Alternative Accreditation: One Really Good Idea in President Obama’s SOTU 2013

by Reihan Salam

Kevin Carey of the New America Foundation has good reason to be enthusiastic. In January of last year, he outlined a higher education affordability agenda that the Obama administration ought to pursue, focusing on the potential value of a “College Scorecard” in disciplining ineffective non-profit public institutions as well as for-profit private institutions:

In the policy documents that accompanied Obama’s State of the Union, and in the more detailed plans released on Friday morning, the administration used an additional word: value. Value is not price—it’s price in relation to quality. What kind of colleges would run afoul of regulations that consider both price and value?

Obama was a polite enough guest not to say so, but a number of colleges and universities in Michigan itself have results that would not look good on his new “College Scorecard” and might jeopardize their federal funds. For example, of the roughly 6,000 African-American undergraduates who attend Wayne State University in Detroit every year—nearly a third of the total student body—less than ten percent can be expected to graduate within six years. For-profit colleges with those kinds of numbers have been raked over the coals in Congress and the media, and rightfully so: What kind of value to students does a university with such results really provide?

And for some time now, he has advocated for alternative accreditation systems might transform higher education for the better:

Congress and the Obama administration should create a new policy framework under which organizations can become officially recognized providers of higher education. Note, I do not say “officially recognized colleges or universities.” That’s because one of the things that makes college so expensive is that colleges (and the college experience these institutions provide) are expensive and currently people can only receive government-subsidized higher education services from colleges. Under the new system, any provider could receive payment via Pell grants, federal loans, or other current and imagined federal aid systems if they agree to a few baseline conditions.

The conditions include:

(1) “They would be free to offer courses for less than the maximum allowable amount per credit, but not more.”

(2) “They would be required to provide public information about how much their students learn, and have their access to federal aid rescinded if students are not learning enough.”

On the plus side, these providers would not have to go through regional accreditation bodies, which are essentially cartels of incumbent higher education providers, and existing colleges and universities that want to continue receiving federal financial aid will have to accept credits in transfer.

Some will object to price regulation, but of course specialized instructional providers can charge anything they’d like — they just won’t be eligible for federal financial aid if they charge more than the maximum allowable amount per credit. Others will object to the fact that existing colleges and universities will be compelled to accept credits from these new providers in transfer. Yet existing colleges and universities are free to embrace the Hillsdale College model and refuse federal financial aid.

To understand why Carey’s model might prove beneficial, consider the iOS marketplace. Apple recognizes that while iOS represents a powerful platform, it can’t match the creativity of the vast number of software developers who work outside of its walls in developing specialized applications. And so it allows other software developers to develop applications independently, which it then tests to see if they’re an appropriate fit for the iOS ecosystem. Because iOS has an enormous customer base, developers are willing to accept Apple’s various restrictions in exchange for access. The result is a better experience for iOS users and a faster app innovation cycle. Specialized instructional providers can be seen in much the same way. One provider might specialize in teaching entry-level calculus, and become extremely good at it — much better than a big, diversified company that does lots of things pretty well, but that might do one narrow thing less well than a super-specialized niche player.

As Carey explains in a new blog post, while the president didn’t say much about accreditation in his State of the Union address last night, the Obama White House did talk about it in its factsheet:

Last year, similar language tying federal aid to “value” was explicitly limited to a group of relatively minor aid programs. The Pell grant and loan programs that make up $140 billion in annual aid were excluded. No such restrictions appear here (although the President did refer to only “certain types” of aid in the speech itself.) But the real kicker is at the end: a new, alternative system of accreditation that would provide pathways for higher education models and colleges to receive federal student aid based on performance and results. [Emphasis added]

Carey goes on to discuss how this alternative accreditation channel might be constructed, e.g.:

Pay for student success, not enrollment. Right now colleges can suck up most or all of a student’s grant aid even if students drop out and don’t learn anything. Under the new system, higher education providers would only get paid if students succeed. This could also be used to finance Prior Learning Assessment of what students already know, which is currently ineligible for federal aid. 

This idea reminds me of so-called social impact or pay-for-success bonds, in which organizations contract with the public sector to provide a service and are only paid if the organization achieves some predetermined benchmark of success. The key is to find the right metrics beforehand, which is obviously challenging, but the incentives are much better than they are under our current approach to higher education financing, in which institutions are rewarded for enrolling students who take years to finish, all the while accumulating substantial debt burdens.

Moreover, Carey recognizes that because this accreditation challenge will represent an enormous opportunity for providers, the federal government has the right to prioritize which institutions are allowed to access the “iOS” marketplace:

National educational and workforce priorities. We don’t have to subsidize everything anyone happens to want to teach or happens to want to learn (another change from the existing system, where this is more or less the case). We can make choices about what’s strategic, needed, and important.

Because this is a very new approach, it will inevitably involve hiccups. Moreover, it will be bitterly opposed by many left-leaning constituencies, from employees of incumbent higher education institutions to teachers unions, which might recognize that this concept also has the potential to transform K-12 — indeed, Carey notes that Randi Weingarten has already attacked the idea.

The hostility to this proposal from the left creates an obvious opportunity for the center-right. The Obama administration hasn’t demonstrated much willingness to really fight left-leaning constituencies, and so it remains to be seen whether they will really pursue this agenda. Conservatives have good reason to spur them on.