This month the U.S. House of Representatives voted to commit billions of new dollars to student financial aid and impose a spate of new regulations on colleges and universities, all in the name of holding down the ever-growing cost of higher education. Unfortunately, the House also deep-sixed the only new program coming out of Washington that might actually restrain costs on a long-term basis: the secretary of education's recent push to focus institutional accreditation on student learning.
That's because the college-cost crisis is fundamentally not about a lack of money — it's about a lack of information. And the Washington higher-education lobby seems bound and determined to keep certain kinds of higher-education information firmly under wraps.
In passing a new version of the federal Higher Education Act, the House expanded eligibility for Pell Grants, tightened federal regulation of private student loans, increased transparency in textbook pricing, and required colleges to report how much of their endowments they spend on student financial aid. That came on the heels of the multibillion-dollar expansion of student aid and the reduction in student-loan interest rates passed in 2006 and 2007. The House also required that institutions with the biggest tuition increases be publicly identified and forced to create "quality-efficiency task forces" charged with finding out why the college made the decision it just made. Such an unprecedented federal intrusion into college pricing and institutional management reflects a growing frustration among lawmakers across the political spectrum with the seemingly endless cost increases in higher education.
But none of those provisions will do much to lower prices for students in the long run. While increased Pell Grants and reduced interest rates will undoubtedly help many needy students afford college — an extremely worthwhile goal — they also amount to throwing more public dollars into an industry with a bottomless appetite for funds.
The "shaming" function of identifying price increasers will be both perverse and ineffective, essentially rewarding institutions that increased tuition before the law went into effect while unfairly tarring institutions that raise tuition for legitimate reasons. With a college degree now an unquestioned requirement for high-paying jobs, and few ways for new competitors to enter the traditional four-year market, there seems to be no practical limit to how much colleges can boost prices. In trying to fix the problem by focusing on simple prices and available financial-aid resources, Congress is fighting a battle with rising costs that it can never win.
The missing element here is value: price as it relates to quality. Because there are no public, easily compared measures of how well individual institutions educate their students, the denominator of the value equation is missing. As a result, price and quality in higher education are assumed to be the same. Institutions looking to climb the prestige ladder have a clear, time-tested formula to follow: Raise as much money as possible from every source available, and spend it on … pretty much anything.
The fact that increased prices go hand in hand with more-selective admissions is all the better, since that leads to increased status, wealthier alumni, and higher rankings in U.S. News & World Report. In a normal market, businesses can cut prices to attract more customers. In the higher-education market, colleges have found that cutting tuition reduces demand, because the lower price signals lower prestige — and thus value — to prospective students. Ten percent of the U.S. News rankings are based on spending per student, which means that a college that became more efficient and passed part of the savings on to its customers in the form of reduced prices would see its status decline. Unsurprisingly, that hardly ever happens. If, by contrast, higher-education leaders had access to information that allowed them to lower or restrain prices while independently confirming their quality to the market, they would have much stronger incentives to disengage from the price/selectivity arms race and focus on value instead.
The only long-term solution to the cost crisis in higher education, therefore, is to sever the iron bond between price and perceived quality. That's one of the reasons Secretary of Education Margaret Spellings has spent the last two years pushing for more transparency in higher-education outcomes and a greater focus on teaching and learning — first through the recommendations of the Commission on the Future of Higher Education, and then through an effort to get accreditors to enforce some kind of objective standard of academic quality. That is wholly reasonable. Taxpayers provide tens of billions of dollars to colleges and universities through financial aid and tax preferences. It is not too much to ask that their voluntary system of quality assurance include some kind of credible process for ensuring that those dollars are well spent — or at least not very badly spent. Currently, the odds that a college or university will lose its accreditation for purely academic reasons are even lower than the odds that it will reduce prices over the long term, i.e., virtually nil.
But the accreditors and the powerful Washington higher-education lobby have pushed back with a vengeance, supporting legislative language — now enshrined in the version of the Higher Education Act that will soon be the basis of final negotiations between the House and the Senate — that would prohibit the secretary from trying to ensure that higher education's principal process for quality control actually focus in a meaningful, objective way on student learning. Elsewhere in the bill, there is language — also backed by influential members of the higher-education lobby — that would prevent the department from modernizing its system of collecting institutional data to include privacy-protected student information.
The pattern is clear: Every time the Department of Education tries to act on its obligation to provide the public with information that might raise uncomfortable questions about institutional quality, higher-education lobbyists push to make it illegal.
To be sure, some higher-education organizations are making good-faith attempts to embrace the ideals of transparency and accountability, like the voluntary system of accountability recently sponsored by the National Association of State Universities and Land-Grant Colleges and the American Association of State Colleges and Universities. Others, however, have drawn a line in the sand at precisely the point that matters most when it comes to restraining costs: public, comparable measures of quality. Unfortunately, those organizations appear to be carrying the day on Capitol Hill.
Nobody wants a No Child Left Behind Act for higher education. Any process of reporting information must reflect the rich diversity and best ideals of higher learning. But in the end, the only way to confront the rising costs that are increasingly putting college out of reach for low-income and middle-income families is to create a higher-education market where price and quality aren't seen as one and the same.
Escalating prices aren't just bad for students; they erode public support for colleges and universities while provoking bad public policies like the "efficiency task forces." If the higher-education lobby gets its way on accreditation and public information during this reauthorization of the Higher Education Act, it's a sure bet that the next one will feature more of the same: reduced access for students and diminishing support for higher education. The nation needs more, not less, of both.
Kevin Carey is the research and policy manager at Education Sector, an independent think tank in Washington.
http://chronicle.com Section: Commentary Volume 54, Issue 25, Page A38
