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The federal government, in concert with the states and institutions, could do more to increase transparency and enhance market accountability in higher education.
More effectively reporting data that it already collects and collecting better data on cost, quality and value would provide a number of benefits.
Students could use the information to avoid investing in schools or programs that do not provide a positive return on investment and to discover options that they may have eliminated on the basis of incomplete or faulty information.
Researchers and policymakers could more readily judge where investments in federal aid are paying off and where reforms could improve efficiency and reduce waste. Private firms could use data to come up with rankings and ratings to reflect the unique preferences of different students.
Private lenders and funders could use labor-market outcome data to improve underwriting and extend credit on the basis of a student’s potential rather than the student’s past experience with credit products.
Perhaps the most visible attempt to rewrite the federal role was the Obama administration’s failed attempt to build a Postsecondary Institutional Rating System (PIRS). In 2013, the White House decided that the nation needed a rating system that would evaluate the approximately 7,000 post-secondary institutions that participate in federal student-aid programs.
To its detriment, PIRS was straddling two different tasks from the very beginning. On the one hand, PIRS was going to produce data and a data tool that could be used by consumers to evaluate the quality, accessibility, and affordability of post-secondary institutions, allowing them to make better-informed choices. But, as a second goal, and far too ambitiously, the White House sought to link performance on PIRS with eligibility for continued Title IV funding — in other words, the institution’s eligibility to collect financial aid. If a school did poorly in PIRS measures such as loan defaults, it would no longer be able to enroll students on any kind of financial aid.
The tie to Title IV funding was inevitably abandoned and the College Scorecard, when released, was an adequate, but not great, consumer information site.
The success of students and institutions should be measured by how much students earn after they leave school and how much they learned while attending. There is some agreement on assessing labor-market outcomes. In contrast, there is little to no agreement on how to measure what many would call the most basic product of higher education: student learning.
The absence of data on student learning and the relative paucity of good data on student earnings highlight the limits of federal data systems. At the same time, an established infrastructure for other measures of student success exists with clearer means for improvement.
Despite being the object of constant tinkering, federal data collection and reporting still fail to answer basic questions regarding the purpose of higher education — and regarding the return on the huge investments made by students and taxpayers.
The first challenge is measuring the price of an education. Though the sticker price of tuition tends to garner the most media coverage, only a fraction of students actually pay that price. Most pay less thanks to grants, scholarships, and tuition discounts. Institutions use their access to fine- grained financial information to price discriminate, or tailor tuition prices to individual students’ ability and willingness to pay. As such, sticker prices (which are readily available) might be misleading vis-à-vis what any given student will actually be charged. Unfortunately, most students don’t know what they’ll actually have to pay until after they’ve applied for admission and financial aid, been accepted, and received a financial-aid offer letter. In other words, they don’t know their real out-of-pocket costs until long after they’ve narrowed their choices to a handful of institutions.
Ideally, policymakers would replace current federal data-collection efforts with a federal data system capturing student-level information. This is the single most important change and the one that is least likely to happen.
The most aggressive actions to spread consumer-oriented information may no longer fall exclusively under the jurisdiction of the Education Department. Most notably, the Consumer Financial Protection Bureau is taking aim at many practices in higher education, including the absence of data.
The way past the deadlock over data seems to be twofold. First, more states need to be brought into the national policy discussion; states are already leading the way in developing detailed student-level data systems that merge multiple existing data systems to provide information to students about the costs and rewards of their college choices. Whether working individually or in consortia, states should be supported and encouraged in these efforts. And innovative states, such as Tennessee and Texas, should have the support of the next administration as they try to crack open the bottleneck on wage data.
Second the concerns for privacy and data security need to be addressed head-on. All too often these concerns are used by entrenched interests in higher education to protect themselves from inconvenient truths about costs, debt and rewards. So long as the federal government suffers humiliating data breaches, opponents of better data systems built on the bedrock of student-level data will win, and students and taxpayers will be stuck with unmanageable debt and schools that don’t get their students across the finish line.
The commissioner of the National Center for Education Statistics from 2005-2008, Mark S. Schneider is vice president and an Institute Fellow at the American Institutes for Research. This Op Ed is a condensed version of remarks that first appeared in What to do: Policy Recommendations for 2017.