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.
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- Notes on a Loan Scandal
- Political winds shift on federal unit records database -- but how much?
- New America report takes aim at private college lobby on student unit record system
- House to Act Fast on Student Loans
- U.S. Suspends Lender Access to Borrower Database
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