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I used to be a securities lawyer. After the financial crash of 1929, the U.S. government implemented the Securities Act of 1933, and then another one in 1934. The goal was to increase transparency so everyday Americans investing in the stock market would have the information needed to make well-informed decisions. Investment analysts prepared reports summarizing the key findings from public filings to make them easier for market participants to understand and interpret.
Nonprofit institutions similarly must file a Form 990, and the U.S. Department of Education has mandated additional reporting under the College Scorecard and other consumer-protection initiatives.
“The best way to attack the ever-rising cost of college is to drive real transparency,” Secretary of Education Betsy DeVos said in a statement last month. “Students need actionable data on costs, debt and return on investment so they can make the best decisions for themselves,” she said.
With that in mind, we at Edmit, the college-finance advisory firm for families that I co-founded in 2017, sought to release a modeling tool we created by using publicly available data to project how many years private colleges have until they could run out of money and close. Colleges are facing headwinds, and recent college closures such as that of Mount Ida in Massachusetts have left students stranded. We planned to share the projections and underlying qualitative and quantitative data, taken from federal sources, on Github, a platform for open-source projects.
Inside Higher Ed was prepared to publish a news article on the projections. After legal threats from Utica College, we decided that, as a small company, we couldn’t afford the risk. Utica received a “D” financial grade from Forbes in 2019, up from a “D -” in 2017. (Forbes did not compile such a list in 2018.)
Separately, the National Association of Independent Colleges and Universities expressed a concern about our predictive model. “To look 10 years down the road in higher education is dangerous (what will happen with HEA, for example?),” the association told Inside Higher Ed. Often cited as a commonly used statistical technique, predictive models inherently rely on past data points to infer what might happen in the future. What is the alternative — no future assessment at all?
When analysts issue ratings on public companies, we simply do what they recommend if we agree. Blockbuster LLC didn’t go out of business because of analyst ratings. It went out of business because it didn’t adapt to a changing world. Similarly, we sought to analyze the financial health of private, nonprofit colleges to inform buyers — students and parents — of their services. And yet there have been cries that this will be their death knell.
Why are we protecting failing institutions and not the very students who will be the ones that pay the price — literally — for their college closures?
College closures affect a lot of people — students, alumni, faculty and administrators, taxpayers and the broader community — but there’s little information available on which colleges might close in the next few years. In the wake of Mount Ida College’s closure, students had to scramble to find alternative institutions, and some were unable to transfer their credits or enroll in similar degree programs. A judge ruled against former students who sued the school.
I recall being upset when I realized that I had $100 in Blockbuster gift cards that had no value after Blockbuster closed. Imagine having spent $100,000 or more on a degree — or, worse still, being a few credits short of a degree — from an institution that then goes defunct.
As a former university vice president, I want colleges to succeed. But, more importantly, I want students to succeed. Students and families are right to question whether the colleges and their associations fighting the release of publicly available information have that same priority.
This story about failing colleges and transparency was produced by The Hechinger Report, a nonprofit, independent news organization focused on inequality and innovation in education. Sign up here for our newsletter.
Nick Ducoff, co-author of Better Off After College: A Guide To Paying for College With More Aid and Less Debt (2019), is co-founder and CEO of Edmit.