jockeying by higher ed interest groups as Congress prepares to refresh the Higher Education Act, the massive law that spells out how the government awards financial aid. But Thursday, LeBlanc said, Obama made clear his aims.
“I think all of the stakeholders are trying to solve different problems and what the president is basically saying is we have one problem -- i.e., the unsustainable nature of the current system -- and that problem is trumping all other problems,” LeBlanc said.
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Southern New Hampshire just received federal approval  to award a low-cost associate degree to students based solely on their performance on tests rather than seat time. Obama said he wants to see more such low-cost competency-based degrees, a change LeBlanc said could threaten traditional colleges’ business models.
While Obama is encouraging low-cost alternatives to traditional experiences, his toughest battle may be his effort to expand a college rating system and then tie federal student aid to those ratings. Congress, which has killed many of Obama’s major initiatives, would have to approve the plan and could be one obstacle among many.
Zakiya Smith, a former White House education adviser who now directs strategy for the Lumina Foundation, said the ratings to hold institutions accountable are in line with what Lumina has been pushing for.
It’s unclear, Smith said, where the battle lines would be drawn. In theory, she said, there is little that's controversial in the president’s premise.
“It’s hard to be against focusing on student outcomes as long as you are adequately accounting for the differences in the types of students that are being served. It’s hard to be against quality,” Smith said. “The problem is when it comes to defining quality and what outcomes matter.”
Three years ago, Tennessee lawmakers wrestled with this very issue. State policymakers spent months meeting with education officials and other interested parties, including business leaders. The state’s goal was to increase the education of its work force, so the legislature decided to tie new funding for colleges to how well they were preparing students.
“While we’re still new at it and we would anticipate it would be an evolving kind of circumstance over the years, it has, in fact, served to focus us and to focus our institutions on student success and student outcomes,” said Tennessee Board of Regents Chancellor John Morgan. “And I believe that is what the president wants -- to the focus the entire higher ed enterprise in the country.”
In his speech, Obama made a point of singling out institutions that are experimenting with technology to lower the cost of higher education.
“The point is it’s possible, and it’s time more colleges step up with even better ways to do it,” Obama said.
Obama’s words were welcomed by entities that provide MOOCs, or massive open online courses. In a statement, edX President Anant Agarwal said Obama’s plan “has recognized the important role that technology needs to play in improving higher education.”
Although Obama did not explicitly mention specific MOOC providers or ed tech companies, he praised Georgia Tech for its low-cost master’s degree program , developed in conjunction with Udacity.
“Our partnership with Georgia Tech is core to our mission of providing greater access to a quality STEM education while making higher ed more affordable,” a Udacity spokesperson said. “While we are still in the early stages and have much to refine, we are encouraged by the administration’s ongoing support for MOOCs and look forward to continuing the important dialogue around improving access to education for everyone.”
Obama also pointed to adaptive-learning initiatives at Carnegie Mellon University and Arizona State University, which he said are “starting to show that online learning can help students master the same material in less time and often at lower cost.”
“It’s tremendous recognition for what we’re doing,” said Philip Regier, vice president of ASU Online. The university has seen student performance rise after it partnered with Knewton to offer a remedial math course . “We’re actually on a trajectory to work with our partners on a set of courses. That’s going to roll out in 2014, and we will replicate its success and continue to do research.”
Some administrators indicated the speech could help sway those who may have been on the fence about the new programs. Kevin P. Reilly, president of the University of Wisconsin System, said he believes the executive shout-out will lead to more interest from potential students and faculty members in the institution's competency-based degrees, approved last month .
“It will cause us to double our efforts and do it faster and better,” Reilly said. “We want to do this very carefully and we want to do it right, and we think if we get these first flex options off the ground in a good, solid way, we’ll have an ability to scale throughout our system.”
Russ Poulin, a deputy director at the Western Interstate Commission for Higher Education’s Cooperative for Educational Technologies, said there could be limits on how far new technology alone can be used to control costs.
Poulin, citing a study the cooperative worked on a decade ago, said employees are ultimately a major cost. He said if colleges really wanted to reduce overall cost, they have to think differently about how they are using their people.
“You use lower-cost personnel and faculty don’t want to hear it,” Poulin said.
He also said the Department of Education has several regulations in place that treat distance education unfavorably compared to on-campus courses. Those regulations, he said, run counter to the president’s message, though the Obama administration has said it will decrease regulatory burdens to allow innovation.
Poulin was also surprised Obama did not take time to back open educational resources, including low-cost textbooks, because students can spend more than $1,000  a semester. For instance, students at the state of Washington's 34 community and technical colleges will save hundreds of thousands of dollars a year because of low-cost textbooks produced by the state's Open Course Library.
“I think there is tremendous promise there. For that to be left off the list is really sad,” Poulin said. “I was really shocked.”