President Obama’s College Rating Proposal

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The college rating controversy reveals the challenges of a performance-based approach to regulating higher education.

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Critics charge that America’s main approach to regulating higher education—a management-based accreditation process—has failed to spur meaningful improvements in the nation’s colleges and universities. Could a performance-based approach to higher education regulation be the answer?

The recent fight over the Obama Administration’s proposed college rating system has made evident the challenges with moving to a performance-based approach. The performance-based rating system presented serious practical problems that the administration was simply unable to resolve. When the Obama Administration announced last year it was abandoning its rating system proposal, it essentially conceded that the higher education sector cannot overall be regulated using performance standards.

When he first announced his rating proposal in 2013, President Obama stated that his goal was to create greater transparency and efficiency in the sector. Higher education funding, he argued, should be focused on broadening access, increasing affordability, and improving educational quality. Specifically, he called for reforms to federal higher education financing that would reward colleges that offer low tuition, provide “value” (defined as programs that had high graduation rates), enable graduates to obtain good-paying jobs, and give access to low-income students.

“What we want to do is rate them on who’s offering the best value so students and taxpayers get a bigger bang for their buck,” the President argued in remarks at the State University of New York at Buffalo. “Colleges that keep their tuition down and are providing high-quality education are the ones that are going to see their taxpayer funding go up. It’s time to stop subsidizing schools that are not producing good results.”

The President’s proposal mirrored performance-based funding proposals that several states, including Tennessee, Ohio, and Indiana, have adopted to allocate a small percentage of funding to their public higher education institutions. The basic idea is that schools that meet established performance goals get greater funding than those that do not.

Although their responses to the President’s proposal differed in tone and substance, higher education institutions around the country were vocal and active critics of the proposal, and their critiques mirrored those of performance-based regulation in general. Higher education leaders argued that such a rating system would be impossible to create because higher education is too diverse and has too many goals. Critics asked: how can the “value” of education ever be meaningfully quantified?

“Private, independent college leaders do not believe it is possible to create a single metric that can successfully compare the broad array of American higher education institutions without creating serious unintended consequences,” argued David Warren, director of the National Association of Independent Colleges and Universities. Any rating system, he argued, would reflect policymakers’ choices more than those of individual students.

Although the Obama administration claimed that the proposal would distinguish among different types of schools, higher education leaders and their lobbyists asserted that such a proposal would further exacerbate the divide between the elite schools—where students from mostly wealthy backgrounds graduate at high rates and secure well-paying employment—from the many universities that provide open access and have lower graduation and employment outcomes.

“It’s not fair or reasonable really, to rate institutions on their performance without consideration of the nature of their student body,” argued Peter McPherson, president of the Association of Public and Land Grants Universities.

Higher education leaders also questioned the ability of the government to gather and manage accurate data on these complicated factors. “Several of the data points that the Department is likely to include in a rating system, such as retention and graduation rates, default rates and earning data—are flawed,” argued Molly Corbett Broad, President of the American Council on Education. “The Department of Education’s retention and graduate rates, for example, count as a dropout any student who transfers from one institution to another, regardless of whether they complete their education at another institution,” she continued.

Furthermore, according to critics, an exclusive focus on limited metrics, such as earning data, could result in colleges neglecting programs in low-paying occupations such as teaching and nursing.

During the summer of 2015, after more than two years of discussions with higher education institutions, educational advocates and congressional leaders, the administration pivoted away from the idea of a creating a rating system and then allocating federal funding based on performance according to the ratings. As an alternative, the administration is putting together a database with “new, easy-to-use tools that will provide students with more data than ever before to compare college costs and outcomes.”

Announcing this new plan, and signaling the administration’s retreat from a rating system, Education Deputy Undersecretary Jamienne Studley acknowledged that meaningfully evaluating colleges “through a rating system is an extremely complex and iterative process that appropriately takes time and thoughtfulness.”

The college rating saga has revealed the challenges to reforming the higher education system using performance-based regulation. Even if everyone agrees on general aspirations like accessibility, affordability, and quality, defining those goals concretely and then applying them uniformly to the highly heterogeneous world of higher education creates its own kind of problems.

This post is part of RegBlog’s six-part series, Improving Higher Education Regulation.

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.