Toward a New Approach to Regulating Higher Education

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A strengthened management-based regime could be combined with a lessening of unnecessary and unhelpful “command and control.”

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All along, the Obama Administration’s proposed performance-based system of funding for higher education had little chance of being adopted in the current political climate. Congress’ 2015 budget threw this point into sharp relief: it specifically prohibited the U.S. Department of Education from collecting the data necessary for the implementation of a performance rating system. Thus, although a performance-based framework is attractive because it would push colleges and universities to focus more on student outcomes, the debate over this system made clear the significant obstacles to its implementation.

The challenges that the Education Department has been unable to overcome are similar to those in other fields. The U.S. Environmental Protection Agency’s (EPA) experience implementing the Clean Air Act is instructive. Under the Clean Air Act, the regulator can articulate a relatively clear goal—the reduction of pollution—and a fairly clear way to measure progress toward that goal, namely emissions. Yet, the EPA’s air quality and emissions standards have been debated and litigated for over a decade, and to this day there is much disagreement over the proper way to set these standards. And as we saw recently with the Volkswagen emissions scandal, there also can be significant levels of cheating.

Even if higher education institutions, advocates, and regulators could agree on the right goals, defining them and measuring these standards pose large obstacles, as the Obama Administration has found. Pursuing a performance-based path toward regulating higher education would likely result in several years of debate over the standards, followed by decades of litigation once these standards would start to be applied.

Still, even with performance-based regulation being unlikely, the debate over the appropriate means to regulate higher education will continue as Congress considers the reauthorization of the Higher Education Act of 1965 (HEA). So what is the appropriate way to regulate higher education?

Although there is much disagreement over the answer to this question, most policymakers agree that meaningful reform requires changes to the type of management-based regulation of higher education institutions. In other sectors, the regulator is more deeply involved in framing the self-evaluation process, and in assessing whether institutions have met their self-established goals. A management-based regulatory scheme “with teeth” could create a climate of greater productivity and transparency in higher education.

For instance, an improved management-based approach would facilitate the achievement of certain widely agreed-upon aims. Policymakers, advocates, and higher education leaders agree that the nation’s higher education system should be affordable, provide access to a large segment of the population, help students complete their degrees, and support student achievement through quality programs that lead to employment. The difficulties have stemmed from balancing these competing and conflicting goals, defining how to meet them, and determining which, among many alternatives, are the best paths to secure the goals. This is where a management-based approach would be advantageous: it would acknowledge the diversity of educational institutions, while still pushing these institutions to make continuous improvement in the pursuit the goals.

Most policymakers have come to the conclusion that a management-based approach is the only workable one, but almost everyone agrees that there is room for improvement within the current accreditation structure. The current system could lead to reform in two ways: through the establishment of a more robust accreditation system that pushes institutions to be more strategic in meeting the above-stated goals, and through a revised regulatory system—either through accreditation or by other mechanisms—that promotes innovation by allowing institutions to experiment and that enables new higher education initiatives to gain access to federal funding.

Higher education leaders have mostly responded to such ideas by pushing back against “greater regulation” of the sector. They might be wise, though, to take a more active role in shaping the scope and tenor of regulation. Performance standards might not be the right approach, but a more robust, management-based regime with greater agreement on the aspects to be planned and evaluated might assist higher education institutions in fighting a more invasive type of regulation, as well as provide greater clarity on the goals these institutions should pursue.

For example, the reauthorized HEA could require each institution to develop a plan that states its own specific goals for access and outcomes. Institutions would then need to decide, and communicate, their goals for students of color and economically disadvantaged students. Further, institutions would need to set goals for retention and graduation, and explain the processes that they will implement to achieve these goals. Finally, institutions would set their own goals for career placement and success.

Many institutions already take such steps in the reaccreditation process, but a revised HEA could make doing so a requirement. It could also mandate that the institutions publish their goals in a form that is easy to understand, compile, and compare. The reauthorized HEA could establish a center within the Education Department that publishes a short and useful explanation of each institution’s plan and a yearly update of its progress.

Higher education leaders might also use their willingness to compromise on “accreditation with teeth” to leverage relief from some of the many onerous regulatory burdens under which they currently operate. Over the past few years, the federal government, through legislation, regulation, and Department of Education practice, has significantly increased oversight of the higher education sector. Federal regulators now require significant reporting on many aspects of higher education practice, particularly in the areas of financial compliance and student safety. In essence, in an effort to improve the performance of the sector, Congress and the Education Department have layered an inflexible, command and control regulatory structure on top of the flexible if weak existing management-based structure. This has created a system in which higher education institutions are less than fully accountable for their primary function—education—at the same time that they are highly regulated in many other areas of their operation.

Educational leaders frequently complain that the specific processes that the Department of Education mandates are burdensome, expensive, and not focused on the most important aspects of their institutions. These critiques are comprehensively described in a report issued this summer by the bipartisan Task Force on Federal Regulation of Higher Education. The report concludes that “many rules are unnecessarily voluminous and too often ambiguous, and … the cost of compliance has become unreasonable. Moreover, many regulations are unrelated to education, student safety, or stewardship of federal funds. For example, accreditors must certify that institutions are up-to-date with fire codes, an oversight responsibility that really belongs with local government. Other Education Department rules can be a barrier to college access and innovation in education.”

The report outlines numerous areas where federal regulation increases university costs without, according to the task force, increasing productivity. For instance, according to the task force, the Education Department has a 300- page book of guidelines for institutions about the Jeanne Clery Act, the law that requires higher education institutions to report incidents of on- and off-campus crime. This command and control regulation has detailed and even contradictory guidelines for what institutions must report, and which too often have the effect of inhibiting the communication of important information and promoting the wasteful use of resources.

The report calls attention to the financial responsibility standards that the Department of Education has implemented to ensure that institutions are financially viable, which often lump colleges with significant resources into the same category as those in financial peril. These standards, the Task Force argues, do not represent best accounting practices, and are both over-inclusive and under-inclusive in identifying schools that necessitate intervention. Further, the rules for determining financial aid eligibility impose onerous requirements on potential aid recipients and institutions alike; such requirements, the Task Force asserts, are disproportionate to the risks of inaccurately allocating financial aid.

In all, the report provides a critical assessment of the increasing federal regulatory reach, detailing the numerous ways in which higher education institutions spend millions of dollars that could be better used. A reauthorized HEA could streamline these procedures and provide clearer guidance to the Department of Education.

Moreover, a fully thought out management-based approach, with an emphasis on institutional financial security and student outcomes, would have the benefit of focusing colleges and universities on the most important priorities. At the same time, eliminating some of the many other regulations that are not directed at those two priorities would free up institutional resources that could be refocused on helping students achieve and progress.

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.