The federal government spends $150 billion a year on student financial aid, so it has an enormous interest in making sure that the nation's colleges and universities provide their students with valuable degrees without tying them to a lifetime of debt.
Holding schools accountable, and giving them incentives to lead more students through graduation while keeping tuition and loan totals down, is the aim of the plan President Barack Obama announced last week. The goals are laudable and his plan includes some solid ideas, but it also poses potential risks.
The most obvious is the possibility of creating a "No Child Left Behind"-style bureaucracy that won't necessarily translate into better education and better value. Under his plan, the Department of Education would develop a rating system by the 2015 academic year that would provide comparative data for colleges based on the percentage of low-income students, tuition charges, student loan debt and graduation rates, as well as salaries and advanced degrees earned by graduates.
The more problematic component would come later, if Congress agrees. Mr. Obama would like to use the ratings to change how federal aid is awarded by 2018. For instance, students attending higher-performing schools could receive large grants or cheaper loans. That feature of the plan also may be the most unrealistic.
In addition, his proposal to cap student loan debt to 10 percent of a graduate's monthly income could prove too expensive, although it would impose stricter requirements for students to show progress toward graduation in order to keep receiving aid.
Less onerous provisions would encourage schools to accelerate progress toward graduation, with more three-year degrees, online coursework and the option for students to use financial aid to pay for exams that allow them to test out of coursework.
Success will require careful attention to the details so that career preparation and broad-based learning that is an essential part of a college education go hand in hand. Mr. Obama's plan is only a starting point.