What the Feds Can (and Can’t) Do in Higher Ed Reform

Career College Central Summary:

  • This article is co-authored by my colleague Kevin James, a research fellow with the Center on Higher Education Reform at the American Enterprise Institute.

    • There’s been a lot of talk recently about accountability in higher education. We added our voices to the mix earlier this week with a new AEI paper entitled “Untapped Potential: Making the Higher Education Market Work for Students and Taxpayers."
    • Many of the proposals in the paper will seem familiar to those who have been following this debate. Some of them – such as “skin in the game” and empowering students and parents with better data on costs and outcomes – have been percolating for quite a long time. Other ideas, such as bringing in a new set of authorizers to serve as alternatives to the accreditation agencies and expanding private financing options like Income Share Agreements, are newer to the discussion.
    • With the exception of the hyper-partisan debate surrounding for-profit colleges, discussions of how to reform higher education policy have tended to divide those who, outside of wanting more public money, favor the status quo; those who want to do away with the federal role entirely; and a third group that wants to leverage federal funds and power in some way to improve quality and lower costs.
    • Proposals from this third group tend to be directionally similar—re-centering federal policies so that they reward outcomes rather than enrollments and create more space for innovation.
    • Like the K-12 reform movement in the early 2000s, the emerging one in higher education is currently a “big tent,” an amorphous group including policymakers and thinkers on left and right. Naturally, observers have tended to focus primarily on the areas of broad agreement within this group.
    • Our goal in Untapped Potential was to do just that by looking critically at the institutions – government, non-governmental organizations, and the market – that play a role in ensuring students receive a quality education at a good price. Unfortunately, all seem to be failing to perform as originally expected, a view shared by most reformers.
    • But rather than simply substituting federal power for these failures – as many policymakers and analysts on the left have proposed – we argue that reformers must first ask what tasks the federal government is equipped to do well and which are better left to other institutions.
    • For example, we argue that the federal government is best able to accomplish “bright line” policies that can be designed and implemented transparently, fairly, and effectively.
    • In that vein, we argue that Cohort Default Rates (CDR) and the “90/10” regulation – both of which are highly imperfect measures of quality – should be replaced with a modernized set of accountability mechanisms that apply to all institutions: a loan performance floor to weed out the worst performing schools and a “skin in the game” policy to encourage mediocre ones to improve.

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