Making Colleges Accountable: One Step Forward, But More to Go

The most ambitious part of President Obama’s new college accountability plan unveiled in August—tying the eligibility of schools for federal student aid to demonstrated results in preparing students for the job market—is unlikely to survive. The less ambitious part—ranking colleges and making the “value” of a school’s degree more transparent to student consumers—probably will. But it is unlikely that transparency alone will shake up the higher education establishment and either lower costs or improve quality, especially when the onus is on students to find and act on the information.

Obama is the first president to push for college accountability. The “No Child Left Behind” accountability movement that swept through the K-12 world in the 2000s skipped over higher education entirely. But there is at least as much reason to be concerned about cost and quality control in higher ed as in K-12. The astronomical increase in tuition is well-known. Less well-known is the fact that federal taxpayers are subsidizing that increase through student grants and tax breaks. Compared to K-12, nearly twice as much federal money goes toward higher ed (not including student loans) every year, yet there is virtually no accountability for how those federal dollars are spent. And there is tremendous waste in the higher ed system; the United States has the highest college dropout rate in the developed world. For students and taxpayers alike, it makes a great deal of sense to expect more from colleges that rely heavily on government-funded student aid.

But so far only Obama’s initiatives promoting passive transparency of results have survived, while initiatives with real teeth that tie institutions’ funding to results have been stillborn. It helps that simply displaying more information online does not need to go through Congress; any change to federal funding or student aid does need congressional assent.

In 2013 the Department of Education began publishing a “scorecard” for each college laying out graduation rates and graduates’ average debt levels. It also developed a “shopping sheet” that colleges can voluntarily provide prospective students containing similar cost and quality metrics.

But Obama’s other attempts at making funding conditional on quality, such as the 2011 “gainful employment” rule, are going nowhere. According to the rule, career-ready and vocational degree programs would lose their accreditation if their graduates did not do well enough in the labor market to recoup a certain amount of the tuition cost. A small fraction, perhaps only about 5 percent, of the programs would have been shuttered. Nevertheless, these institutions are fighting tooth and nail in court to keep the gainful employment rule a remote possibility. Republicans have promised to scuttle the plan in Congress.

A similar fate no doubt awaits the part of Obama’s new plan that would make the level of federal student aid they receive contingent on how much value they offer students. It would cast the accountability net wider than the gainful employment rule, applying to all colleges. The hefty lobbying weight of the higher education establishment is kicking into gear, vowing to kill it. Republican Congressional leaders are mobilizing against it; Senator Lamar Alexander (R-TN) calls it “government overreach,” while Representative John Kline (R-MN) warns it could lead to “federal price controls.”

If recent history is any judge, the part of Obama’s new plan that ranks colleges based on value has better political odds of getting off the ground. More states are also introducing their own college quality comparison websites and ranking systems, including California which enrolls a quarter of the nation’s community college students. For now, federal higher education accountability will continue to rely on transparency in the hopes that students who are empowered with more and better information will make more prudent decisions and force colleges into sharper competition.

That is a lot to expect of students. These data transparency systems assume a level of engagement that may not be there, particularly with low-income students who have the highest dropout and debt default rates and therefore could benefit the most from stricter college accountability. The proposed ranking system would still be several steps and clicks away from students on the Department of Education’s website. Colleges can opt out of using the “shopping sheet” or can bury it deep in application materials.

A better transparency-based system would force colleges to place the relevant information directly into the hands of students in a clear and digestible way. Better yet, a proactive intermediary would help students make college decisions and support them through to graduation. Research has shown that high-needs students tend to do much better when they are placed in a highly structured environment and decisions about what courses to take are made for them by guidance counselors or the course trajectory is already clearly mapped out for them. Some of the more innovative community colleges take the liberty of placing indecisive students into degree programs that data show leads to higher earnings.

And while the federal government is reluctant to tie institutions’ funding directly to quality, several states are giving it a shot. Florida and Louisiana are now using graduates’ wage data to determine which degree programs to terminate or expand. Several states, notably deep-red Tennessee and Texas, are experimenting with performance-based funding for their community college networks.

Soon we could have a better sense of what works better for improving the country’s higher ed system: putting the onus directly on the institution or indirectly through student consumers.