I approach the topic of the appropriate reach of government regulation into higher education in very much of two minds. On the one hand, I am the president of an independent-minded private college that has been in continuous operation for 139 years and delivers strong outcomes in terms of access, persistence, graduation, employment and post-graduation debt. Regulation from the federal government isn't likely to impose higher performance thresholds than we have already established for ourselves (and consistently achieved), or to improve our performance, but added regulations will very likely impose new costs on us related to compliance, in addition to being just plain irritating.
On the other hand, I serve on the Board of Trustees of the Higher Learning Commission, and that service has opened my eyes both to the broad variety of institutions that the Commission serves and, very frankly, to instances of institutions that have gone awry, that are not serving their students well, that are not good stewards of the federal dollars that flow through their budgets, and that are either unwilling to admit their shortcomings or unable to address them.
The investment that government -- both federal and state -- makes in financial aid to students, who then pay that money to us so that we can use it to deliver our programs, is certainly considerable, and we need to be good stewards of it, so that students are well-served and taxpayers' dollars well-spent. If those ends are to be achieved, some regulation will be necessary.
So, how much is just right? Here’s an answer: the minimum amount necessary to achieve the two goals I just mentioned: ensure that students are well-served and that tax dollars are well-spent
As the reaction from the higher education community to the Department of Education's talk about a federal rating system for colleges and universities demonstrates, those seemingly simply goals I just articulated aren't simple at all once you get into any level of detail in specifying what it means to be "well-served" or "well-spent."
Does "well-served" for example tie out to a minimally acceptable four- or six-year graduation rate? What about open-access institutions whose mission is to prepare underserved students to succeed at a different kind of institution? What about institutions in a situation where graduation may not be the most important goal?
"Well-spent" raises similar questions. If you are an institution with a graduation rate in the 90 percents, but the percent of Pell-eligible students in your student body doesn’t reach the number of Pell-eligible students that somebody in an office in Washington decided was minimally acceptable, does that mean the federal dollars that flowed to your budget through student tuition payments weren't well-spent because they weren't supporting certain policy goals, despite evidence that your program is effective?
These problems aren't new. Every regulated industry faces them, and perhaps as we think about proposed increases in the regulation of higher education a wise thing to do would be to study those industries -- if any -- where the right balance between the actors in the industry and government regulation has been struck.
In the meantime, here are a few thoughts about how much government regulation is just right:
It's too much if it imposes compliance costs and burdens on institutions that plainly are serving students well and being good stewards of tax dollars.
It's not enough if there's demonstrable evidence that there are numbers of institutions with clearly articulated and appropriate mission statements that are not delivering on those missions but are nevertheless consuming significant resources.
It's not enough if there is clear and demonstrable evidence that self-regulation, and by that I mean accreditation, is ineffective.
It's too much if regulation requires an institution that is otherwise flourishing to change its mission in response to the policy goals of whoever happens to be running the U.S. Department of Education at the moment.
It's too much if the net effect is to narrow the diversity of types of higher education institutions in America, the diversity of their missions, of their entry points, and so forth.
It's too much if a compliance industry grows up around regulation.
It's too much if it can't be demonstrated that the net effect of the regulations, after the costs and burdens it imposes, has been to make institutions better serve students and steward tax dollars.
Many institutions of higher education in America don't need more regulation to help or force them do their job. Some do. Regulation that starts from that simple fact is most likely to be good for students, good for higher education, and good for the country.
David R. Anderson is president of St. Olaf College, in Minnesota. This column is adapted from remarks made at the panel on “How Much Government Regulation of Higher Education is Just Right?” at the 2014 Annual Conference of the Higher Learning Commission.
On his education bus tour, President Obama is urging, among other suggestions, a new rating system to ensure that more families are able to afford higher education. I think we can all (well, almost all of us) agree that the rising costs of a bachelor’s degree need to be constrained, and we must find ways that facilitate middle- and lower-income students entering and graduating from college. The value proposition matters, and “debt without diploma” is unacceptable.
What is vastly harder to agree upon is how to address the problem, rather than just wringing our hands over it -- which we have been doing for far too long.
Let’s start with the president’s idea of rating colleges based on graduation rates and prospective earnings, among other variables. To be sure, given the president’s reference to U.S. News rankings in his speech today at the University of Buffalo, one wonders whether “ratings” are similar to or different from rankings – apart from using different variables.
More on the Obama Plan
Performance Funding Goes Federal: Obama gets aggressive in proposing college rating system. Making it happen won't be easy, but higher ed leaders said they'll play ball.
Disappointed, Not Surprised: Professors overwhelmingly voted for Obama twice. But five years into his presidency, few faculty leaders are surprised that they disagree strongly with his plan for higher ed reform.
Enjoying White House Attention: For colleges and other organizations promoting alternative paths to degrees, the president's speech was validation they have wanted.
On the surface, these two data points may seem easy to calculate. And advising families on how to compare and contrast college offers seems wise. But devising a quality rating system will require deep insight into how the world of higher education actually works – on the ground, in the trenches. As the president noted, Secretary Duncan needs to garner suggestions from a wide range of educational constituencies.
First, we know that more-elite institutions that serve Pell-eligible students have higher graduation rates than open-access institutions that enroll Pell eligible students. What accounts for this disparity is subject to debate, but arguably, part of the answer is that the richer institutions “cream skim” and only take the “best” among the low-income students.
For example, students who are selected to be Posse Scholars graduate from college (largely highly selective institutions) at a rate of 90 percent -- which is stunningly good. But, it is worth remembering that the 640 Posse Scholars enrolling each year are selected from approximately 15,000 applicants.
This means that elite institutions, absent some adjustment, would rank higher than non-elite institutions on graduation rates without any explanation as to why that is occurring. And the lower graduation rate of less-elite institutions may be at least partially explained by the lack of preparedness of their students. For some students and their colleges, a graduation rate of 40 percent is success, not failure.
Second, if we only calculate graduation rates of true first-year, full-time cohorts, we will be missing the mark in terms of who is actually enrolling in college today. Students with previous credits, transfer students, adults returning, part-time students and veterans would not be counted in the calculation, although at least some of these data points will be included as IPED’s data are improved over time.
Third, earnings are certainly occupation-based. Graduates who become teachers and nurses and police officers earn less than students who are employed by investment banks or hedge funds. Clearly, success in higher education cannot be measured based on earnings alone.
Yes, college graduates should not be underemployed or employed in fields that do not take advantage of their education. But how we calculate “sufficient” earnings is critically important, and more earnings are not necessarily better for the public good.
Finally, there is a built-in assumption that students and their parents will pay attention to and use the ratings effectively. Experience suggests otherwise. Despite transparency in the realm of consumer protection, consumers still make irrational and unwise choices, as behavioral economists have noted.
Indeed, as scholars point out, consumption decision-making is often based on non-economic determiners. And we already have early evidence that the current scorecard has not worked as expected – despite best efforts to share its availability. Moreover, the income-based repayment program – also publicized – has not had the expected uptake among students who could benefit from it, as the president himself noted. We need to make disclosure “smart.” We also need to focus on how to engage families in conversations about money. And educational institutions need to see that their obligations to advise students about loan repayment extends beyond graduation, particularly since initial payments often commence six months post-degree.
So if we proceed with graduation rates and earnings as indicators, we need to be cautious in terms of how we calculate both and be aware that even the best ratings may not help the very audiences we seek to persuade.
Indeed, possible key users of the ranking system are high school guidance counselors. But, as a recent report from the Public Agenda notes, this group of professionals is struggling to counsel students for college effectively. Thus, their caseload and training may make their uptake of any new ratings problematic, absent major changes in their education and training.
As an additive or alternative to the president’s suggestions, I think we would be wise to make change where the “default” position benefits students and their families. So, as one example, what about enacting legislation, through an amendment to the Bankruptcy Code, that enables students and parents to discharge burdensome private and public loans through bankruptcy?
A recent study by the Center for American Progress suggested the dischargeability of select public and private loans (with a robust definition of what constitutes nondischargeable qualified student loans.) The Consumer Financial Protection Bureau and the Department of Education issued a report in 2012 suggesting reconsideration of the nondischargeability of private student loans.
To anticipate the suggestion that easing bankruptcy’s discharge will create a moral hazard, my experience over 30 years of working with debtors and consumer finance suggests that this common concern is not supported by the evidence.
The availability of bankruptcy and the opportunity for dischargeability of specified debt has not led to a wave of abusive bankruptcy filings. As I always have said, most people do not wake up in the morning and say, “Yippee. I get to file bankruptcy today, having failed at America’s rags-to-riches dream.”
Surely the president has latched onto an issue that matters – a college education for the betterment of individuals and their families and society at large. This is because, at the end of the day, we need an educated citizenry to preserve our democracy. The real issue is how we make that accurate idea a reality. As with most difficult issues, the devil remains in the details.
Karen Gross is president of Southern Vermont College. She served as a senior policy adviser to the U.S. Department of Education during 2012 and is now a consultant to the department. The views presented here are her own and do not represent the position of the government, including the Department of Education.