Federal Government Impedes Innovation in Higher Education, Witnesses Tell Panel

WASHINGTON — American higher education is afflicted with systemic barriers to being more productive, witnesses told members of the Senate Homeland Security and Governmental Affairs Committee on Wednesday. The federal government has played a role in building those barriers, witnesses testified. 

The hearing, a review of the federal Department of Education’s performance, was asking “a key question,” said Chairman Ron Johnson (R-Wis.). “Are we getting the bang for the buck? We’re spending an enormous amount on education,” he said, noting that taxpayers have spent about $1,500 billion on the Department of Education since its launch in 1980, and $87 billion in 2015. “Have we improved performance?” 

Economist Richard Vedder, a nationally renowned expert on college costs from the Center for College Affordability and Productivity, testified that by many measures, we have not. About 40% of students entering college do not earn a degree within six years, college tuition has risen about 3% a year since the Department of Education was founded, compared with 1% a year before that, and the department’s rules have helped stifle innovation, he testified. 

Kevin Carey of the New America Foundation affirmed that undergraduate tuition, fees, room and board have risen at about 2.5 times the rate of inflation since the mid-1960s. He noted that while the number of people seeking degrees has risen sharply, the supply of colleges has not. 

“Accreditation has a lot to do with that,” he said, referring to rules that restrict the ability of new colleges to accept students who use federal aid. “Accreditation defines away the possibility of radical innovation and productivity increases,” he said, comparing the situation to one where Apple Corp. would need approval from competitors to launch the iPhone. 

“The incentive systems within the higher education systems, to be efficient and to be productive, are very, very limited,” Vedder testified. 

Chairman Johnson, a manufacturer before his election to the Senate, noted the crucial role of competition in improving other fields. “Productivity is table stakes in the private sector and business,” he said. “You have to improve your productivity if you’re going to succeed.” 

Also testifying at the hearing was Theodore R. Mitchell, undersecretary of the Department of Education. He defended the federal student aid system. Chairman Johnson noted that new research from Federal Reserve economists has found that for every added dollar of federal guaranteed student loans, college tuition rises by as much as 65 cents. He noted that student debt owed by Americans rose from $76 billion in 1994 to $1,076 billion in 2015 and asked Mitchell, “Do you view that as a measure of success?”   

“We see that as an investment,” Mitchell replied, adding that taxpayer-subsidized repayment programs can help reduce the burden on students. 

Chairman Johnson said the hearing was the first in a series that will examine what taxpayers have spent on federal departments and what results those departments have obtained for the money. 

Chairman Johnson’s opening statement can be found here

Video of the full hearing can be seen here