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President Obama unveiled a plan Thursday for the federal government to establish a rating system for colleges and universities that will ultimately link federal aid to performance.

The rating system is intended to encourage institutions to help more students graduate on time, provide opportunities to more disadvantaged students, and make college more affordable. College students now graduate with an average of nearly $26,000 in debt.

“The president believes we have to fundamentally rethink how higher education is paid for in this country,” said Cecilia Munoz, director of the Domestic Policy Council. “These are bold reforms. They’re not going to be popular with everyone, especially those who benefit from the status quo.”

The Obama administration plans to spend more than a year developing the rating system, with input from students, college presidents, experts and others, two White House representatives said this morning in a conference call with reporters.

The idea is to provide prospective college students and their families with information so that they can make informed choices.

“The idea is to give students some guidance as to which colleges are creating value and which are not,” said James Kvaal, deputy director of the Domestic Policy Council. “Not just to reward colleges for spending more if that spending is not helping students learn.”

Generally, the intent is to base college ratings on factors that will include the percentage of low-income students at a college, as measured by the number receiving Pell grants; affordability, as measured by tuition and average debt; and outcomes, measured by graduation and transfer rates, graduate earnings and advanced degrees of graduates.

The administration hopes to have the rating system in place by 2015, then spend a few years refining the system.

Obama hopes that by 2018, federal aid will be tied to college ratings. Students at colleges that are rated higher could get bigger Pell grants and “more affordable” student loans, according to information provided by the White House in advance of Obama’s speech. Such a change would require approval by Congress.

The president also is proposing that Pell grants would be distributed in installments throughout the semester, rather than the present system, in which students receive the full payment at the outset, regardless of whether they remain enrolled in classes. That proposed change is designed to ensure that more lower-income students are completing their coursework.

“The Pell program right now doesn’t offer students a lot of incentives to finish,” Munoz said. “Right now, you could enroll and then disenroll the next day and keep the funds.”

The president also will encourage colleges and universities to promote innovations that will emphasize how much students are learning, rather than how much time they spend taking classes.

Some approaches the White House highlighted as being high quality and lower cost include three-year accelerated degrees, massive open online courses, and hybrid approaches in which students watch lectures online and then work on problem-solving exercises in the classroom. Kvaal cited the Open SUNY initiative, a compilation of the online courses offered at SUNY schools across the state, as one example of the sort of innovation that states should be encouraging.

email: mpasciak@buffnews.com