WASHINGTON — President Obama unveiled a plan Thursday to rein in exploding college costs, drawing skepticism from some New England college presidents concerned about tying federal funding to a new performance rating system.
Under Obama’s plan, the federal government would develop a report card by 2015 for all public and private colleges that would measure tuition increases, graduation rates, student debt, and even graduates’ earnings to help students pick schools that offer the best value.
The White House hopes that by 2018, two years after Obama’s term ends, Congress will pass legislation that would link the ratings to how much schools will receive in federal financial aid — the controversial sticking point for some lawmakers and college leaders.
“Colleges that keep their tuition down and are providing high-quality education are the ones that are going to see their taxpayer funding go up. It is time to stop subsidizing schools that are not producing good results,” Obama said in a speech at the State University of New York Buffalo.
The plan rewards schools that come up with innovative ways to keep costs down while helping more students graduate, and, if Congress approves, would help assure that graduates don’t have to spend more than 10 percent of their income on loan repayment.
But some college leaders, while applauding the premise behind Obama’s proposals, worry that the ratings could become an overly simplistic measure of a school’s value.
“I don’t have a problem with looking at data. It’s how you use it that becomes a problem,” said Robert Caret, president of the University of Massachusetts. “The Obama plan wants to look at income potential as an outcome to measure success by. But we don’t want people to stop being social workers and teachers. We’re not creating little widgets to fit into a certain workforce.”
In fact, the five-campus UMass system is embarking on its own grading system, with the first performance reports to be released next spring. Each campus will be measured on metrics such as six-year graduation rates, freshmen retention, and how it manages financial resources — but not on how much graduates earn.
Some higher education lobbyists also urged caution in creating the federal rating system. They feared it would be akin to the federal No Child Left Behind law, under which elementary and secondary schools with persistently low test scores — mostly schools enrolling a high number of low-income, minority students — have been labeled failures.
“I appreciate wanting to create a common measure, but one of our strengths is the diversity and range of institutions students can pick from,” said Christine Keller, associate vice president for academic affairs at the Association of Public and Land-grant Universities. “If we’re going to tie institutional performance with funding, we need to be very, very careful that we have the right metrics to measure that.”
The association is developing an alternative set of data that it views as a more accurate reflection of the types of students schools serve. For example, graduatation rates would include transfer students and those attending school part time, not just first-time full-time students who start and finish at the same institutions.
White House officials said Thursday Secretary of Education Arne Duncan will be working with college presidents, professors, and students over the next year and a half to develop the rating system.
The Obama administration said its proposal will stem skyrocketing tuitions and rising student loan default rates.
The average borrower graduates with more than $26,000 in debt. The average tuition at a public four-year college has risen by more than 250 percent in the last 30 years, in part because of declining state funding. Yet only 58 percent of students actually graduate within six years, the White House said.
“The bottom line is this,” Obama said. “We’ve got a crisis in terms of college affordability and student debt. . . . Higher education is still the best ticket to upward mobility in America, and if we don’t do something about keeping it within reach, it will create problems for economic mobility for generations to come.”
Obama also put the onus on students, telling those receiving federal grants that the government will disburse aid over the course of a school year, rather than a lump sum. Only students who continue to make progress toward a degree will receive the grants.
In his speech, Obama singled out Southern New Hampshire University, a private school based in Manchester that has cheaper options for students to complete their degrees. In addition to the traditional four-year residential experience, Southern New Hampshire recently started an accredited degree program that measures student progress based on how much they have learned, not how much time they spend in the classroom.
“The idea would be if you’re learning the material faster, you can finish faster, which means you pay less and you save money,” Obama said about the school’s plan.
The Southern New Hampshire program costs $2,500 a year and theoretically a student could move at his own pace to complete a bachelor’s in one or two years, compared to the $112,200 price tag if they were to choose the traditional route. The school is now weighing charging students different tuitions for different majors, depending on earning potential.
Paul LeBlanc, president of the university, praised Obama for delivering “a bold, shake-everything-up speech for higher education.”
“There will be a lot of people in traditional higher education who will be unhappy with aspects of it because he says aloud what is painful to recognize: that the current system is unsustainable and it has to change in a dramatic way,” he said.
Still, LeBlanc said, he is concerned that schools, particularly small liberal arts schools without large endowments, may be penalized under the new federal rating system if their graduates don’t immediately find high-paying jobs.
“The fact that lots of recent graduates are struggling to find work has much more do with the jobless economic recovery than the fact that they were ill-prepared,” LeBlanc said.
It remains to be seen whether Obama’s plan will go far enough in addressing the multiple reasons college costs have risen so dramatically, a problem schools, students, and parents, as well as the government, are complicit in, LeBlanc said.
Some Republican critics expressed discomfort at the federal government taking on such a large role in the higher education system. Senator Marco Rubio, a Florida Republican, called the plan a “slippery slope” that “ends with the private sector inevitably giving up more of its freedom to innovate and take risks.”
“President Obama needs to realize that not every problem can be solved by giving more power to Washington bureaucrats,” said Rubio, who has proposed his own plan for schools to publicize graduates’ salaries.Tracy Jan can be reached at email@example.com. Follow her on Twitter @GlobeTracyJan.