Higher Education Transparency and Consumer Choice

For more on this issue, check out this post from Clare McCann on our sister blog, Ed Money Watch.

For those who care about increased higher education transparency, the last few days have been a trip through the Congressional looking glass, culminating with yesterday’s introduction of a bill to “study” higher education transparency. On Thursday a bipartisan group of senators and representatives introduced the Student Right to Know Before You Go Act, which would help provide students, families, and taxpayers with answers to critical questions like whether students at particular institutions graduate, whether they get jobs, and whether they can comfortably pay back their loans. A televised discussion among Senators Wyden (D-OR), Rubio (R-FL), and Warner (D-VA), Representatives Hunter (R-CA) and Andrews (D-NJ), students, and guidance counselors underscored the urgent need for better information about higher education outcomes and value.  

It seems pretty straightforward. Students, families, and policymakers have questions. And this legislation would provide answers. But the day after the legislation was introduced, an unnamed senior Congressional education staffer said of the effort, “But a federal unit record system is only designed to answer questions no one is asking, namely: how do we bring No Child Left Behind and its command and control mentality to higher education.”

Let’s ignore the intentionally distracting NCLB reference and instead focus on this doozy: “designed to answer questions no one is asking.” Perhaps the staffer has fallen through the looking glass, because from this side it seems like everyone is asking these questions.

It’s not often that you see members of Congress (or anyone for that matter) defending a college with a zero percent graduation rate. But that is exactly what is happening for Oregon’s Marylhurst University. Both of the state’s Senators and three of its representatives recently wrote a letter to the Department of Education defending the University against claims from the Department’s own College Scorecard that it has a 0% graduation rate.

Zero percent is certainly at odds with the rhetoric on the website of this small, open-admission, Catholic liberal arts school. Student success is in the first sentence of a lengthy and passionate case for cultivating ethical, engaged leaders capable of taking on the challenges of a rapidly changing world.

But talk is cheap and self-promotion is easy, which is why Republicans and Democrats have been calling for better, more comparable data that students can use to inform their college-decision making processes. Marylhurst, however, isn’t alone in tooting its horn. The Council for Adult and Experiential Learning recognized the university as a national leader for its "outstanding commitment to the expansion of lifelong learning opportunities and for innovative efforts to improve access and quality in academic programs for adult learners."

It turns out that adult learners are the problem. Or, more accurately, how the federal government counts (or doesn’t count) adult learners. The College Scorecard reports graduation rate data only of first time, full time students. However, just three percent of Marylhurst’s students fall into that category. The vast majority are working adults taking upper division courses part time in order to complete a degree started elsewhere. And these students seem to be doing well. Out of 911 undergrads enrolled last year, 204 graduated. But the success of these students doesn’t count, at least not according to the federal government.[i] Disregarding the majority of students at an institution is not fair. Not fair to the institution, not fair to students.

A federal district court judge dealt a huge blow yesterday to the U.S. Department of Education’s efforts to regulate the for-profit college sector. More broadly, the court’s decision in the case, which deals with the Department’s Gainful Employment regulations, could make it much more difficult to bring greater transparency and accountability to higher education as a whole.

The roots of this case go back to June when the federal district court vacated some of the Department of Education’s Gainful Employment (GE) regulations. While the judge affirmed the department’s authority to regulate on GE and held up requirements that GE programs disclose information like median debt to students, he found that one of the three measures used to determine whether a program prepared students for gainful employment -- the student loan repayment rate -- “lacked a reasoned basis.” And since the judge concluded that all the metrics were intertwined, he threw them all out. With no metrics to report, the disclosure requirements included in the regulations were also effectively eliminated.

The Department went back to the court and asked the judge to reinstate the reporting requirements so that it could implement the disclosure provisions of GE (without program-level information, disclosure would be impossible to achieve). In yesterday’s decision, the judge denied this request on the grounds that the reporting requirements would violate one of the worst laws in the history of higher education: the federal ban on a student unit record system.

Welcome to the Syllabus, a weekly guide that provides insight into what’s happening in higher education.

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President Obama gave his State of the Union address on Tuesday and higher education played a feature role. “Tonight, I ask Congress to change the Higher Education Act, so that affordability and value are included in determining which colleges receive certain types of federal aid,” President Obama said, “And tomorrow, my administration will release a new ‘College Scorecard’ that parents and students can use to compare schools based on simple criteria: Where you can get the most bang for your educational buck.”

But what does this mean for higher education?

In last night’s State of the Union, President Obama announced the release of the College Scorecard, a consumer information resource that helps students and families compare colleges and universities on important measures such as costs and graduation rates. “Colleges must do their part to keep costs down…” said President Obama, “Parents and students can use [the Scorecard] to compare schools based on simple criteria: Where you can get the most bang for your educational buck.” While better information is not the cure to solving all problems with student access and success in higher education, it can lead to more informed decision-making and, in turn, improved outcomes. But information only helps students and families if it gets into their hands and they know how to use it.

The College Scorecard is not a new initiative. In last year’s State of the Union, President Obama put higher education “on notice” saying that, “If you can’t stop tuition from going up, the funding you get from taxpayers will go down.” In the days that followed he announced a new higher education reform package that included two new consumer information tools: the Scorecard and the Financial Aid Shopping Sheet. After thousands of public comments on both, the finalized Shopping Sheet was released in July and now the new Scorecard is out today. I’ve already written extensively about the Shopping Sheet, but what will the new Scorecard mean for students and families?

As a rule, speechwriters put the most dramatic parts of a president’s agenda front and center in televised speeches, leaving the boring policy details to the supplemental notes. Last night, the Obama administration did the opposite: the higher education section of the State of the Union address was much the same as last year’s, focusing intensely on college affordability and putting institutions on notice that the gravy train of public support for rising prices would have to end. But the truly earth-shaking policy initiatives were left for the supplemental policy document  released directly after the speech, in which the Obama administration proposed the biggest change to federal higher education policy since at least the Higher Education Amendments of 1972.

Those laws created what would become the Pell Grant program for low-income students, which has grown to a $40 billion pillar of government support for higher learning. The Pell grant is a voucher system--any eligible student can use their grant to pay tuition at any accredited college of their choice.

The key words in that sentence are “accredited” and “college.” There are lots of ways to learn, but Pell grants can only be used to purchase learning from organizations that fit the model of colleges as we know them today. And who decides, legally, what a “college” is? Accreditors, a group of independent non-profit organizations run by...colleges as we know them today. By controlling access to Pell grants, student loans, and other forms of financial aid, existing colleges determine the price, structure, and character of higher learning. This regulatory monopoly has had severe and sadly predictable negative effects on price and innovation in higher learning. To compete on a level financial playing field, you have to teach, spend, and ultimately charge like established institutions.

The Obama administration wants to change all of that:

In 1969, tenure track faculty constituted 78 percent of the academic workforce. Today, less than 25 percent of the academy is on the tenure track (TT). This means that in about forty years, faculty labor has turned completely upside down. Non-tenure track (NTT), contract-contingent faculty—otherwise known by the anesthetized (often pejorative) term adjuncts—now account for the vast majority of faculty appointments in the United States. Further, a recent survey of provosts affirmed that we have every reason to believe this reliance on adjuncts will continue its upward trajectory. While a good deal is known about the growth in NTT labor, very few people seem to realize that the traditional conception of a tenure-track faculty does not, by and large, apply to the modern academy.

Here’s some background on the status of adjunct labor. The community college sector accounted for the lion’s share of NTT growth between 1969 and 1998. Adjunct appointments in two-year colleges grew by more than 800 percent over that span. In the years that followed, data show that although community colleges still accounted for the greatest growth in real numbers, the most dynamic rate of growth in adjunct labor occurred at public and private, nonprofit comprehensive universities (four-year schools providing education through the master’s level). In addition, NTT appointments account for disproportionately high numbers of women and faculty of color.

There are bad actors in every sector of higher education. But the National Association of Independent Colleges and Universities (NAICU) would like you to believe otherwise. During a panel discussion with Congressional staffers at their annual conference, private college presidents expressed frustration with increased federal scrutiny and regulation. They argued that problems with debt and default are just for-profit problems, not private nonprofit problems. A Republican staffer for the House Committee on Education and the Workforce, Brian Melnyk, agreed in part saying, “There are some bad actors among for-profits,” but he added, “bad actors can be found in every sector of higher education.” This comment was not well received. Several audience members yelled, “Name them.” Melnyk declined. But I won’t.

In October, the Department of Education released the first official 3-year cohort default rates (CDR) for postsecondary institutions, which measure the percentage of students who have defaulted on their federal loans within three years of leaving college. Having a rate above 30 percent starts an institution on the road to federal student aid sanctions. And although institutions with 3-year CDRs over 30 percent are overwhelmingly for-profits (73 percent), private nonprofits still account for 11 percent of the schools. Of that 11 percent, almost half are NAICU members.

The Center for American Progress (CAP) recently issued the report Improving the College Scorecard: Using Student Feedback to Create an Effective Disclosure. The report presents findings from a series of consumer focus groups conducted with high school students to evaluate two simple, one-page college disclosures—one developed by the Obama Administration (the College Scorecard) and one developed by CAP—concerning college costs, graduation rates, student debt, and graduate earning potential. Although there is widespread agreement that students and families need better information to make an informed decision as to the best school for them, the report argues that rigorous consumer testing of disclosures is necessary to ensure the disclosures are effective for their intended audience. For example, based on its initial student focus group feedback, CAP found that the overall purpose of the Administration’s and CAP’s simple, one page college scorecard disclosures were poorly understand by high school focus group participants, thus indicating needed improvements to the design of currently proposed disclosures. In addition to recommending broadly that the federal government invest in rigorous consumer testing of disclosures, the report provides the following more specific observations and recommendations based on the focus groups:

• Attention should be paid to the use and explanation of certain terms, and these terms should be field tested to determine their ease of being understood. Students expressed a strong desire for consistency in language across the entire college application process, including the terms “net price,” “out-of-pocket,” “living expenses” and “total cost of attendance.”
• Students desired more customization to reflect their family’s personal financial situation. Since only averages were included on the disclosures, students saw this information as only somewhat useful.
• Student debt measured as a repayment or default rate was not meaningful to students interviewed. While average debt loads were more so, what students most strongly responded to was average monthly repayment figures and average number of years in repayment.
• An emphasis on four-year graduation rates has a bigger impact on students’ decision- making process than six-year graduation rates. Students desire to and assume they will finish in four years, not six.
• Students want more information about employment prospects by major to see how graduates fare in the job market.

EXECUTIVE SUMMARY

The federal financial aid system is no longer up to today’s demands. Built in a different era, its haphazard evolution over the decades has made it inefficient, poorly targeted, and overly complicated. With the need for higher education never greater and college growing increasingly unaffordable, students deserve a streamlined aid system that is more understandable, effective, and fair.