Empower students with information about what their education will produce

The White House made headlines on higher education last week with an executive order aimed at bolstering free speech on college campuses. The order would tie federal dollars to maintaining the First Amendment on campus. Despite President Trump’s charged-up rhetoric, it doesn’t appear this effort will have any teeth. In fact, the real news in this executive order lies beneath the headline.

The administration also issued a promising directive aimed at improving transparency in the higher education market, calling for the Department of Education and the Treasury Department to begin collecting more detailed information on student employment outcomes after college. Close observers will recall that the Department of Education started publishing student employment outcomes on the College Scorecard just over four years ago. But critics, myself included, have complained that outcomes data need to be more granular; it should report outcomes by program of study, in addition to the average outcome across the whole institution. This executive order does just that.

{mosads}As one might imagine, there is tremendous variation in student outcomes across programs of study, which makes choosing a college based on an average of all programs at that institution a relatively unproductive exercise. Business and STEM field majors pay off with high salaries and rates of employment, while humanities tends to offer lower returns. But there is no way to compare specific programs across institutions, which would help potential students see which colleges offer the greatest value for their field of interest.

Publishing this more granular data will allow students to shop for colleges and decide how much to borrow by comparing their student loans with how much they can expect to make after graduation. Empowering students with information about what they are purchasing will allow them to police the market for higher education: their spending will help keep prices in line with value. Institutions will have to answer for programs that offer consistently poor outcomes, by reducing the cost to students.

This executive order also is a move that pushes back on the steps taken during the Obama administration to hold for-profit institutions to a higher standard. The Gainful Employment regulations, which were put in place at the very end of the Obama administration, require the publication of earnings and debt outcomes for explicitly career-oriented programs that participate in the federal student aid program, which are primarily housed at for-profit institutions. Programs that failed to meet these standards lost their eligibility for federal student aid. In essence, this created a higher standard for the for-profit higher education providers, which specialized in teaching job-specific skills.

Secretary of Education Betsy DeVos and the Trump administration have come under fire for failing to enforce the Gainful Employment regulations and planning to rescind them. But as long as it is in pursuit of greater transparency and an accountability overhaul, rescinding these regulations is the right move. Holding all institutions accountable for the outcomes they generate for students is the right approach, regardless of their tax status.

For-profit institutions have tended to produce worse outcomes for students. They charge high prices and often leave students with weak earnings prospects, leading to high levels of student loan default. But that is no reason to turn a blind eye to the programs of study on the non-profit side that have continued to lead students down a path toward financial instability.

If this executive order is the first step in a movement toward a universal system of accountability based on student financial outcomes, it should enjoy bipartisan support. But provision of information is only the first step. The federal government spends over $60 billion on grants and tax subsidies for higher education every year (not to mention the exorbitant spending on loan programs), which means the government must play a role in policing this market.

Moving forward, it should take steps toward replacing the current system of accreditation, which operates as a gatekeeper for access to federal student aid. Instead, we should move towards an outcomes-based accountability regime that prevents programs of study that are failing to produce results from siphoning off more taxpayer dollars and setting cohort after cohort of new students up for failure.  

Most students in this country attend college with the sole aim of enhancing their labor market opportunities. It’s time that federal oversight of higher education comes in line with these values and stops protecting institutions who defend bad student outcomes with the flimsy notion that they are creating unmeasurable social value.

Beth Akers is a senior fellow at the Manhattan Institute and the coauthor of “Game of Loans: The Rhetoric and Reality of Student Debt.”