The Beginning of the End of Higher Education’s Special Deal

This fall, the Obama administration will release the first draft of a plan to rate America’s colleges and universities. When it does, all hell will break loose, because the ratings spell the beginning of the end of a special deal the higher education sector has long enjoyed.

The deal is this: Washington gives institutions of higher learning about $150 billion a year in the form of student aid, research grants, and various tax breaks. In return, those institutions promise the federal government … nothing. Schools are under no obligation to demonstrate that they’ve spent that money effectively—by, say, keeping prices down, or increasing their graduation rates, or helping more lower-income students get degrees, or showing that any of their students have learned a damn thing. The money just flows, year after year, in ever-greater amounts.

The administration’s new ratings, which are scheduled to go into effect in time for the 2015-16 school year, will be the first concrete step by Washington to demand some accountability for that investment. Individual colleges will be graded on measures of access (such as the percentage of Pell students they enroll), affordability (the net price of attendance), and outcome (graduation rates, loan default rates, and so on). Such metrics may seem familiar to longtime readers of the Washington Monthly, since we’ve been ranking schools that way for years in our annual college guide, which we proudly offer again in this issue. Our coverage begins on page 19.

But we’re just one magazine. It’s obviously a much bigger deal for the federal government to define the higher ed hierarchy in this way, so different from the conventional view, epitomized by the U.S. News & World Report, in which college status is based on reputation, money, and exclusivity. Like nutrition labeling or Energy Star ratings, the new federal college ratings, if done right, will give prospective students and their families better information with which to make their decisions. That, in turn, should put more market pressure on colleges and universities to deliver more value for the money.

There are a lot of colleges out there that won’t look so good on such a rating system. Some of them could be put out of business, especially if federal dollars are tied to the ratings, as the president would like to see Congress do (he can implement the rating system itself by executive action). Not surprisingly, the trade associations that represent colleges and universities in Washington are doing everything they can to block the administration. As Laura Colarusso and Jon Marcus report, their lobbyists are partnering with Republicans in Congress to frame the ratings as both an oppressive regulation and an unconstitutional White House power grab—the message du jour of the GOP going into the November elections.

Crafting a rating system that serves the interests of students and taxpayers but is also fair to colleges will certainly be tricky. As Ben Miller shows, just figuring out which colleges are the worst performers is tough given the wide variety of ways they can fail students. Moreover, universities are complicated human organizations and can be damaged in unintended ways by ill-considered federal rules. Zachary Schrag demonstrates this in his story about institutional review boards (IRBs), federally mandated entities meant to curb unethical behavior by university researchers that in practice have wound up also stifling perfectly benign scholarship. The answer is not to abandon the ethics regulation entirely but to craft a more balanced version, as Schrag shows other countries have successfully done.

Indeed, in addition to adding some new regulations on the higher education sector, we need to scale back others, specifically those that restrict the entry of innovative new players into the market. Kevin Carey profiles one such player, a company that runs “boot camps”—intense, short-duration courses meant to give college graduates the specific skills they need to land good-paying jobs. Currently, students can’t use federal grants and loans to attend boot camps. Remove that restriction and boot camps could give more-expensive master’s degree programs at traditional colleges a run for their money. The whole way we connect college grads to jobs in this country is due for an overhaul. Amy Binder makes that clear in her story of how elite schools like Harvard are complicit in a rigged recruiting game that funnels a disproportionate number of their graduates to Wall Street, where many wind up hating both their jobs and themselves.

The deal that higher education has traditionally enjoyed in America—billions in tax dollars, zero responsibility for results—is certainly a sweet one. But in an era when a college degree has never been more expensive or more important for upward mobility, it’s one we can no longer afford. Federal power must be exercised with care. But it must be exercised.

Paul Glastris

Paul Glastris is the editor in chief of the Washington Monthly.