Management-Based Regulation of Higher Education

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Regulation of higher education has long been “management-based”—and under attack for being ineffectual.

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More than 7,000 institutions of higher education exist in the United States today. The sector is richly diverse, with everything from large public research institutions to small religious colleges to for-profit institutions located fully on the web, and much in between. The structures of higher education vary widely, as do the purposes of the institutions.

Recognizing this diversity, government has historically taken a management-based approach to the regulation of higher education, unlike numerous other fields where command and control regulation has predominated. Although states have sometimes been more prescriptive of the methods and processes by which institutions (particularly public higher education institutions) must operate, in general higher education institutions have been given the flexibility to set their own goals and to determine the methods by which they will achieve them.

The Higher Education Act of 1965 (HEA), the law that created the current federal system of higher education finance, does not prescribe how institutions should teach, research, or provide service to the community. However, the HEA states that an institution must be “accredited” for its students to be eligible for Pell Grants and student loans under federal programs.

Accreditation is a private system under which regional or national private entities work with individual higher education institutions to review and critique their operations. The higher education institution provides a “self-assessment” that the accreditor then uses as a framework for examining the institution’s successes and challenges.

Accreditation has been around for more than a century. Before World War II, accreditation was a fully private initiative that provided a process for institutions to assess themselves, and it also served as a basis upon which institutions would allow students to transfer from one to another. Since the 1950s, accreditation has taken on a second, somewhat conflicting, responsibility of assuring the government of institutional quality control. Private accreditors help the federal government by certifying that institutions are worthy of participation in higher education financial programs.

Under the current accreditation system, seven regional and seven national accreditors work with institutions to assess their programs. Numerous “program accreditors” also certify specific academic programs. For example, the American Bar Association accredits schools of law.

The initial accreditation process for a new institution is especially detailed—some would argue overly burdensome—and can take between five and ten years to complete. After initial accreditation, for most institutions, re-accreditation happens every ten years, providing an opportunity for them to update their goals and methods and to work with a third party to self-evaluate. Supporters argue that the flexibility of the accreditation system allows it to be responsive to the diversity of higher education—the numerous different academic programs at different kinds of institutions that serve different kinds of students. A “one-size fits all” approach to regulation, they argue, would be destined to fail.

With some meaningful exceptions discussed below, the regulation of higher education is flexible. Unlike with what sometimes happens with management-based regulation in other sectors, institutions are not required to submit their plan to the government regulator, but only to the third party accreditor. They are also not required to implement their plans, and there are no penalties if, for example, at reaccreditation the institution has not implemented the plans it established a decade before. However, if an accreditor finds that the organization has not met the basic requirements of financial stability and academic rigor (this happens rarely), the institution is no longer eligible to participate in federal financial aid programs. For almost every institution, removal of an accreditation would be a death knell, so they work hard to ensure that this does not happen.

This “hands-off” approach has brought increasing complaints over the years. Critics argue that the accreditation system has few teeth—that almost every institution is re-approved, whether they are doing well or poorly. Further, critics assert that the system provides no ability to assess levels of institutional success. The reaccreditation answer is a binary “yes or no,” which prevents comparison of institutions. As a result, it is difficult for students (and regulators) to determine which institutions provide a quality education and which ones should be avoided. The accreditation system, critics argue, does not push institutions to improve. Since an institution meeting minimum requirements gets the same access to funds as a high-performing one, there are not enough incentives to improve educational outcomes.

To enhance the strength of the regulatory system, Congress amended the HEA in 1992 to require the U.S. Department of Education to approve accreditors. The Education Department must certify that each accrediting agency has the capacity to assess higher education institutions. The amended HEA also gave more direction to accreditors, requiring them to certify that institutions meet “minimum standards” in ten areas, including student achievement and compliance with Title IV. Since the adoption of these requirements, Education Department oversight of accreditors has increased, but many still argue that the system has had little substantive impact and that the regulations have pushed accreditors to become “box checkers,” certifying that institutions meet minimum standards in their operations. The system, they argue, does little to help institutions improve student academic outcomes.

Over the past decade, policy makers have increasingly questioned the value of accreditation in the federal financial aid system. A 2006 report by a commission appointed by then Secretary of Education Margaret Spellings argued that accreditors needed to push institutions to focus more on student academic outcomes and that the system should be more transparent and accountable to public concerns.

“Accreditation is the primary barrier to innovation in American higher education,” argued Charles Miller, who chaired the commission. While she was the Education Secretary, Spellings tried to change department regulations to require accreditors to measure student learning and other outcomes, but higher education institutions convinced Congress to prohibit the department from adding these requirements. More recently, former Education Secretary Arne Duncan called accrediting agencies “the watchdogs that don’t bark,” and Senator Marco Rubio (R-FL) has called the system a “cartel.”

Critics argue that accreditation serves as a barrier to entry for innovative new educational approaches. For example, federal regulations require that student aid be allocated based on the number of “academic credits” being taken by the student. This system calculates the total number of credits received using the number of hours the student is expected to spend in class. This “seat time” approach does not measure actual student learning, many argue.

New approaches, such as “competency-based” education, would determine student progress based not on the number of hours in class but on the achievement of certain skills. But because they do not fit well into existing federal financial aid regulatory requirements, competency-based approaches have struggled to achieve accreditation and are therefore have been less able to compete for students desirous of financial support.

Higher education today is under attack from people across the political spectrum. American colleges and universities are, according to critics, too expensive, not focused on student success, not helping students progress quickly to graduation, and not preparing students for success in the workplace. Given the significant increase in federal funding and the even greater increase in family contributions to higher education over the past decade, and with overall student debt at $1.2 trillion, it is not surprising that there are increasing demands for greater or different regulation of the sector. But figuring out how to reform will not be easy.

Wendell Pritchett

Wendell Pritchett is the Presidential Professor of Law and Education at the University of Pennsylvania Law School. From 2014 to 2015, he served as Interim Dean.

This essay is part of a six-part series, entitled Improving Higher Education Regulation.