Education

A Nascent College Accountability System

Holding institutions of higher learning accountable for rising tuition and loan defaults.

Arnold Ahlert · Jan. 20, 2020

Quite likely, most Americans have never heard of Harvey Mudd College. Yet when the salary-comparison site PayScale analyzed alumni salary data of 3.5 million respondents representing more than 4,000 colleges and universities across the U.S. for its 2019-2020 College Salary Report, the undergraduate science and engineering institution in Claremont, California, topped the list. Its graduates earn $88,800 in their early careers, and $158,200 in their mid-careers. Making data like that easily available might influence thousands of students’ choices regarding which college to attend. The Trump administration has begun doing something about that — something with the potential to upend a contemptible status quo whereby thousands of students are drowning in college-loan debt with little or nothing to show for it.

“In November, the Department of Education released post graduate earnings and debt data broken down by college program — which will have a revolutionary impact on higher education,” columnist Andrew Gillen explains. “Students (and policymakers) can now get accurate information about how much recent graduates earned by college and degree (e.g., a Bachelor’s in Physics from Ohio State University).”

Unfortunately, the data set is limited. It includes only students receiving federal financial aid and, as of now, those students’ earnings only one year after they’ve graduated. But when one considers the reality that hundreds of billions of dollars from federal, state, and local governments are provided to institutions of higher learning on an annual basis — with no consideration for the actual outcomes produced by those institutions — one suspects the political pressure ultimately brought to bear in a nation besieged by skyrocketing tuition costs and $1.5 trillion of outstanding student-loan debt will be impossible to ignore.

The Trump administration is not the first one making the attempt to increase transparency. In 2014, President Barack Obama championed a government rating system aimed at holding the nation’s 7,000 colleges and universities accountable for the $150 billion in federal loans and grants they were receiving at the time.

Quite unsurprisingly, those who’ve benefited from this arrangement were appalled. “Applying a sledgehammer to the whole system isn’t going to work,” Robert G. Templin Jr., former president of Northern Virginia Community College, complained at the time. “They think their vision of higher education is the only one.”

Adam F. Falk, former president of Williams College in Massachusetts, agreed. “As with many things, the desire to solve a complicated problem in what feels like a simple way can capture people’s imagination,” but, he added, it is likely to be “oversimplified to the point that it actually misleads.” Charles L. Flynn Jr., president of the College of Mount Saint Vincent in the Bronx, insisted a rating system “cannot be done well and that the initiative was "uncharacteristically clueless.”

Ultimately, the Obama administration precipitated Gainful Employment regulations, whereby vocational programs that engendered too much student debt would no longer be eligible for federal financial aid. The Trump administration rescinded the regulations because they targeted for-profit programs while exempting most public and nonprofit programs.

Moreover, the Obama administration’s efforts to bypass Congress created unnecessary partisan rancor belied by the reality that a federal accountability system applied to all colleges is something both parties favor. In February 2019, Sen. Lamar Alexander, GOP chairman of the committee, proposed overhauling the Higher Education Act by streamlining federal student-aid applications, simplifying student-loan repayments, and holding colleges accountable for repayment rates on student loans. Two months later, Democrat Sen. Chris Murphy proposed four measures of accountability: graduation and loan-repayment rates, whether loan debt is too burdensome for graduates, and the release of data showing the proportion of low-income students who are admitted and graduate.

In a nation as polarized as this one, such bipartisanship is rare. And despite the aforementioned rule recision, Gillen believes Gainful Employment would make an excellent starting point for the Trump administration’s effort to precipitate the next level of accountability. “Adjusting the original Gainful Employment rules to account for differences in the student cohorts as well as differences in the earnings and debt measures, we can apply what I call Gainful Employment Equivalent (GEE), to explore what a similar accountability system might look like,” he states.

It is likely GEE would not be well received by those being held accountable, because it would reveal some highly damning data. As Gillen reveals, approximately one million graduates per year “received federal financial aid to attend a college program that does not pass a reasonable debt-to-income test.” The same test reveals that 69% of students attending law school — where the average student-loan debt for 2015-16 graduates was a whopping $145,500 — would also fail to receive an adequate bang for their buck.

The other part of the equation is just as critical. “For years we’ve asked students to make one of life’s most important decisions essentially blindfolded,” Gillen rightfully notes. “We’ve told them a college degree is the surest path to success but have given them little guidance on where to go to college or what major to choose once they get there.”

Again, such a rating system, whereby students wold be pointed toward statistically well-paying majors or the most lucrative parts of risky ones would be utterly anathema to a number of colleges not only replete with worthless majors, but those with ever-expanding bureaucracies invariably tied to some aspect of “social justice” or “diversity” — all of which drive up tuition costs.

“Not every college or program will survive,” Gillen warns. “But those that do will be stronger.”

Yet one more thing is critical to the mix: Colleges must be held accountable for some percentage of student-loan defaults. Those defaults are currently underwritten in total by taxpayers, and this contemptible dynamic allows colleges to raise their costs with impunity.

It also precipitates bone-headed plans like Elizabeth Warren’s assertion that she will implement student-loan forgiveness by executive fiat. Such a disastrous “solution” not only fails to incentivize colleges to rein in their costs, it engenders moral hazard on steroids, as in the idea that freely made personal commitments can be “justifiably” cast aside.

No doubt that resonates among some younger Americans, long-marinated in a cultivated sense of “grievance,” whereby some broken promises are perfectly acceptable. But such capriciousness is utterly catastrophic for any society other than one that embraces anarchy.

Maybe if we finally hold colleges truly accountable, some of those socialist/Marxist wannabes will get a clue.

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