Learning from the “College Rating System” Debate

Last fall, the U.S. Department of Education released an updated “College Scorecard,” an online system providing a voluminous amount of data on the nation’s colleges and universities. The scorecard is the outcome of a three-year effort, announced by President Obama to much fanfare during the 2012 campaign, to create a “college rating system” that would assess the nation’s higher education institutions on their cost of attendance, student graduation rates, and graduates’ post-college earnings. It would also determine the allocation of federal funding to those institutions. After three years of withering attack from college leaders across the nation, the administration backed off and announced last summer that, in addition to updating the scorecard, it would focus its efforts on methods to promote “innovation” within the higher education sector. Although the rating system has failed to take root (at least for now), the debate that it instigated over the appropriate methods for the federal government to regulate higher education was instructive about the challenges legislators face as they continue to discuss the (already two years late) reauthorization of the Higher Education Act. It is not surprising that higher education leaders are opposed to greater federal regulation. As chronicled in a major report released last summer by the Task Force on the Regulation of Higher Education, the sector also has valid complaints about the inappropriately burdensome nature of many current federal regulations. However, the dramatic increase in federal student support (some $160 billion in FY 15) over the past decade, combined with growing concerns about the productivity of the higher education sector, make it likely that demands for greater accountability from the industry about outcomes, and particularly student outcomes, will continue. So what is the way forward? Reformers of the system of higher education seek feasible and effective ways to use law and regulation to improve the access to and quality of higher education in America. They want to know how the Higher Education Act should be amended. They want the right approach. The debate over the Obama Administration’s college rating proposal probably reveals more than just that the right approach cannot lie with general performance-based ratings. It may be that the right approach is to take several approaches. To succeed in improving higher education demands that we start with first principles. Higher education is, after all, only one of many sectors the government regulates. Looking at the debate over higher education reform from the vantage point of the regulation in general, and in light of the main types of regulation, can help us to understand better how higher education could be more productively overseen. Such an analysis also suggests some potential compromises that could promote greater productivity from the higher education sector while at the same time reducing some of its regulatory burdens. In this series of essays, I identify a path forward that both Democrats and Republicans can, and are starting to, recognize. Success on this path will not depend on the implementation of an overarching system of college ratings, or any other single fix. Rather, it will call for wisely selecting and tailoring an appropriate mix of different regulatory tools