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Nearly a decade after the Obama administration broached the idea of rating colleges and universities, the Biden administration is ready to take another crack at the historically fraught concept.
This time around, the administration is planning to publish a list of programs that are considered to have a low financial value to students and taxpayers. But first the department must decide how to determine which programs have low financial value—a question that’s been the subject of much research but no clear consensus.
The department’s request for information, which was released this week and closes Feb. 10, seeks input on the measures and metrics that should be used to build the list, what data should be collected to assess a program’s nonfinancial value, the structure of the list and how to share the list once it’s created.
This latest effort will show how the accountability landscape has changed, if at all, since the rating idea was first broached, which morphed into the College Scorecard. (The Obama administration didn’t end up rating institutions after opposition from higher education groups and others.) Advocates and researchers said the list would be helpful and a good start in highlighting programs that don’t serve students well, though they acknowledge the challenge ahead for the department to define a program’s financial value.
Amy Ellen Duke-Benfield, managing director of policy and research at Higher Learning Advocates, a bipartisan nonprofit that works to improve outcomes for students, said the federal government is lagging behind state leaders, who already have been talking about how to define a high-quality postsecondary program.
“Students, even if they go to liberal arts colleges, are thinking about future employment more often than I think some institutions would care to admit,” she said. “There has to be a nuanced approach, but we can’t continue to avoid a discussion about student earnings coming out of particular programs. We’ve been trying to avoid this now for over a decade … We can’t continue to punt this to the federal level.”
Researchers, think tanks and organizations have looked at a variety of metrics to determine the value of higher education, including a student’s debt-to-income ratio, student loan default rates, graduation rates and earnings above the average high school graduate’s salary.
Duke-Benfield said evidence of job opportunities for a credential and whether a graduate has the skills sought by an employer would be good metrics for the department to consider.
The Postsecondary Value Commission, a high-profile panel backed by the Bill & Melinda Gates Foundation, said in a report that students should, at minimum, earn as much as a high school graduate and enough to recoup what they paid for college within 10 years. The commission proposed measuring economic returns in terms of thresholds that would take into account whether a student’s earnings reach the median level for their field as well as economic mobility and security.
“When determining the value of particular programs, it is critical that the Department of Education keep equity in mind—not just whether programs deliver value over all, but whether they are delivering value to all groups of students, especially for those who have been historically marginalized,” said Diane Cheng, vice president of research and policy for the Institute of Higher Education Policy, which managed the commission. “To unearth potential inequities, the outcomes data included in the department’s calculations should be disaggregated by race, ethnicity, income and gender, wherever possible.”
Georgetown University’s Center on Education and the Workforce calculated the net present value, which used a student’s earnings 10 years after attending a college or university, to develop a ranking of 4,500 institutions by return on investment.
“There’s a lot of factors that would go into thinking about what a low-value program is and what a low-value degree might be,” said Martin Van Der Werf, director of editorial and education policy at the Georgetown center. “I think what it’s going to boil down to more than anything is probably really looking at debt-to-income ratios.”
He expected the department’s measure of financial value to ultimately end up similar to the gainful-employment rules issued during the Obama administration, which measured in part how much student loan debt students had relative to their discretionary income. The gainful-employment regulations only applied to for-profit institutions and certificate-granting programs, but Van Der Werf said the planned list should include programs from all types of institutions.
“I think we would find that there’s a number of programs, not just at for-profit colleges, but also at public and private colleges that are not for-profit that also have a lot of programs that have pretty questionable value,” he said. “I think that this actually would be pretty illuminating. The problem is that it’s going to be really hard to get general agreement on what the definitions are.”
Michael Itzkowitz, a consultant for Third Way, a left-of-center think tank, helped to create the College Scorecard and developed a price-earnings premium metric with Third Way in 2021 as a way to measure a degree’s return on investment. That metric looks at how long it takes students to recoup their educational costs.
“What we know is that there are some colleges that are high cost, some that provide little to no financial value and some that are both,” he said. “This list gives the department an opportunity to identify schools that will ultimately leave students worse off.”
He said the planned list—which he called a “great start”—will help to flag programs for oversight entities such as accrediting agencies and provide a starting point for Congress in determining how to hold low-performing programs accountable.
“I think the most difficult part will be dealing with multiple stakeholders and the higher education lobby,” he said. “No institution ultimately wants to be found on a list that says it’s low performing, yet the data that we have available shows that there are many more that ultimately don’t serve students well than we initially thought.”
The Administration’s Plan
As part of his announcement of plans to forgive up to $20,000 in federal student loans for eligible Americans and revamp the income-driven repayment program, President Biden said the Education Department would create an annual list of programs with the high debt levels.
“The goal of the income-driven payment program is to reduce the burden of loans for low- and middle-income borrowers, not to subsidize programs that fail to help many of their students graduate and achieve their goals,” administration officials wrote in a request for information.
They’re hoping the list will draw public attention to “low-financial-value” programs, which are ones where the total costs exceed the financial benefits. Institutions on the list will be asked to submit a plan to improve their program’s financial value, but other consequences were not included in the request. Students also could receive a warning before they receive federal financial aid to attend a program on the list, according to a department fact sheet.
The administration has several plans underway to reform the student loan system, but officials noted that those changes wouldn’t address the high cost of some postsecondary programs and low graduation rates.
“This includes the presence of too many postsecondary programs that saddle students with levels of debt far out of proportion to the income they earn after leaving their program,” the request says. “Data from the College Scorecard show these problems are especially concentrated among undergraduate certificate programs and graduate programs.”
Jon Fansmith, assistant vice president for government relations at the American Council on Education, said the department’s request seems to take into account limitations of the data currently collected and the need to compare programs rather than institutions.
“The easiest way to do things concerning the vast numbers of programs you’re talking about is a simple metric,” he said. “But a simple metric—in a lot of cases—could have really negative consequences, unless there’s some ability to differentiate why the numbers look the way they do. It can be a helpful flag for seeing where there might be problems and where additional follow-up is needed.”
Career Education Colleges and Universities, an organization representing for-profit institutions, said in a statement this week that the list should provide information about programs at all types of colleges and universities.
“The department has a well-established bias against for-profit institutions and a zeal for weaponizing the tools at its disposal to make it more difficult for those schools to serve students,” CECU president Jason Altmire said in the statement. “That said, we are encouraged by this solicitation.”
Dominique Baker, an associate professor of education policy at Southern Methodist University, found in a 2020 study that there wasn’t strong evidence that the name-and-shame strategy was effective in changing affordability or enrollment.
She studied colleges and universities that were included on annual lists highlighting the institutions with the highest change in tuition and average net price. The lists were first published in 2011 by the department at the direction of Congress.
“Broadly speaking, there was not strong evidence that providing information alone is able to create a significant amount of change in either students’ behaviors or institutional leaders’ behaviors,” Baker said in an interview, noting that she couldn’t find other research on the lists she studied and that policy recommendations shouldn’t be based on a single paper.
She said that any metric used to determine financial value should be something the institution has control over. For example, job opportunities and earning potential can vary across states, as can the cost of living.
She also wondered how any measure of financial value would account for discrimination in the labor market and consider the value of jobs such as teachers, librarians and social workers, which are important to a community but don’t necessarily lead to high earnings.
“I think that it is going to be incredibly challenging to create a sort of single measure of financial value of an institution, particularly given these larger societal structures that we have in this country,” she said.
Baker and others interviewed noted that the department doesn’t have many options to hold institutions accountable, absent a revamped Higher Education Act of 1965, which was last reauthorized in 2008.
“We’re seeing these types of accountability pushes in part because Congress is not creating new accountability structures for higher education,” Baker said. “The Department of Education is doing, in some ways, what it can.”
Julie Peller, executive director of Higher Learning Advocates, said it’s important to highlight different employment rates for programs where people aren’t going to see high earnings so that students have all the information before making a decision.
“Students are demanding to know more of what they’ll get out of their both money and time investment in higher ed,” she said.
As the department moves forward on making the list, Peller said she’ll be watching to see how officials balance simplicity and understanding.
“Because you don’t want to make it too complicated, on one hand, but on the other hand, I’d be worried that we might unintentionally disincentivize institutions from enrolling the very students that we want them to be enrolling … that could benefit the most from education,” she said.