Education Department

Tripping Up on the Paperwork

A federal appeals court’s recent decision demonstrates how even an eminent jurist can be confused by the complex regulatory system established by the Higher Education Act, with potentially significant negative consequences for colleges and universities.

In United States ex rel. Main v. Oakland City University, Judge Frank Easterbrook of the U.S. Court of Appeals for the Seventh Circuit authored an opinion for a three-judge panel that reversed a District Court decision and permitted a qui tam action to proceed under the False Claims Act. In that action, a former director of admissions for a university contended that the institution had violated the prohibition in the HEA and the U.S. Department of Education’s implementing regulations against paying incentives for enrolling students. 

The False Claims Act is aimed at obtaining restitution to the government of money taken from it by fraud, and liability under that Act occurs when someone presents to the government a false or fraudulent claim for payment. In a qui tam action, a private individual -- the “relator” -- files a lawsuit seeking this restitution. The government may decide to take over the case, and the relator may obtain a financial reward if the action is successful. 

Qui tam cases are a mixed bag. On the one hand, the government obtains the assistance of private individuals to extend its investigative and litigation resources to protect the integrity of government programs. On the other hand, given the vast array of federal programs and the volumes of requirements that result from them, qui tam actions offer fertile ground for trial lawyers seeking a supply of new business and a potent weapon to force settlements from organizations that participate in government programs. The key, of course, is for the courts to scrutinize these actions carefully and to circumscribe them to achieve the purposes of the False Claims Act.

This is what Judge Easterbrook’s opinion failed to do. His failure is all the more surprising in light of his reputation not only as a highly capable jurist, but as a conservative one presumably skeptical of broad constructions of federal law that fuel the  litigiousness of the plaintiffs’ bar.

Fundamentally, Judge Easterbrook’s opinion simply got wrong crucial aspects of the regulatory structure established by the HEA. The opinion failed to understand the distinction between eligibility and participation in the student aid programs.

An institution establishes its eligibility under the HEA by filing an application with the Department of Education. However, an institution need not actually seek participation in the HEA student aid programs in this application. It may simply wish to be designated as eligible to participate because that status has significance apart from gaining access to the financial aid funding available to its students under Title IV of the HEA. 

Furthermore, the application does not require the institution to certify its compliance with all HEA requirements. The eligibility requirements are more limited and, as pertinent to the Oakland City case, nowhere include any certification by a college that it complies with the incentive compensation prohibition.

Only when an institution seeks to be certified to participate in the student aid programs does it agree to comply with the many participation requirements applicable to those programs. It does so by signing the Program Participation Agreement (PPA), which does include a representation that it will not violate the incentive compensation prohibition. Even then, however, the institution has made no actual claim for federal funds. That may occur only when it helps students apply for Title IV loans and grants. 

Judge Easterbrook dismissed this structure as “paperwork,” and this led him into error. Thus, early in the opinion, he stated that the university had assured the Department of Education in its eligibility application -- what he calls the “phase one application” -- that it would comply with the rule against incentive compensation. But, as noted above, that is simply wrong -- a college does not agree to comply with the incentive compensation rules until it formally seeks certification to participate in the program.

Easterbrook then went on more critically to state that the “phase two” application -- presumably the PPA and subsequent student applications for Title IV funds -- depended on the finding that the university was eligible and that the university could not be eligible if it knowingly violated the incentive compensation rule. 

That too is wrong. The Department of Education has the discretion to use a variety of remedies in the event that it believes an institution violated a participation requirement like the incentive compensation rule. These include placing an institution on the reimbursement method of receiving Title IV funds, or requiring repayment of funds, fines, and provisional certification. To be sure, the department may also seek to revoke the institution’s eligibility, but it is not compelled to do so. In contrast, the department must revoke eligibility if a true statutory condition of eligibility is no longer met, such as accreditation by a recognized accrediting agency or state licensure. 

Yet, Judge Easterbrook stated that “[i]f a false statement is integral to a causal chain leading to payment, it is irrelevant how the federal bureaucracy has apportioned the statements among the layers of paperwork.” This conflation of the requirements in a complex regulatory structure like the HEA can only fuel False Claims Act qui tam litigation, since now, based on Judge Easterbrook’s erroneous understanding of how the HEA works, any alleged violation can serve as the basis for relators and, more realistically, their enterprising counsel to sue.  

By failing to grasp the distinction between eligibility and participation, his opinion, on behalf of one of the leading federal Courts of Appeals, may dramatically increase the vulnerability of institutions of higher education to a whole new species of lawsuits: False Claims Act qui tam actions alleging knowing violations of one of the myriad requirements in the HEA and implementing regulations. The danger of such litigation will be heightened by the threat of treble damages under the False Claims Act.

It was precisely this danger that another federal court recognized in a qui tam case involving the same incentive compensation requirement ( United States ex rel. Graves v. ITT Educational Services, Inc.). That court, following the teaching of the Supreme Court and five U.S. Courts of Appeals in an extensive and well-reasoned decision that recognized the relevant distinctions in the HEA structure, understood that False Claims Act liability attaches not to the underlying allegedly fraudulent activity, but to the claim for payment. Judge Easterbrook’s opinion noted this case, which was squarely on point to the case before him, toward the end of his brief opinion. However, he gave it short shrift because it was decided by a district court judge (it was affirmed without opinion by the Fifth Circuit).

Judge Easterbrook seems to have had some inkling of the flood of litigation that his opinion may cause. In discussing the ITT case and Oakland City University’s protests that any purported regulatory violation in a funding program could require litigation in a False Claims Act suit, he took refuge in the requirement that the violation must be “knowing.” 

As he stated, “[t]ripping up on a regulatory violation does not entail a knowingly false representation.” That is no bulwark against abusive plaintiffs’ attorneys. It will not be hard to plead a knowing violation, survive a motion to dismiss, and subject institutions to extensive discovery aimed at determining whether someone acting on their behalf “knew” that they planned to violate one of the many requirements of doubtful specificity in the HEA and the voluminous Department regulations.

Judge Easterbrook’s bland assurances that they will ultimately prevail will be cold comfort later after thousands of dollars of legal fees, extensive distractions from their missions of educating students, and smears against their reputations in the news media. Unless Oakland City is reversed, it is Judge Easterbrook and the Seventh Circuit who have unfortunately tripped up. 

Mark L. Pelesh
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Mark L. Pelesh is executive vice president for legislative and regulatory affairs for Corinthian Colleges, Inc. He was formerly the head of the Education Law Group at Drinker Biddle & Reath in Washington, and specialized in the Higher Education Act and U.S. Department of Education regulations.

No God Left Behind -- Why Not?

The secretary of education’s Commission on the Future of Higher Education unequivocally advances the notion that the “business” of colleges and universities -- defined primarily in the final report as “preparation for the work force” -- is best advanced by the disclosure of data allowing institutions to be compared to one another, particularly in measurements of student learning. Standardized testing of all college students would be required to produce those comparative quantitative data. Such universal application of testing is forwarded as the guarantee of accountability for what this American democracy requires most essentially from its higher-education institutions. In other words, what has already been applied with mixed success to pre-collegiate education is now to be applied to higher education. In addition to the No Child Left Behind Act, we are to have what might be called No College Left Behind.

In the nation’s current zeal to account for all transfer of teaching and insight through quantitative, standardized testing, perhaps we should advance quantitative measurement into other areas of human meaning and definition. Why leave work undone?

I suggest, for example, that a federal commission propose an accountability initiative for those of faith (not such a wild notion as an increasing number of politicians are calling the traditional separation of church and state unhealthy for the nation). This effort should be titled No God Left Behind. The federal government would demand that places of worship, in order to be deemed successful, efficient and worthy of federal, state and local tax-support exemption, provide quantitative evidence of the effectiveness of their “teaching.” (Places of worship are not unlike colleges and universities in that they are increasing their fund-raising expectations -- their form of “price” -- because of increasing costs.) The faithful, in turn, would be required to provide quantitative evidence of the concrete influence of their respective God upon behaviors within a few years of exposure -- say four years.

And in keeping with the Commission on the Future of Higher Education’s suggestion that one test would be appropriate for all types of higher-education institutions regardless of mission -- liberal-arts colleges, private research universities, public research universities, community colleges, for-profit-online universities, vocational schools -- a standardized test would be applied to a person of faith, whether Christian, Jew, Muslim, Hindi or other “approved” religions. Additionally, a pre-test would be given to the faithful upon initial engagement with their respective God and place of worship, and would be followed by a post-test after four years to assess “value added.”

Of course, I really don’t think No God Left Behind is a good idea. The reasons why also are applicable to No College Left Behind and No Child Left Behind. Most people of faith, I believe, would argue that this quality lies beyond mere human quantitative measurement to validate its worth, that it exists in a variety of forms (only the most radical would argue for the exclusion of faiths that fail a test), and that its effects on human beings may not be immediately evident. None of these assertions, of course, makes faith for believers any less real as a source of improving the quality of human life.

My case for faith continuing to flourish for those who wish it, without proof through standardized testing, shares critical affinities with my argument for higher education not being universally subject to quantitative assessment. There are at least four inter-related issues that confound the Commission’s absolutism towards quantitative measurement to solve the imagined knowledge deficit and lack of contribution to the nation by American higher education.

First, quantitative testing, to be of application, must have as its subject that which can be empirically assessed. Such limitation leaves out critical areas of human knowledge, meaning and definition that are not readily subject to immediate empirical assessment during the course of instruction but are, nevertheless, very real: the development of character thorough trial and error in a residential setting, an appreciation of the arts and aesthetics; a literary and poetic sensibility; a recognition of the responsibilities of citizenship; an appreciation of liberty and freedom; a spirit of business entrepreneurialism; and creativity and inventiveness in the sciences (and I am not talking solely about the short-term acquisition of cultural, historical and political “fact” in these areas).

The commission’s recommendations -- with their focus on workforce preparation -- might well reduce the scope of what is taught and discussed in those institutions to only those areas that can be indisputably measured by a test. An abiding respect for learning, which is not so obviously technical and thus not measurable through standardized assessment, is rooted deeply in the intentions for a distinctively American higher education by our country’s founders. Indeed, Benjamin Rush, a patriot, signer of the Declaration of Independence and founder of several colleges, to include Dickinson, proclaimed this distinctive American relationship among advanced knowledge, abstract concepts and the future well-being of the nation when he said, “Freedom can exist only in a society of knowledge. Without learning, men are incapable of knowing their rights.” The intent of a liberal education is thus defined.

Both propositions are based not on the quantitative assessment of the merely technical, but rather the confidently ambiguous power of existing in a “society of knowledge,” one that would influence learners to a much desired and critically important ideal -- democracy and the diversity of perspective that it secures. There exists in Rush and his co-conspirators, in founding a distinctively American higher education after the end of the revolution, a mature appreciation of the complexity and variety of the instruction necessary to advance a democracy.

Second, and closely related to the perspective of Rush, is that education in America was not intended solely to provide young people for “the work force” through the empirically demonstrated mastery of a limited set of practical skills. Fundamental literacy, numeracy and scientific knowledge were more properly the task of the grammar schools and the academies (high schools). American higher education historically builds on this “technical” accomplishment and engages students in a democratic way of life through both advanced technical and speculative (creative) learning.

Third, students in the United States at all levels of formal education already are the most “tested” by standardized measurement in the world. Yet, we still seem to be in a position of deficit in improving what students actually know and need to know to function productively in society. Do we truly believe that more testing will lead to improved teaching and learning? Are we so convinced that “to test is to learn” despite so much evidence to the contrary?

Fourth, are we oblivious to the fact that, like the flourishing of spirituality only in societies that are generously supportive, the acquisition of knowledge only advances in political entities for which this activity is esteemed and generally valued? A society and government in which only practical, technical knowledge is lauded and that which is more abstract is derided -- such as the long-term, arduous education for the appreciation of democracy, liberty and freedom -- have little chance of moving a people to take the enterprise seriously.

I have no doubt that Secretary Spellings, the Commission members and the chairman, Charles Miller, intend an American higher education that offers the nation and the world graduates who can confront, with knowledge, skill, creativity and an entrepreneurial spirit, the challenges and the opportunities that the world demands. My caution -- and it is a pointed one -- is that in our rush to secure excellence thorough the simplistic and misguided notion of increased quantitative assessment of workforce skills, we will destroy the historic distinctiveness of American higher education.

Derek Bok, in Our Underachieving Colleges, cites numerous commentators over the last few decades alarmed at the perversion of American higher education as it progressively leans to practical and technical knowledge at the expense of more generous, less immediately focused ambitions. For example, Diane Ravitch, an education analyst who has frequently criticized the college establishment, states, “American higher education has remade itself into a vast job-training program in which the liberal arts are no longer central.” And Eric Gould in 2003 observes negatively that, “What we now mean by knowledge is information effective in action, information focused on results. We tend to promote the need for a productive [emphasis added] citizenry rather than a critical, socially responsive, reflective individualism.”

We must never forget that a distinctively American higher education, using a wide variety of internal and external assessments already in place, aims to increase competencies and literacies established prior to college (although far greater public transparency is certainly needed).  This ambition the United States shares with the rest of the world. American education, however, infuses this globally shared agenda with something extra, something that has secured its distinction for centuries -- to extend beyond factual and technical knowledge and to introduce its students to what Derek Bok describes as, “more ethically discerning … more knowledgeable and active in civic affairs”  -- and that cannot be captured through standardized testing at the moment of introduction, for it unfolds over time and with experience.

Lose this ambition and American higher education has lost permanently its distinction as a democratic society of knowledge.

William G. Durden
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William G. Durden is president of Dickinson College.

A Compromise on Unit Records

Of all the ideas to come out of Margaret Spellings's Commission on the Future of Higher Education, the final report proposal that has been the most contentious inside the DC Beltway is the proposal for a unit-records database. There are plenty of other controversial ideas floated in the commission's hearings, briefing papers, and report drafts, but the one bureaucratic detail that most vexed private colleges and student associations over the past year is the idea that the federal government would keep track of every student enrolled in every college and university in the country. Given reports this year about the Pentagon hiring a marketing firm to collect data on teens and college students, the possibility that Big Brother would know every student's grades and financial aid package has worried privacy advocates.

Fortunately, privacy and accountability do not need to be at odds.

The proposal for a unit-records database was floated in a 2005 report that the U.S. Department of Education commissioned. Advocates have argued that the current system of reporting graduation data through the Integrated Postsecondary Education Data System (IPEDS) only captures the experiences of first-time, full-time students who stay in a single college or university for their undergraduate education. How do we capture the experiences of those who transfer, or those who accumulate credits from more than one institution? Theoretically, we could trace such educational paths by tracking individuals, including your Social Security Number or another identifier to link records.

Charles Miller, who led the Spellings commission, was one of the unit-records database advocates and pushed it through the commission's deliberations. Community-college organizations liked the idea, because it would allow them to gain credit for the degrees earned by their alumni. But the National Association of Independent Colleges and Universities, the U.S. Student Association, and other organizations opposed the unit-records database, and in its current form the proposal is certainly dead on arrival as far as Congress is concerned.


There are three problems with a unit records database. The first problem is privacy. I just don't believe that the federal government would keep my children's college student records secure. An October report by the House Committee on Government Reform documents data losses by 19 agencies, including financial aid records that the U.S. Department of Education is responsible for. Who trusts that the federal Department of Education could keep records safe?

The second problem is accuracy. I have worked with the individual-level records of Florida, which has had a student-level database in elementary and secondary education since the early 1990s. If any state could have worked the kinks out, Florida should have. But the database is not perfectly accurate. I have seen records of first graders who are in their 30s (or 40s) and records of other students whose birthdays (as recorded in the database) are in 2008 and 2010. The problem is not that the shepherds of the database system are incompetent but that the management task is overwhelming, and there are insufficient resources to maintain the database. Poorly-paid data entry clerks spend their time entering students into the rolls, entering grades, withdrawals, and dozens of other small bits of information. We probably could have a nearly perfect unit-records database system, if we are willing to spend billions of dollars on maintenance, editing, and auditing. In all likelihood, a unit-records database system for all higher education in the U.S. would push most of the costs onto colleges and universities, with insufficient resources to ensure their complete accuracy.

The third problem with such a database is that the structure and size would be unwieldy. Florida and some other states have extensive experience with unit records, and very few researchers use the data that exist in such states. The structures of the data sets are complicated, and beyond the fact that using the data taxes the resources of even the fastest computers, the expertise needed to understand and work with the structures is specialized. Such experts live in Florida's universities and produce reports because they are the experts. But few others are. There would be no huge bonanza of research that would come from a national unit-records database.

A Solution: Anonymous Diploma Registration

Most of the problems with the unit-records database proposal can be solved if we follow the advice of statistician Steven Banks (from The Bristol Observatory) and change the fundamental orientation away from the question, Who graduated? and toward the question, How many graduated? The first question requires an invasion of privacy, expensive efforts to build and maintain a database, and a complex structure for data that few will use. But the second question -- how many graduated? -- is the one to answer for accountability purposes. It's the question that community colleges want answered for their alumni. And it does not require keeping track of enrollment, course-taking, or financial aid every semester for every student in the country.

All that we need is the post-graduation reporting of diploma recipients by institutions, with birthdates, sex, and some other information but without personal identifiers that would allow easy record linkage. Such a diploma registration system would fit with the process colleges and universities already go through in processing graduations. An anonymous diploma registration system could also identify prior institutions -- high schools where they graduated and other colleges where students earned credits that transferred and were used for graduation. Such an additional part of the system could be phased in, so that colleges and universities record the information when they evaluate transcripts of transfer students and other admissions. The recording of prior institutions would address the need of community colleges to find out where their alumni went and how many graduated with baccalaureate degrees.

Under such a system, any college or university could calculate how many students graduated and the average time to degree (as my institution in Florida already can). Any college or university could also count how many students who transferred to other institutions eventually graduated. High schools would be able to identify how many of their own graduates finished college from either in-state and out-of-state institutions. Institutions could figure out what types of programs helped students graduate, and the public would have information that is more accurate and fairer than the current IPEDS graduation statistics. All of these benefits would happen without having to identify a single student in a new database.

A short column is not the place to describe the complete structure for such a system or to address the inevitable questions. I am presenting the idea in more depth this afternoon at the Minnesota Population Center, and I have established an online tutorial describing the idea of anonymous diploma registration in more detail. But I am convinced that the unit-records database idea is wasteful, dangerous, and unnecessary. Anonymous diploma registration is sufficient to address the most critical questions of how many graduate from institutions, and it does not threaten privacy.

Sherman Dorn
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Sherman Dorn is an historian of education at the University of South Florida. He edits Education Policy Analysis Archives and writes about education policy and other matters in his professional blog.

Making Graduation Rates Matter

Education Secretary Margaret Spellings recently wrote a letter to the editor of The Detroit News in defense of her higher education commission's proposal for a national “student unit record” system to track all college entrants to produce a more accurate picture of degree completion. “Currently,” she said, “we can tell you anything about first-time, full time college students who have never transferred–about half of the nation’s undergraduates.” It took a long time to bring Education Department officials to a public acknowledgment of what its staff always knew: that the so-called “Congressional Methodology” of our national college graduation rate survey doesn’t pass the laugh test.  If the Secretary’s Commission on the Future of Higher Education made one truly compelling recommendation, it was for a fuller and better accounting through student unit records.

But it was well known that the establishment of a national student unit record system was a non-starter in Congress due to false worries about privacy and data security. So one wonders why the department hasn’t simply proposed a serious revision of the process and formula for determining graduation rates. Having edited and analyzed most of the d-department’s postsecondary data sets, may I offer an honest and doable formula?

There are four bins of graduates in this formula, and they account for just about everyone the Secretary justly wants us to count. They count your daughter’s friends who start out as part-time students -- who are not counted now. They count your 31-year-old brother-in-law who starts in the winter term -- who is not counted now.  They count active duty military whose first college courses are delivered by the University of Maryland’s University College at overseas locations -- who are not counted now.  They count your nephew who transferred from Oklahoma State University to the University of Rhode Island when he became interested in marine biology -- and who is not counted now.  And so forth.  How do you do it, dear Congress, when you reauthorize the Higher Education Amendments this year?

First, define an “academic calendar year” as July1 through the following June 30, and use this as a reference period instead of the fall term only. Second, define the tracking cohort as all who enter a school (college, community college, or trade school) as first time students at any point during that period, and who enroll for 6 or more semester-equivalent credits in their first term (thus excluding incidental students). 

Automatically, institutions would be tracking students who enter in winter and spring terms and those who enter part-time. Your brother-in-law, along with other non-traditional students, is now in the denominator along with your daughter.  Ask our colleges to divide this group between dependent traditional age beginners (under age 24) and independent student beginners (age 24 and up), and to report their graduation rates separately. After all, your daughter and your brother-in-law live on different planets, in case you haven’t noticed. You now have two bins.

Third, establish another bin for all students who enter a school as formal transfers. The criteria for entering that bin are (a) a transcript from the sending institution and (b) a signed statement of transfer by the student (both of which are usually part of the application protocol). These criteria exclude the nomads who are just passing through town. 

At the present moment, community colleges get credit for students who transfer, but the four-year colleges to which they transfer get no credit when these transfer students earn a bachelor’s degree, as 60 percent of traditional-age community college transfers do.  At the present moment, 20 percent of the bachelor’s degree recipients who start in a four-year school earn the degree from a different four-year school.  That we aren’t counting any of these transfers-in now is a travesty -- and makes it appear that the U.S. has a much lower attainment rate than, in fact, we do.  All this hand-wringing about international comparisons that puts us on the short end of the stick just might take a different tone.

Fourth, ask our postsecondary institutions to report all students in each of the three bins who graduate at two intervals: for associate degree granting institutions, at 4 years and 6 years; for bachelor’s degree granting institutions at 6 years and 9 years. For institutions awarding less than associate degrees, a   single two-year graduation rate will suffice. Transfers-in are more difficult, because they enter an institution with different amounts of credits, but we can put them all on the same reporting schedule as community colleges, i.e., 4 and 6 years.

These intervals will account for non-traditional students (including both active duty military and veterans) who move through the system more slowly due to part-time terms and stop-out periods, but ultimately give due credit to the students for persisting. These intervals will also present a more accurate picture of what institutions enrolling large numbers of non-traditional students, e.g. the University of Texas at Brownsville, DePaul University in Chicago, and hundreds of community colleges, actually do for a living.

Colleges, community colleges, and trade schools have all the information necessary to produce this more complete account of graduation rates now. They have no excuse not to provide it. With June 30 census dates for both establishing the tracking cohort and counting degrees awarded, the algorithms are easy to write, and data systems can produce the core reports within a maximum of two months. It's important to note that the tracking cohort report does not not replace the standard fall term enrollment report, the purposes of which are very different."  

But there is one more step necessary to judge institutions' contribution to the academic attainment of the students who start out with them.

So, in rewriting the graduation rate formula in the coming reauthorization of the Higher Education Amendments, Congress should also ask all institutions to make a good faith effort to find the students who left their school and enrolled elsewhere to determine whether these students, too, graduated.  The National Student Clearinghouse will help in many of these cases, the Consortium for Student Retention Data Exchange will help in others, state higher education system offices will help in still others, and we might even get the interstate compacts (e.g. the Western Interstate Commission on Higher Education) into the act.  Require our postsecondary institutions to report the students they find in a fourth bin.  They will not be taking credit for credentials, but will be acknowledged as contributing to student progress.

No, this is not as full an account as we would get under a student unit record system, but it would be darned close -- and all it takes is a rewriting of a bad formula.

Clifford Adelman
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After 27 years of research for the U.S. Department of Education, Clifford Adelman recently left to be a senior associate at the Institute for Higher Education Policy. His last monograph for the department was The Toolbox Revisited: Paths to Degree Completion from High School Through College (2006).

The Flawed Metaphor of the Spellings Summit

By the conclusion of Secretary of Education Margaret Spellings' recently-convened Test of Leadership Summit on Higher Education, I finally understood why her proposals are so ... well, so ill-conceived. They rest on a faulty metaphor: the belief that education is essentially like manufacturing. High school students are "your raw material," as Rhode Island Gov. Donald Carcieri told us. We need "more productive delivery models," economies of scale, even something called "process redesign strategies." Underlying everything is the belief that business does things right, higher education does things wrong, and a crisis is almost upon us, best symbolized by that coming tsunami of Chinese and Indian scientists we hear so much about. Time for higher ed to shape up and adopt the wisdom of business.

But the whole metaphor is wrong. Education is nothing like business, especially not like manufacturing. Consider the Spellings Summit's faulty assumptions:

1. "If it isn't measured, it isn't happening." This slogan we heard in formal talks and casual conversations. Therefore more testing, more reporting, more oversight, as Spellings is proposing, should improve colleges and universities. The one certain result of the Spellings initiatives will be a mountain of new reporting by colleges and universities, funneled to the Federal government via accreditors. Without formal assessment, this view holds, nobody learns anything.

But for human beings, it's obviously wrong, unmeasured good things happen all the time. Left alone, a 5-year old will explore, discover, and learn. So will a 20-year-old. They get up in the morning and do things, for at least a good part of the day, whether anyone watches and measures them or not. Many people read even if they aren't forced to. The professor does nothing; the student learns anyway. Medical doctors live by the dictum Primum non nocere:  first, do no harm. Sometimes the best treatment is to leave the person alone. That's because - unlike steel girders - students are living creatures. (We'll return to this point.)

2. Motivation is simple. "Rewards drive behavior," said several speakers with no more thought on the matter, moving easily to the use of money to guide institutions. Students and professors alike were considered to be easily directed. If tests are "high stakes," students will automatically want to do well, and if colleges as a whole do poorly, they should just be punished. Nowhere did the Spellings Commission report, or the "action plan" presented at the summit, consider that students might not like standardized tests, that administrators find report-writing onerous, or that professors could resent the nationalization of educational goals-and quit teaching altogether. Coercion, it is believed, is a simple and effective method for directing people. After all, if you put a steel girder on a flatcar, it will stay there until moved. And if you melt a steel girder to 4,000 degrees F., it almost never gets angry and storms out of the room or broods.

Consider one of the immediate results of No Child Left Behind, the resignation of hundreds of fourth-grade teachers. Coercion costs; people will try to avoid it. They'll quit their job, for instance. They'll get angry and sulk in the back of the room. "Getting tough" is not the answer.

3. Clearly stated goals at the outset are a prerequisite for success. In machining, or the production of microchips, precise specifications, measured to the nanometer, are necessary. Everything must be planned, laid out in advance, then rationally carried through to completion. As several speakers said, "We all know what needs to be done," as if that were a simple thing.

But in fact, serendipity -- the occurrence of happy, if unpredicted, outcomes seems to have no place in this scheme. The great Peter Drucker recognized that in business, unplanned outcomes can be better than planned outcomes. Post-it Notes and Viagra, for instance,  were not intended outcomes in planning; they were huge successes.

People set their own (often conflicting) goals; they resist coercion; they often surprise us. Admittedly, that makes working with them (healing them, leading them to salvation, encouraging their curiosity) a messy process. But I've seen no evidence that business people are better at it than educators.


Daniel F. Chambliss
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Daniel F. Chambliss is chair of the sociology department at Hamilton College and director of the Project for Assessment of Liberal Arts Education. He is the author of Champions: The Making of Olympic Swimmers and Beyond Caring: Hospitals, Nurses and the Social Organization of Ethics.

Time for a Shotgun Divorce

The irresistible force of the Cheneyist federal government has met the immovable object of colleges entrenched in their Eisenhower-era way of doing things, or so some commentators on the Department of Education’s recent attempt at negotiated rule making would have it. If that were true, it would be a fairly traditional conflict that could be resolved through standard political channels.

Under those conditions, the service of a critic such as Anne Neal on the National Advisory Committee on Institutional Quality and Integrity (NACIQI), the department panel that reviews accreditors, would excite little attention. Government and politics are joined at the hip, and Neal has been a visible and effective commentator on important policy issues, from a position roughly congruent with that of Republicans. Fair enough.

But that isn’t the situation. What is really happening is that accrediting bodies, which are not part of any government, are being jammed in between the principals like trapped sheep and beaten from both sides. The feds beat them for not thinking or acting like enforcers. Their collegiate membership beats them for listening to The Idiots In Washington. The Department of Education is using accreditors as a human shield to absorb incoming fire from schools, while simultaneously insisting that the accreditors, not the feds, fight back, with ammunition supplied by the feds themselves.

Sorry, that’s a foul. Can’t do it that way. It’s even inconsistent with the usual habits of the force-based Cheneyist government, which is usually quite willing to simply declare any opposition -- indeed, any discussion -- to be enemy action and begin stomping. Of course, arranging for a third party to be blamed for one’s actions is as old as politics.

Neal has argued that the formal linkage between the feds and accreditors needs to come to an end. She is right. This civil union of the 1950s, so convenient in another era under other conditions, no longer works. Eligibility for federal financial aid should be decoupled from accreditation as soon as possible and determination of eligibility brought inside the Department of Education. The department does it already for foreign schools, albeit badly. The establishment of an eligibility unit inside the department would simplify the situation immensely. If ever a Republican president were to support additional staff for the department, this is where they should go. Democrats could hardly object: adding this function where it belongs would allow government to work more efficiently and colleges to have a much clearer idea of what standards they must meet. A fine bipartisan plan.

The feds are trying in a very crude, clumsy way to transform accreditors into things that they were never intended to be and cannot be effectively: enforcement arms of the federal government. If the federal government wants to impose standards on schools that want federal aid, fine. Standards must be met for most federal aid, and that is as it should be. But the feds should not hide behind a third party in a shotgun wedding, when the bride would rather be anywhere else and the children think their new daddy is made by Frankenstein.

The standards for eligibility for financial aid should be set through a rational, governmental rule-making process that establishes the standards -- just like every other agency does it. Well, I make no claims of rationality for all governmental decisions, but neither can I do so for all policies established by accreditors -- assuming that anyone can figure out what they are.

Various critics of accreditation argue that the process is intrusive, ineffectual, does not help maintain quality and is not worth keeping. That’s a discussion that needs to happen between the colleges and their accreditors, separately from what standards the federal government expects colleges to meet for aid eligibility. I have seen good, bad and useless things emerge from accreditors during my years working in higher education, and the discussion needs to happen. Separately. It is not appropriate to try to answer those questions, which are not federal in nature, in the middle of a tug-of-war between colleges and the feds, by wrapping the rope around the necks of the accreditors in the middle.

There is no reason for accreditors to be attached to the federal government. Allowing this interspecific coitus to continue is simply a recipe for mutant policy offspring that can’t be effective. End it now. It’s time for a shotgun divorce.

Alan Contreras
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Alan L. Contreras has been administrator of the Oregon Office of Degree Authorization, a unit of the Oregon Student Assistance Commission, since 1999. His views do not necessarily represent those of the commission.

Maggie ... Yer Doin' a Heck of a Job!

News of New York Attorney General Andrew Cuomo’s investigation of questionable student loan practices was initially met with dismissive contempt from most of the permanent players in the loan programs. The student loan industry lost precious crisis-management time to cognitive dissonance with the very idea of an enforcement agency that it didn’t control. The student aid profession and its leadership, meanwhile, went through a very public demonstration of the seven stages of grief with the vilification they suffered because of their years of coziness with lenders.

As public outrage at what was, until a few short weeks ago, perfectly respectable business-as-usual began to build, the players finally understood the Cuomo investigation for what it really was: a rout. Like ragtag remnants of a defeated army in retreat, they shed the insignia of their true identity to don the uniform of the winning side, no matter how ill-fitting and grotesque. Some of the most predatory lenders agreed to abide with the letter -- but of course not the spirit -- of the Cuomo code of conduct. Organizations that had long ago reduced their ethics to those of an impeccably honest auctioneer retreated from their prior moral stance of always letting the highest bidder win their support in contested policy debates.

Some aid organizations decided to deal with their addiction to loan industry money by going cold turkey. Others chose the associations’ equivalent of methadone treatment by refusing some lender money while accepting it in other forms. The postmodern moment was at hand when the Republican Congressional leaders -- whose previous 12-year tenure in majority will forever be remembered as the Gilded Age of loan industry rapacity -- indicated that they, too, would introduce legislation to restore integrity to the system they had done so much to create. They even joined the Democrats to pass emergency loan legislation, if only to quickly declare the endemic problems of the loan program resolved and to prevent more meaningful reform of the corporate welfare program they have set up for their political supporters in the loan industry. The point of this street theater of contrition, atonement and conversion, of course, is not real change, but a sufficiently convincing appearance of reform.

By the time Cuomo appeared before the House Education and Labor Committee for the Washington equivalent of his triumphant march, the chorus of special interests had practiced their new reformist tune enough at least to delude themselves and maybe even fool the inattentive passerby. But the careful staging suffered one fatal flaw: one of the lead actors had apparently slept through the rehearsal and was loudly and unabashedly singing off-key. Enter Margaret Spellings, stage left!

Far from striking an apologetic -- or at least conciliatory -- note for having so miserably failed to do her job while student loan corruption festered under the department’s nose, the secretary of education has chosen instead to sing an all too familiar tune of brazen defiance. On the very day of Cuomo’s testimony -- a day that, like others implicated in the scandal, she should have wisely spent away from the public eye -- she actually issued a remarkable press release to refute the reality that everyone else could by now discern.

The secretary’s statement, and her subsequent testimony Thursday before the House committee, combined outright ignorance of some of the facts already in evidence and denial of others. It also unapologetically rejected any personal responsibility for the debacle, citing the complexity of the job, which Spellings has apparently only grasped after Cuomo stepped into the vacuum created by her inattention. In fairness, the secretary’s testimony did manage to identify mistakes at her agency, but they all dated back to the period before 2001, when the administration effectively handed the loan programs to past and future employees of the student loan industry to run as they saw fit! As a rhetorical device, her Congressional appearance combined the tenuous grasp of facts, irritated denials, and vague promises that are the hallmarks of having been caught asleep on the clock. It is déjà vu, all over again: think Tommy Thompson and his ludicrous public comments as anthrax was being mailed around the country; the hapless Brownie as Katrina ravaged New Orleans; or Alberto Gonzalez as he explained to the Senate Judiciary Committee how he didn’t really run the Department of Justice.

Like so many other hopelessly under-qualified Bushies in high office, Spellings brought little by way of independent accomplishments hitherto expected of a cabinet appointee. Not only was she no Dick Riley or Lamar Alexander, her non-patronage résumé was actually even less impressive than that of her predecessor, Rod Paige! What she lacked in independent credibility for the job, however, she has made up with officious self-importance and a messianic belief that she is the right person in the right place in history to transform American higher education. Ironically, the euphemism Spellings has used repeatedly to describe this obsessive illusion of grandeur is, of all things, “accountability!”

In the Spellings lexicon, accountability is codeword for a prosecutorial assault on the traditional collegiate sector for alleged evils that range from lack of transparency, profligacy, inefficiency, and incompetence to political tendentiousness. There is no denying that, like every other human endeavor, American higher education partakes of all these qualities to some degree. And a thoughtful examination of the future of higher education would certainly not be a bad idea. But Spellings has approached the effort not only with dogmatism, but also with a Vaudevillian’s knack for committing every one of the sins for which she has taken higher education to task.

Her tenure in office has thus far consisted of a quixotic frolic to assert substantive federal control on colleges and universities through a variety of politically motivated and legally suspect maneuvers. Describing this detour from her legal responsibilities as overseer of the loan system in terms of sheer incompetence would, in a very real sense, be the more charitable explanation of the loan debacle. A more cynical mind could take the secretary’s pugilism on the collegiate front as a sideshow intended to distract attention from the wholesale looting of the treasury by the administration’s loan industry friends. But the authenticity of her performance at the hearing tends to favor the more charitable interpretation: I for one am now willing to accept that Spellings simply doesn’t get it. That she has been pursuing ill-advised policies for which she has no legal authority (like federalizing transfer of credit rules), while she failed to do what she has had ample authority and legal responsibility to do (like overseeing lenders and protecting the students and taxpayers), is apparently too complex a proposition for the secretary to be contemplating even now, after it has become clear that she has been playing the fiddle while Rome burned.

Whatever else it may bring about, the Cuomo investigation has demonstrated the emptiness of the secretary’s haughty pronouncements on accountability. What is already known of the department’s inaction -- if not outright complicity -- in the scandal amply demonstrates that accountability was the last thing this secretary demanded of the companies feeding at the federal trough on her watch. The disingenuous nature of the Spellings gospel of accountability becomes all the more apparent in light of her post facto reaction to the scandal. Her press releases and disavowal of authority and responsibility are ample enough proof that the thought that accountability applies to her as well has yet to cross the secretary’s mind.

And what’s the average borrower confronting this debacle to think? One apt thought may well be that you go to college with the Department of Education you have, not the one you ought to have. A heck of a job indeed!

Barmak Nassirian
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Barmak Nassirian is associate executive director of the American Association of Collegiate Registrars and Admissions Officers.

What's Ahead on Student Loans in 2008

After a year in which it dominated the headlines, the student loan “scandal” has lost its head of steam. New York Attorney General Andrew Cuomo has largely moved on to other areas of interest. And the U.S. Senate and House of Representatives, which have each passed different Sarbanes-Oxley-like versions of legislation to address the issue, have also taken up other matters for now.

But that doesn’t mean that colleges and lenders are out of the woods, as the U.S. Department of Education is just getting started with administrative investigations and enforcement actions that will make the department ground zero on this issue in 2008.

In response to criticism from Cuomo, the Congress, and the General Accountability Office, the department increased its oversight of colleges and lenders during the latter half of 2007. In July, the Federal Student Aid office (FSA) sent letters to 921 colleges whose student-loan volume was almost entirely, if not entirely, with one lender. The letters were intended to remind the colleges of the requirement to provide borrowers a choice of lender. Then, on October 24, FSA sent letters to 55 of those colleges, as well as 23 lenders that held loans with one or more of the originally identified 921 colleges, requesting information and documents that could indicate the existence of improper inducements, in violation of the Higher Education Act of 1965, as amended (HEA), and its regulations.

Those 78 colleges and lenders (and perhaps many others) should be prepared for the possibility of an administrative investigation and enforcement action by the department in 2008. Here are four things they can expect:

1. More Adversarial Program Reviews

Based on my personal knowledge of the department’s prior practice, and its current organizational structure, two different divisions that report to the Federal Student Aid Program Compliance office are currently reviewing the responses of the colleges and lenders: (1) the School Eligibility Channel is examining college compliance, and (2) Financial Partners Eligibility & Oversight is examining lender compliance. Although FSA, and not the department’s Office of the Inspector General (OIG), is conducting the oversight, I expect OIG to be working behind the scenes with FSA to ensure that colleges and lenders are held accountable for regulatory violations.

An examination of colleges by FSA’s School Eligibility Channel typically takes the form of a program review, which is FSA-speak for “investigation.” A program review entails an on-site visit by FSA that generally involves the collection of financial-aid documents and interviews with financial-aid administrators. Colleges receive notice that a program review will be initiated and are provided the opportunity to respond to a preliminary program review report before FSA issues a “final program review determination” letter. Colleges can expect the School Eligibility Channel to be reluctant to accept their explanations for business arrangements with lenders. There will be findings of regulatory non-compliance in the program review letters.

Lenders have historically had a much more cooperative relationship with Financial Partners Eligibility & Oversight than colleges have had with the School Eligibility Channel. Financial Partners once boasted that, as its name suggests, it works in partnership with lenders to promote best practices and to provide technical assistance. However, that collaborative approach was criticized in September 2006 by the OIG as one that “emphasized partnership over compliance.” As a result, lenders should expect a more adversarial relationship with Financial Partners, which, like the School Eligibility Channel, will conduct program reviews and make findings of regulatory non-compliance.

2. Application of an Uncertain Legal Standard

What types of agreements between colleges and lenders transgress the current prohibition against inducements? Only FSA knows. It is very difficult to discern the legal standard that FSA will apply.

The department’s longstanding interpretation of the anti-inducement provisions is that a violation requires there to have been a quid pro quo, i.e., something given for something taken. In other words, there must be a payment or other inducement provided in exchange for FFEL loan applications. That interpretation finds support within the department as far back as 18 years ago and remained the department’s position through this past summer.

In a February 1989 Dear Colleague Letter, the department described several types of business-development activities between colleges and lenders that would be deemed permissible so long as they were intended as a form of advertising or as a creation of good will, “rather than as a quid pro quo for loan referrals.” Secretary Margaret Spellings actually attached that guidance to her August 9, 2007 letter to the higher-education community urging colleges and lenders to act in the best interests of students and parents. Indeed, three months earlier, in May, the Secretary testified to a congressional committee that a payment can only constitute an improper inducement where there is a quid pro quo.

The department, however, published new regulations on November 1, 2007 that changed its interpretation of the HEA’s anti-inducement provisions. The regulations, which become effective on July 1, 2008, eliminate the requirement of a quid pro quo and replace it with a standard that will prohibit virtually all business-development activities between colleges and lenders, including efforts to create good will. The department made this change of interpretation by giving itself the authority to limit, suspend or terminate a lender from the FFEL Program if the lender is unable to present sufficient evidence that payments or services provided to a college were provided “for a reason unrelated to securing applications for FFEL loans or securing FFEL loan volume.”

In the preamble to the regulations, the department signaled that the new regulatory language is intended to prohibit virtually any payment that is provided merely for the purpose of securing FFEL loans. This would prohibit virtually all payments because FFEL lenders are, after all, in the business of securing FFEL loans. With the quid pro quo requirement eliminated, nearly all business-development and good-will activities will now be prohibited.

FSA should, of course, wait until the effective date of the new regulations before it applies this new interpretation of the anti-inducement provisions. And, even then, FSA should apply the new interpretation only to payments offered on or after that date or else risk holding colleges and lenders liable for activities that were not illegal at the time they were conducted. But FSA’s intentions are unclear, considering that it seems to already be looking to the new regulations to support its probe of agreements between lenders and affiliates of colleges.

3. Probes Into Lender Agreements With College Affiliates

Based on FSA’s letters, lenders can expect FSA to examine not only agreements between lenders and colleges, but also those between lenders and affiliates of colleges. By "affiliates of colleges," FSA undoubtedly means entities such as alumni organizations. In July 2007, as part of a highly-publicized settlement agreement with Cuomo, Nelnet agreed to stop paying alumni associations for exclusive referrals of their consolidated loans. However, agreements with alumni organizations and other college affiliates are not yet covered by the federal anti-inducement statutes and regulations.

The HEA’s anti-inducement provisions prohibit lenders from making payments “to institutions of higher education or individuals.” Although the current regulations use the slightly different phrase “to any school or other party” to describe the scope of covered recipients, once that phrase is read in the context of the HEA language (as it must be so read), the term “other party” in the regulations can only mean “individuals.” It cannot be construed to mean or to include college affiliates because such entities are neither “institutions of higher education” nor “individuals.” So FSA seems to be probing lender agreements with some entities that are not currently covered by the regulations.

The new regulations will, however, add “school-affiliated organizations” as an additional class of covered recipients and, therefore, in a matter of six months, give FSA authority in this area. The term “school-affiliated organization,” which was defined broadly by the Department, covers any organization that is directly or indirectly related to a college, regardless of whether it is within the college’s structure and control. It includes alumni organizations, foundations, athletic organizations, and social, academic, and professional organizations. But because the HEA’s anti-inducement provisions for lenders only cover payments to “institutions of higher education or individuals,” the new regulatory prohibition against payments to “school-affiliated organizations” appears to go beyond the HEA.

4. More Limitation, Suspension and Termination Proceedings

Colleges that are found in regulatory non-compliance generally receive an FPRD letter that assesses a liability against the college, or they receive a notice imposing an administrative fine. In the past, FSA initiated limitation, suspension, or termination proceedings against colleges only in the most egregious cases. FSA has never terminated a large, well-respected college from the Federal Family Education Loan (FFEL) Program, and no one thinks they will do so over this. But FSA might place limitations upon them. Smaller colleges -- particularly for-profit, career colleges -- may not be so lucky.

And while limitation, suspension and termination proceedings for lenders were extremely rare in the past, FSA will now choose to initiate them. This is so because FSA can require “corrective action,” which includes a monetary payment, only as part of a limitation or termination proceeding. As a result, lenders can expect such proceedings.

That is what colleges and lenders can expect from the department in 2008 in terms of administrative enforcement. Here is what they (indeed, every American) should demand of the department: Responsible and principled leadership.

The Department Should Enforce the Law Responsibly and in a Principled Manner

Increased accountability in the FFEL Program should be greatly welcomed by all. Every taxpayer should demand that colleges and lenders, like any other recipient of our hard-earned tax dollars, play by the rules. And colleges and lenders, themselves, should insist on accountability in the FFEL Program. Where true violations of the statutory and regulatory anti-inducement provisions are discovered, FSA should put an immediate stop to it. And where those violations are flagrant or committed with a fraudulent intent, FSA should impose the most serious administrative sanctions.

But internal pressure from the OIG and external pressure from Cuomo, the Congress or the news media to severely punish violators should not be perceived by senior department officials as “cover” for FSA to impose unnecessarily harsh penalties. Getting a “pound of flesh” by reflexively imposing large administrative fines against our nation’s colleges or by unreasonably limiting, suspending or terminating the very lenders that help put our college students through school would be counterproductive.

Instead, FSA should carefully exercise its inherent administrative enforcement discretion by thoroughly reviewing each violation on a case-by-case basis to determine whether a sanction is even needed. For example, regulations allow for informal compliance procedures to permit a lender to show that the violation has been corrected or to at least present a plan for correcting the violation and preventing its recurrence. However, if a sanction is needed, then FSA should fashion a penalty that is sufficient, but not greater than necessary, to achieve the purposes of the FFEL Program and to ensure its continued viability and integrity. Among the factors FSA should consider are the nature and circumstances of the violation and the violator’s history of regulatory non-compliance.


The coming year of administrative enforcement will make some people within the FFEL Program very anxious, but it will serve an important purpose. Colleges and lenders must be held to account for conduct that denied borrowers a true choice of lender as a result of improper payoffs. And the department, acting in the best interests of those same borrowers, should strictly enforce the laws on the books and exercise sound discretion in doing so. Administrative enforcement is not a one-size-fits-all process.

Jonathan Vogel
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Jonathan Vogel is a former Deputy General Counsel of higher education at the U.S. Department of Education and a former federal prosecutor with the U.S. Department of Justice. He is now a partner with the law firm of Sonnenschein Nath & Rosenthal.

Demise of a Good Idea

In 2004, the U.S. Department of Education proposed to modernize its system of gathering information from the nation's colleges. Among other provisions, it would have required colleges to begin submitting privacy-protected data about individual students' academic progress. The goal was straightforward: replace a cumbersome series of surveys about discrete topics (enrollment, graduation rates, finance, etc.) with a single survey that would ultimately yield far more accurate information about institutions.

This "unit record" system would have provided much more accurate information about individual colleges. The current federal graduation rate measure, for example, doesn't give colleges credit for students who transfer and graduate elsewhere -- a problem in an era of increasing mobility. By matching student records from multiple institutions, the system would give colleges full credit for students who start or finish their careers elsewhere. Colleges with a transfer mission, like community colleges, would benefit most. The system would also show "net price" -- student costs after institutional financial aid packages are taken into account, which often runs thousands of dollars less than the sticker prices commonly reported by the press. In other words, the unit record system would make most colleges look more successful and less expensive than current data suggest. And these are only a few of the informational benefits the system would bring.

Yet the reaction to the proposal from parts of the higher education community was nothing short of apoplexy. While the public university and community college associations were generally supportive, lobbyists from organizations like the National Association of Independent Colleges and Universities began throwing around words like "Orwellian" with abandon. Public opinion surveys filled with leading questions were commissioned, op-eds were placed in The Washington Post, and meetings were convened with members of Congress. The very idea of thousands of colleges and universities sending electronic files bulging with Social Security numbers, diploma information, and other potentially sensitive data about millions of students to a single repository in Washington -- one presumably full of huge, ominously buzzing computer servers where the data would be analyzed without students' consent -- was said to be dangerous and downright un-American. It would also be a terrible financial burden, institutions said, another unfunded mandate sucking funds away from students and education.

So awful was this idea that higher education lobbyists had language inserted in proposed versions of the federal Higher Education Act to ban the system outright, language that is now being considered in final negotiations over the bill. When the Spellings Commission on the Future of Higher Education released a draft report endorsing the system in late June 2006, the president of NAICU, David Warren, called it "an assault on Americans' privacy and security in the shadow of the fourth of July."

All of which is strange, given that just such a centralized, DC-based system -- complete with the big computers, social security numbers, and all the rest -- already exists. The same institutions that are busy denouncing the hypothetical federal system happily send individual student data to this very real system, several times a year. It's called the National Student Clearinghouse, and it's located one of those indistinguishable suburban office buildings off the highway in Herndon, Va., about 25 miles from the halls of Congress, where it's run by a non-profit organization founded by the student loan industry. I've been there, twice.

The fact that some higher education leaders are waging war against the federal system while simultaneously supporting the lender-enabled system does much to separate rhetoric from reality when it comes to questions of information systems, student privacy and higher education. It turns out to be perfectly possible to gather and organize massive amounts of potentially sensitive information about college students in a safe, responsible way. And most colleges are more than willing to participate -- as long as it's in their financial best interest to do so.

The Clearinghouse was founded in 1993, and was originally named the National Student Loan Clearinghouse, because that's exactly what it was, and is: a solution to a student loan information problem. America is a big country; there are thousands of colleges and universities, along with thousands of financial institutions that provide student loans. Most students don't start paying off their loans until after they leave college. That means that lenders have a vested interest in knowing exactly when students leave, so they can start sending them polite (and eventually less polite) letters asking them to repay. Lenders can't really rely on students for this information. ("Yeah bro, still in school. Majoring in, um, art history now. It's my, you know, personal calling.") They have to get it from the colleges themselves. Historically, that meant that each lender had to maintain some kind of ongoing information reporting relationship with hundreds or thousands of colleges, while each college had to do the same with hundreds or thousands of lenders. It was a hassle, and the Clearinghouse provided a better way.

The Clearinghouse is basically a gigantic nexus and storage facility for information about college enrollment. Every month or two, participating colleges send an electronic file to Herndon with a list of all the students currently enrolled. Lenders send a list of all the students to whom they've lent money. The Clearinghouse puts the lists together, and sends a third list back to each lender, detailing which of their borrowers are still enrolled and which are not. Instead of colleges dealing with thousands of lenders and lenders dealing with thousands of colleges, everyone just deals with one organization, the Clearinghouse.

Actually doing this is harder than it sounds. The student loan industry invested millions of dollars in getting the organization off the ground, and it currently employs nearly 100 full-time people to manage the process, which involves a lot of matching algorithms, data protocols, and the afore-mentioned large computers. But the important thing to understand is that it works. As of today, over 91 percent of all the college students in America are enrolled at one of the 3,100 colleges and universities that send individual information about them to the Clearinghouse, whether or not they took out a student loan. The Clearinghouse employs elaborate security procedures that have never been breached, and is fully compliant with the Family and Educational Rights and Privacy Act (FERPA).

While the Clearinghouse was originally created to fulfill a specific purpose, it has gradually branched out into other areas, including providing degree verification for employers and information for researchers and K–12 school systems. It was Clearinghouse data that allowed Chicago Public Schools to learn that less than half of its graduates who went on to college were earning a bachelor's degree within six years, and at some local institutions success rates were lower than 20 percent. The Clearinghouse also provides reports and analyses to colleges, letting them find out, for example, where all the students they accepted but didn't enroll chose to enroll instead.

It's all perfectly logical and above-board. Which is the point -- colleges and universities have no principled objection to centralized databases of student information. They're happily sending unit-record data to one right now. There are, for example, 43 private colleges and universities represented on NAICU's board of directors. Of them, 38 were enrolled in the Clearinghouse system as of April 21, 2008.

The controversy around the proposed federal unit record database is a power struggle masquerading as a fight for student privacy. Colleges don't mind sharing information with lenders because they have a mutually beneficial relationship, each providing a market for each other's services. By contrast, colleges are deeply suspicious of any new entanglements with the federal government. Throughout the nation's history, Uncle Sam has adopted a hands-off approach to higher education, providing no direct operating support and asking for little or no say in the conduct of universities in return. That appears to be changing, as federal lawmakers are increasingly asking tough questions about price and quality, suggesting that the former is too high and the latter is too low.

There is an important discussion to be had about the federalism and the proper relationship between the academy and the state. The U.S. Department of Education doesn't have an unlimited claim on student information, and the benefits of any system should be weighed against the costs of compliance for institutions. More broadly, the need for public accountability must be balanced with the American higher education's traditional strengths of diversity and autonomy. And the need for stringent privacy protections for students goes without saying. Of course, the National Center for Education Statistics, where higher education data is held, already collects large amounts of student-level data through its extensive series of longitudinal surveys. And like the Clearinghouse, its security record is unblemished.

But the private college lobby doesn't want to have a serious conversation about these issues. Instead, they've built an argument on hypocrisy and misrepresentation, arguing on Capitol Hill against student information systems even as they help build one just a short drive away.

Kevin Carey
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Kevin Carey, whose "Outside the Circle" column debuts today, is research and policy manager at Education Sector. His previous piece for Inside Higher Ed was about the global spread of college rankings.

Pell Grants: Glass Half Full

President Obama’s avowed goal is to provide an “education so that every child can compete in the global economy,” and in so doing to restore the United States’ leadership role by having the highest proportion of college graduates in the world by the year 2020. He’s recognized that one of the mechanisms necessary to achieve that is to transform Pell Grants into an entitlement.

The Pell Grant program is the sine qua non of equal educational opportunity. It represents one of the most important mechanisms developed in higher education to ensure low-income students are afforded financial access to postsecondary opportunities. By all accounts, Pell Grants historically have contributed to allowing millions of low-income students unparalleled access to higher education in the last four decades, and yet they have been vulnerable to funding shortfalls and their value has frequently lagged behind college cost increases. Therefore, proposing to make the Pell Grant an entitlement is a smart step by the Obama Administration. This constitutes a much-needed, long-overdue reform.

However, unless the administration changes course, it is likely to squander this terrific opportunity for the United States to boost both its academic and economic competitiveness. The administration risks compromising this critical investment in human capital by failing to dramatically enhance investment in college retention and completion.

So the president’s reform measure, as it now stands, resembles nothing so much as a doctor’s prescription to treat a complex condition — in this case, barriers to postsecondary access and attainment — with a single medication. In isolating an important and necessary pre-condition — the provision of financial aid — but failing to consider other dimensions of this phenomenon, the treatment is doomed to failure.

Unless and until the administration addresses the full spectrum of causes, it will not achieve its goals. And until it takes a holistic approach to student aid, its enormous investment in Pell Grants will not be fully leveraged.

Simply put, the Obama administration’s definition of student aid is far too narrow. What is desperately needed instead is a more comprehensive view of student aid that reflects the recognition that low-income and first-generation students face multiple barriers — class, cultural, informational, academic, and social — to postsecondary education, and not just a lack of funds. Merely providing financial resources through mechanisms like the Pell Grant alone will not solve the problem of getting first-generation and low-income students through college. Congress recognized this more than a quarter of a century ago in the Education Amendments of 1980 when it proclaimed the principle that the TRIO programs were “an integral part of the student assistance programs aimed at achieving equal educational opportunity.”

“Without the information, counseling, and academic services provided by the TRIO programs,” the House Report went on to say, “disadvantaged students are often unable to take advantage of the financial assistance provided by the other Title IV programs, and more importantly, such students do not develop their talents by gaining access to postsecondary educational opportunities and completing a course of study once they have embarked on it.”

By investing in financial aid but not providing increases for TRIO and GEAR UP, the Obama administration is failing to raise the aspirations of low-income students and to equip them with the tools necessary to persist in their studies and, ultimately, achieve college degrees. Thus we have to conclude that in this budget, the Administration is, perhaps unwittingly, undermining its own policy goals.

There is ample evidence that financial aid alone has never been and can never be the “silver bullet” to guarantee educational opportunity. And the public investment in Pell Grants has grown so large that there is a real liability to taxpayers unless it can be properly leveraged. In fact, just over the last eight years, Pell Grants have seen a 214 percent increase in funding (from $8.8 billion FY2001 to $18.8 billion in FY2009).

Looked at another way, in constant terms, funding for Pell Grants in the last three decades has grown by 143 percent. Yet the disparity in bachelor’s degree attainment rates between students from the top and bottom quartiles of family income has nearly doubled since 1970, according to Tom Mortenson in “Family Income and Higher Education Opportunity, 1970-2006."

Through a comparison of college completion rates of Pell recipients who did and did not receive support services, we know that Pell Grants alone do not suffice to retain low-income and first-generation students. Data from the U.S. Department of Education show that six years after beginning a postsecondary program, students who have participated in TRIO Student Support Services have a higher rate of earning a baccalaureate degree (30.9 percent) than other low-income college students, regardless of whether they received (21 percent) or did not receive (8.9 percent) Pell Grants.

Yet the president’s budget continues the pattern of previous years of level funding. Funding for TRIO and GEAR UP programs that provide such vital supports to low-income and first-generation students has essentially been flat for the last seven years. By virtue of this stagnant funding as well as rising costs, TRIO programs serve 25,000 fewer students now than in 2003.

Here’s what we know for certain: This year, an estimated 1.6 million low-income students will begin their pursuit of a postsecondary degree. If previous trends continue, only 176,000 of these students will earn a baccalaureate within the next six years. And if the president’s budget proposal is enacted, about 20,000 students already in college will lose support services, thus increasing the likelihood that they will fail to earn degrees.

Is it possible that President Obama is ignoring his campaign promise to support TRIO, GEAR UP, and the first-generation and low-income students the programs serve across the country? During a May 2008 speech in Denver, then-candidate Obama said the key to improving the lives of American families was to “expand college outreach programs like GEAR UP and TRIO.” If these “promises” are to become reality, President Obama must act decisively to assume responsibility for students’ success now. America simply does not have time to “wait and see” while the futures of hundreds of thousands of low-income students hang in the balance. Their futures are our own.

Arnold Mitchem
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Arnold Mitchem is president of the Council for Opportunity in Education.


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