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January 31, 2014 10:26 AM Federal College Ratings: Three Modest Steps

By Robert Shireman

Having worked on Capitol Hill, in the White House, and at the Education Department I know how frustrated policy makers can get with higher education’s insistence that taxpayers should just trust that colleges are doing the best job they can and should be left alone. President Obama’s announcement that the federal government would launch a college rating system was a valiant effort to force a real conversation about measures and about accountability.

Unfortunately, many higher education leaders went on the attack rather than offering suggestions and participating in a discussion. We are left with no sense of what the stakeholders think the Administration should do other than to do nothing, which the president has made clear is not an option.

I start with the view that consumers are not the only audience for ratings and other information about colleges. At least as important are the journalists, watchdog groups, and army of professional and amateur analysts who digest information and help us all identify what is illuminating. They feed into the wisdom that is transmitted by and to counselors, teachers, parents and students. Exposing deeper information about colleges to sunlight will improve the market in the same way that the Securities Exchange Act of 1934 forced timely public disclosure as a way of cleaning up an investment market that was rife with scams and misinformation. We all don’t have to read the stock prospectuses and 8K filings—we know there are experts dissecting them, and the important information emerges through other mediums.

First, I would launch a pilot program of surveys of the veterans and other students who receive taxpayer support. U.S. News and other college guides can’t do this because they do not have independent access to contact information for college students and alumni. Electronic surveys would cost almost nothing to implement and could produce a treasure trove of information about students’ experiences. It could even save taxpayer costs by providing an early warning signal of fraud or emerging problems.

Second, I would point to a few key baseline indicators of a college’s integrity, in a way that will prompt the colleges to be more forthcoming with information. Attach a consumer “use caution” flag to any college that is unwilling to make the answer “yes” to these questions:

Is the amount the college spends on instruction more than half the amount students pay in tuition? Certainly consumers should know if large amounts of their tuition dollars are going somewhere other than the classroom. (The feds already college these data).
Are the names and qualifications of instructors available on the institution’s web site? Nothing is more important to the quality of education than the teachers. It is not a good sign if a college isn’t willing to show potential students who those teachers are likely to be, and what their qualifications are.
Are the college’s most recent accreditation self-study and visiting team reports publicly available? Accreditation is supposed to give us confidence that a college meets at least some minimum level of quality, but the actual substance of accreditation reviews are too often hidden from public view.
Does the college have a policy that prevents its board members from participating in decisions in which they have a personal financial interest? Students are extremely vulnerable as consumers because the very definition of the product - a good education - is nebulous. Potential students should know if a college is run by people who are choosing between serving students or their own bank accounts.

Third, make public more of the data and documents that the Education Department now hoards. The colleges’ required financial statements, the compliance audits, and the application for federal funds should be posted automatically on the web for public inspection the moment a college submits them. With a little work the Department could also produce other useful information such as student loan delinquency and repayment rates by institution.

To those who have asserted that a federal rating system is unprecedented, I would point out that what we currently have is a binary rating system. Making distinctions among colleges is the core of federal policy, opening the spigot of taxpayer dollars, or not, based on whether the college is accredited; whether it abstains from paying enrollment bounties; whether it submits data; whether it has an online net price calculator. Further, career programs must actually prepare people for gainful employment, and colleges that allow owners to take profits must pass a market test by demonstrating that a minimum number of customers are paying without federal aid (unfortunately this requirement is riddled with loopholes).

My three steps will not create the type of rating system that President Obama had in mind, but they also are not the rating system that higher education leaders feared. They are modest, important steps that would provide some further guidance and protection to consumers, opening up to public scrutiny the data and processes that undergird quality and value in higher education.

Robert Shireman is the Executive Director of California Competes and former Deputy Under Secretary at the U.S. Department of Education.

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