09/05/2013 11:16 am ET Updated Nov 05, 2013

Asking the Right Questions About the Administration's Cost Proposals

President Obama's recent proposals to address the access and affordability issues facing higher education are important and complex. Together, they present a set of initiatives that may significantly influence how colleges and universities manage their costs and prices, as well as monitor educational quality and delivery.

Included among the key elements of the president's plan are:

  • A ratings system that would track similar institutions based on access, affordability, and student outcomes -- including data about the advanced degrees and earnings of graduates;
  • A performance-based funding process that links the availability of federal student aid to the results of those ratings;
  • A state "Race to the Top" program for higher education designed to stimulate innovations in cost-containment strategies at colleges and universities, with eligibility tied to each state's maintenance-of-effort in investment in public higher education;
  • A new model of distributing federal student aid that would link distribution of funds to students to their progress toward a degree or certificate;
  • Modification of the current income-contingent repayment program for student borrowers that puts into place a "Pay as you Earn" loan repayment plan that caps loan payment at 10 percent of monthly income.

Full details of the president's plan can be found here.

Higher education has been confronting the challenges of change for a number of years, especially since the recession of 2008 and 2009. College and university leaders, including board members, already realize the imperative of addressing access, affordability, and student outcomes. Their efforts to grapple with such issues have not been, nor need to be, dependent on federal or state policy initiatives. Most institutions and their leadership have been actively engaged in making tough decisions related to fiscal priorities, pricing, investments in academic programs, and educational delivery. Many of the financial problems facing our institutions are tied to the fixed costs of health and retirement benefits, as well as declines in state operating support, in particular for public higher education.

With a public that is demanding a new, less-expensive approach to obtaining a college education and a student body that is focused on jobs, the new proposals will require careful consideration. The president's call for change is a welcome start, but some of the more ambitious aspects of the plan will ultimately require congressional approval -- not an easy hurdle these days -- during the coming reauthorization of the Higher Education Act. Congressional scrutiny will allow for a more thoughtful discussion of the plan's specifics.

While the politics of the president's proposals play out over the next months, institutional and system boards and CEOs can continue to focus on the implications. Effective collaboration within institutions -- with governing bodies asking the right questions, making and supporting important and, at times, difficult decisions, and even weighing in on the national policy debates in a coordinated approach -- will be essential. Trustee voices at regional policy hearings and in conversation with policy leaders can have a very real impact.

So, as the debate over the president's proposals continues, boards should be working with other institutional leaders and asking appropriate questions, including:

  • Do the data we receive and discuss accurately reflect student outcome information?
  • Are we making decisions about academic priorities based on a financial model that reflects our institution's overall mission and strategic goals?
  • What percentage of our students is impacted by federal student loans -- and what are the retention and completion trends of Pell recipients?
  • How many current students or their families are being denied federal student aid? How would our institution fare in a national ranking of similar institutions based on available data related to access, rate of tuition increases, and student success?
  • What changes, if any, should we board members and top administrators consider in consultation with faculty members to maintain overall academic quality and meet student expectations?
  • What is our perspective on the overall recommendations being advanced by the Department of Education, and how can we most effectively advance those views?

A number of the president's proposed initiatives will be put into motion rather quickly. Others will become part of the political dialogue. AGB will remain on top of those initiatives as more information becomes available, as hearings are held, and as the recommendations are presented to Congress.

Higher education is central to the future of our country -- how it is made available to current and prospective students matters. This is a conversation that requires the participation of board members and other institutional leaders throughout the nation.