What Does Value Look Like in Higher Education?
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Students and families paid more than $154 billion in tuition and fees to attend public, private, and for-profit colleges, universities, and trade and technical schools in the 2011-12 academic year, borrowing more than $106 billion to attend those institutions under the William D. Ford Federal Direct Loan Program. When writing those checks and taking out those loans, few people realize that only 38 percent of students who enter a four-year degree program and 21 percent of students who enter a two-year degree program graduate on time.
To address these issues, President Barack Obama launched the College Scorecard in February 2013. This tool helps prospective students and their families quickly compare institutions of higher education on four key elements: cost, graduation rate, median amount borrowed, and loan default rate. More recently, he called on the U.S. Department of Education to create a college rating system that identifies institutions that provide the best value for students and families. Consumers could use this rating system as early as the 2015-16 academic year to compare schools with similar missions.
The system would also help identify colleges that do the most to help students from disadvantaged backgrounds, as well as institutions that are improving their performance on this measure. In announcing the rating system, the president stressed that students could continue to choose the college or university they want to attend but offered the possibility that taxpayers might be more generous to students attending high-performing colleges. To tie financial aid to performance, Congress would need to amend the Higher Education Act, or HEA, of 1965 upon its next reauthorization to allow consideration of the college rating system in the awarding of aid. While the creation of a rating system could be accomplished without changes to HEA, using those ratings to change how federal student-aid funds are awarded would require a change to the law.
The Federal Government's Plan
Since the president’s announcement, the Department of Education has been holding public hearings around the country to gather input from students and their parents, state leaders, college presidents, and others on how to develop a rating system that puts a fundamental premium on measuring value while ensuring college access for those with economic or other disadvantages. Inside Higher Ed recently obtained the written comments received by the Department of Education and made them publicly available. Not surprisingly, college and university faculty and administrators have expressed concern that the rating system will include graduates’ earnings, which raises the prospect that higher-education institutions will be judged, in significant part, by the earnings of recent graduates.
These critics argue that the true value of higher education comes not from the amount that people are paid but from the significance and meaning of the work that students do for the nation, their communities, or their employers. So judging institutions based in whole or in part on earnings, they argue, would penalize colleges whose graduates go on to do important but low-paying jobs, such as social work or teaching. Overall, the comments received by the Department of Education are consistent with last year’s Gallup/Inside Higher Ed poll, which found that most college presidents are skeptical that the rating system will effectively reduce the cost of college. But a change to the quality-assurance system in higher education—whether in the form of ratings or another system—is critically needed and should focus on access, affordability, retention and completion, and post-graduation labor-market outcomes.
With that said, the value of higher education cannot be reduced to a single value, such as the median or average earnings of graduates. As Secretary of Education Arne Duncan has indicated, an assessment of the value of a higher-education institution must include the consideration of a number of factors, including: