Obama Seeks New System For Rating Colleges 302
PolygamousRanchKid writes "Targeting the soaring cost of higher education, President Barack Obama on Thursday unveiled a broad new government rating system for colleges that would judge schools on their affordability and perhaps be used to allocate federal financial aid. But the proposed overhaul faced immediate skepticism from college leaders who worry the rankings could cost their institutions millions of dollars, as well as from congressional Republicans wary of deepening the government's role in higher education. The new rating system does not require congressional approval, and the White House is aiming to have it set up before the 2015 school year. But Obama does need support from Congress in order to use the ratings as a basis for parceling out federal financial aid. In addition to tuition, schools will also be rated on average student loan debt, graduation rates and the average earnings of graduates. Under Obama's proposal, students attending highly rated schools could receive larger grants and more affordable loans."
The obvious reasons... (Score:3, Informative)
First of all, you're comparing an Australian government propaganda site--excuse me--an Australian government site that's sole purpose is to show off what a good idea it is to come to Australia to study to a list of "topuniversities." There's a difference.
Secondly, an Australian bachelors degree is only three years versus four for the US. From my admittedly limited experience, Australian degrees tend to be more trade-oriented than most traditional US universities, so again, the difference is probably not as bleak as you make it out to be.
Finally, correct me if I'm wrong, but the majority of Australian universities are public and heavily subsidized (so again, compare apples to apples, publics to publics). Australian professor salaries are also lower, and Australian professorships are more akin to civilian servant positions. Professors in the US--august representatives of the academy--are basically their own social/political/economic class.
The best--or most expensive, depending on your take!--universities in the US probably cost in toto about 60k a year right. There are a LOT of families that can afford that without dipping into savings and without blinking an eye. The last figures I saw are that around 20% of all American families make 100k or more a year. The most expensive colleges are still really expensive, but there is a HUGE diversity of colleges in the US from junior colleges and community colleges, to small liberals arts, to big state publics, to privates research institutions, etc. Given the tremendous wealth in the US and the availability of cheap, easy to get government money, why NOT raise tuition? With very few exceptions (see Antioch), colleges and universities hardly ever go out of business or have trouble filling seats.
Re:Forget ratings, measure ROI. (Score:3, Informative)
Over here, a degree (not counting the really expensive ones like medicine) costs $15-30k and a masters $20-37k.
Here is an even more extreme example: France [wikipedia.org]
One can therefore get a Master's degree (in 5 years) for about €750-3,500.
And this includes health insurance. The bulk of the educational cost is socialized through taxes. Education (K12 to university) accounts for 1/3 of the state expenses, IIRC.
Re:Forget ratings, measure ROI. (Score:3, Informative)
Here's where your theory starts to fall apart. Fannie and Freddy could only make or purchase "conforming" loans until well after the bubble had inflated. "Conforming" loans meant Fannie and Freddy could not buy all the bad loans the banks were making inflating the bubble.
Until the end of the bubble, when the banks needed a place to dump their now-crappy portfolio.
The CRA provides incentives. The CRA also says that the borrower has to pass through the bank's normal lending criteria. Your theory also runs into the problem that the CRA changes you claim to be the problem were passed in the 90s. If your theory were correct, it wouldn't have taken 20 years to cause problems.
Nope. Minimum is 3% down. And less than 20% down requires hefty PMI payments. PMI covers the risk of default on these more-than-80% mortgages
What was new was not the CRA, FHA, or Fannie and Freddy. They were doing the same things they had done for decades, and there wasn't a massive housing bubble during those decades.
What was new was securitization of home loans. Banks used to have to keep their loans, or sell the loans individually. That provided tons of incentives to make "good" loans - the bank would be stuck with the bad loans.
With securitization, banks now had a place to dump bad loans. So there was little incentive to make only "good" loans - the bank got paid back well before the loan went bad.