Thanks to Arnold Kling, I had another opportunity to talk to Kevin Carey today about higher education. I’ve written about Carey’s work in the past, and in particular his proposed framework for restraining cost growth and improving the quality of instruction at the same time. This time, Carey noted a fascinating state-federal dynamic in higher education spending that struck me as particularly interesting, and in some respects reminiscent of the Medicaid dynamic. Basically, state governments have been withdrawing support for public colleges and universities (in part because of the fiscal pressures created by the expansion of Medicaid, among other things); to compensate, state governments have been more inclined to allow public colleges and universities to raise tuition. This has led to a concomitant increase in federal spending on higher education subsidies (e.g., the increase in Pell Grant spending from $15 billion to $40 billion, which partly reflects the post-crisis deterioration of household incomes but also tuition increases). As a result, there has been little pressure on public colleges and universities to actually contain costs. That the incentives here are perverse should go without saying.
And so Carey believes that the federal government should exert pressure by, as we’ve discussed, offering an alternative route to accreditation for low-cost, high-quality instructional providers, thus increasing supply, and mandating that all colleges and universities that accept federal aid should honor these credits. This is what we might call a “Blairite” solution, in which the power of the public sector is leveraged to drive private sector innovation in service to social goals. The controversy surrounding the rise of for-profit higher education flows in part from the fact that the federal government does not exert meaningful restraints on any higher education institutions, including traditional public and private non-profits. If colleges and universities, whether public or private, had to take on some liability for the students they admit and encourage to take on loan debt, as Glenn Reynolds has proposed, we’d have a very different higher education industry, in which so-called “diploma mills” would have to be far more careful about the promises they make.
In a similar vein, we could — and in my view should — demand that all colleges and universities that accept federal aid release data about outcomes. I’ve just started reading Academically Adrift, which Carey recommended to me, and the book is very revealing. Scott Jaschik of Inside Higher Ed has an article on the book:
The book cites data from student surveys and transcript analysis to show that many college students have minimal classwork expectations — and then it tracks the academic gains (or stagnation) of 2,300 students of traditional college age enrolled at a range of four-year colleges and universities. The students took the Collegiate Learning Assessment (which is designed to measure gains in critical thinking, analytic reasoning and other “higher level” skills taught at college) at various points before and during their college educations, and the results are not encouraging:
*45 percent of students “did not demonstrate any significant improvement in learning” during the first two years of college.
*36 percent of students “did not demonstrate any significant improvement in learning” over four years of college.
*Those students who do show improvements tend to show only modest improvements. Students improved on average only 0.18 standard deviations over the first two years of college and 0.47 over four years. What this means is that a student who entered college in the 50th percentile of students in his or her cohort would move up to the 68th percentile four years later — but that’s the 68th percentile of a new group of freshmen who haven’t experienced any college learning.
At the very least, colleges and universities should be required to release data on whether or not students demonstrate a significant improvement in learning between enrollment and graduation — and if they don’t, they should be barred from receiving federal student loan money.
I am hard-pressed to think of a reasonable counter-argument. One obvious rejoinder is that the federal government shouldn’t interfere with colleges and universities. But of course that is a case for rolling back all federal student loan programs. I’m happy to have that conversation. But my suspicion is that most people who would favor rolling back all federal student loan programs would see the appeal of mandating transparency if we assume that eliminating federal funding in this space is politically impossible. But the idea that taxpayers should provide funding without asking for transparency in return strikes me as a profoundly irrational middle ground.