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The Spellings' Commission on the Future of Higher Education; It's a Start

Important higher ed issues are out of the bag and open to discussion.
University Business, Dec 2006

The Commission of the Future of Higher Education, sponsored by Secretary of Education Margaret Spellings, made its final report, "A Test of Leadership," in September 2006. One might ask why so many years have passed without a national dialogue on the very educational issues that are front and center to national competitiveness and college affordability issues, which are regularly discussed around every family's kitchen table? Was the hiatus period due to other priorities? Or, as some have said, was the commission's report timed to the midterm congressional elections? It really doesn't matter; the issues are out of the bag and open to discussion at long last, thanks to Spellings.

In a news release dated September 26, 2006, Spellings stated the purpose of the commission was to open a "robust national dialogue on the vital issues of accessibility, affordability, and accountability." These are the issues now and have been the issues for a long time, at least back to the Higher Education Act of 1965 and maybe as far back as the Morrill Acts of 1862 and 1890 with respect to the access issue.

In the judgment of the commission, "higher education has become ... at times self satisfied and unduly expensive." Certainly no one would argue with the "unduly expensive" part of that statement. Cost containment was a priority issue for the Spellings Commission. Cost containment was also the thrust of the findings of the Advisory Committee on Student Financial Assistance in its recent report, "Mortgaging Our Future." In fact, the Advisory Committee estimates that 2.4 million qualified students will not obtain a bachelor's degree this decade because of financial barriers (Advisory Committee, 2006). However, cost containment was not the only issue that commission members had a problem with. I was in attendance at the final commission briefing at the Department of Education and there was push back on the conclusions from several members of the commission, even though only David Ward, president of the prestigious American Council on Education, abstained from signing the document. What he said is worth repeating:

I, like many of the college presidents I represent, believe that while our country's system of higher education remains among the best in the world, we face the challenges of maintaining that stature. Some of these challenges come from abroad, from the increasingly competitive global marketplace in which our country must compete economically and for which our institutions are relied on as a continued source of innovation. Other challenges are closer to home, such as the need to attend to crucial issues of affordability, access, and accountability that threaten our ability to serve students, families. And the nation's long-term economic, social, and creative needs.

Specifically, Ward takes issue with the commission's one-size-fits-all approach to problem solving:

"For example, many of the problems cited in the report are the result of multiple factors but they are sometimes attributed entirely to the limitations of higher education. The recommendations as a whole fail to recognize the diversity of missions within higher education." (Ward, 2006)

Another commission member, Richard Vedder, a professor at Ohio University and a visiting scholar at the American Enterprise Institute, did sign the report with numerous comments concerning errors of omission. He opined that the good in the report exceeds the bad, so he joined the other 18 of the 19 members of the commission in signing the report. He states: "There are many problems with our current system of higher education that are ignored or only vaguely discussed by the commission." Prominent on Vedder's list is this observation: "While appropriately calling the patch-work system of federal financial assistance programs 'dysfunctional,' there are no recommendations to improve it." ( Vedder, 2006)

At the commission briefing, Vedder chided the commission for making no mention of the $60 billion per year private sector Federal Family Education Loan (FFEL) Program in its report. Charles Miller, chairman of the commission, commented in a press conference that he thought, over time, private loans would replace federal student loans as private loan products develop to be just another consumer finance sector. One might ask, what happened to the "lender of last resort" concept that underpins all federal loan programs for people without credit, such as students from low- and middle-income families? Federally subsidized student loans are part of need-based aid, along with Pell Grants.

On the plus side, the commission strongly recommends an increase in need-based aid at least with respect to Pell Grants. The commission recommended that Pell Grants, which are currently provided by the federal government in the amount of $4,050 per year, be increased in purchasing power to a level of 70 percent (from 48 percent in 2004-2005) of the average in-state tuition at public four-year institutions. The call for more need-based grant aid has been endorsed by many education leaders, including Sen. Edward M. Kennedy (D-Mass.), who said the commission's best recommendation is for an increase in the Pell Grant. (Kennedy, 2006) The problem is that money has to be appropriated as part of the federal budget in amounts that could become so large as to become unaffordable. There is an alternative: a Pell Grant line of credit which does not exist at this time. The notion is that a line of credit would convert to a Pell Grant upon successful completion of an academic year, otherwise it becomes a federal student loan (Kesterman, 2005)--the reason being that loans are a more cost-effective use of scarce federal resources. Congressional cost estimates place the cost of grants to be six times the cost of loans, although actual subsidy depends on future trends in interest rates. (Kane, 1999)

We have already seen, in the Deficit Reduction Act (DRA) of 2005, the taking of $12 billion in earmarked Pell Grant funds for priority defense, Homeland Security, and Medicare needs. Speaking of the Deficit Reduction Act, here again the devil is in the details. The constitutionality of the Deficit Reduction Act is being challenged in the case of OneSimpleLoan v. the Secretary of Education because it appears that the House of Representatives and the Senate did not pass identical bills before being signed by the president, as required by law. This has only happened a few times in the history of our country.

This discrepancy is a detail of historical proportions that is now on appeal before the U.S. Court of Appeals for the Second Circuit. In September 2006, two major groups filed amicus ("friends of the court") briefs in the support of OneSimpleLoan v. the Secretary of Education, challenging the constitutionality of the DRA; one group was the Public Citizen Litigation Group, the other was made up of members of the U.S. House of Representatives, including Henry A, Waxman, Nancy Pelosi, John D. Dingell, Charles B. Rangel, Pete Stark, George Miller, James L. Oberstar, Louise McIntosh Slaughter, Sherrod Brown, Bennie G. Thompson. The legislators were in support of OneSimpleLoan and reversal.

If the DRA is declared unconstitutional, the changes that it made to the Higher Education Act will be voided. It is difficult to speculate what that would mean. Would the $12 billion in Pell Grant funds be restored, only to be swept away again by a new replacement law? Would the student loan reconsolidation process again be available to borrowers as requested in the initial suit filed by OneSimpleLoan on April 18, 2006? What happens to student loans made after July 1, 2006, when higher interest rates took effect? These are just a few of the many questions associated with the ultimate ruling.

The Spellings Commission covered many other higher education issues--too many to cover well in one short article. There is considerable doubt about how to hold the varied layers of higher education to

higher standards of accountability, which are recommended by the commission. On one hand, more innovate teaching methods are called for, and the other hand there is a suggestion of more federal involvement in measuring and reporting learning outcomes. There is concern in some quarters that this might be code for an extension of the No Child Left Behind, K-12 approach to learning. Higher education needs freedom to experiment. Higher education is a very competitive arena that generally stimulates performance without standards. Leave the European model in Europe.

Finally, what does the commission want private industry to do? The commission talks of global competitiveness and preserving American jobs, while at the same time U.S. industry is exporting jobs faster than can be measured. The commission wants automatic green cards for foreign students so they will take science jobs in the U.S. after graduating from a U.S. college with an advanced degree. This may be good for foreign students with resources to attend college in the United States, and for their prospective American employers, but we should ask about who these foreign students will displace in the job market. Could it be the qualified American students with good math scores who can't afford to go to college, as reported by the Advisory Committee on Student Financial Assistance? We have a problem of inadequate capital formation for educating the lower-income and middle-income American students who are opting out of their college dreams or scaling back their education because of price. The U.S. personal savings rate is less than one percent--by far the lowest in the developed world. This is a serious long-term problem and more green cards does not fix that problem.

That being said, questions without clear answers are better than no questions. The dialogue has already started. Spellings has announced that there would be follow-up meetings in the spring of 2007 to get down to sector specifics. This could produce some meaningful recommendations to the Higher Education Act Reauthorization process in 2008-2009. The wild card is likely to be the aftermath of the midterm congressional elections held on November 7, 2006.

Frank Kesterman, Ed.D., is Director of Government Relations for
OneSimpleLoan, a student loan firm specializing in student loans and student
loan consolidation services. Dr. Kesterman was formerly with the Department
of Education, the Treasury Department and Office of Management and Budget,
Executive Office of the President. He can be reached at or by emailing

Advisory Committee on Student Financial Assistance. (2006). Mortgaging our future.
Washington D.C: Advisory Committee on Student Financia1 Assistance.

Kane, T. (1999). The price of admission: rethinking how Americans pay for college.
Washington D.C.: Brookings Institute/ Russell Sage Foundation.

Kennedy, E. (2006). What Spellings got right and wrong. InsideHigherEd. Retrieved October 3, 2006 from

Kesterman, F. (2005).  Student loan borrowing in America. Dissertation published by George
Washington University and UMI, Ann Arbor Michigan.

The Secretary of Education's Commission on the Future of Higher Education. (2006).
A test of leadership, charting the future of U.S. higher education. Washington, D.C:
Department of Education.

Vedder R. The Spelling's commission: an evaluation. (2006). Center for College Affordability and Productivity. Retrieved September 29, 2006 from

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