Obama's College Rating System: Where Is It?

Obama's College Rating System: Where Is It?

President Obama announced a college-rating system in late 2013. Eighteen months in, there's no sign that the system is anywhere near completion. At this point, the best idea would be to scrap it and try a more promising approach.

The ratings are meant to help prospective students and their parents identify good colleges -- a Consumer Reports for higher education run by the federal government. The system would rate each institution using a formula that takes into account such factors as affordability, access for low-income students, and graduation rates. The administration hopes that Congress will eventually agree to link each college's eligibility for federal-aid dollars to these ratings.

But progress has been slow. A leading higher-education group described the most recent public draft, released in December, as "so incomplete, tentative and amorphous that it is impossible to offer the type of critique that this undertaking would otherwise require." The sentiment is widely shared, and the administration's goal of having the first round of ratings available by the upcoming school year -- after several previous missed deadlines -- seems increasingly dubious.

The administration's basic goals -- helping students and parents find good schools and holding schools accountable for performance -- are not bad. So, why the delay?

Accountability always generates a certain amount of opposition, particularly from those held accountable. But the opposition this time has been far broader than the schools themselves. More importantly, much of it is justified.

Although rating colleges may seem like a straightforward task, there are many reasons why the federal government is not equipped to do it well and will likely create as many problems as it solves. These include:

1. Students and parents aren't likely to pay attention to government ratings.

Much of the information that would go into a rating system is already available through the government's College Scorecard, an earlier Obama initiative focused on the same goal of better informing students and parents. While this effort is worthwhile, research suggests students and parents use private sources of information -- like comparison tools available through the College Board -- far more than government websites. Therefore, it's not clear that adding ratings to the Scorecard will do much to change student behavior.

2. The process is laden with value judgments.

It's one thing to make data about schools -- such as tuition and fees, graduation rates, loan-default rates, and the average earnings of previous graduates -- available to the public. It's another to compress all of those things into a single rating using a federally determined formula. Each student is going to weigh these factors differently, along with many other characteristics not listed. Therefore, a government rating process will likely devolve into a highly politicized fight over which higher-education characteristics the government should emphasize.

3. The data are flawed.

A rating is nothing without good data behind it. Yet very little high-quality data exists about the performance of higher-education institutions. Even basic measures like federal graduation rates exclude many students who are difficult to keep up with, such as part-time and transfer students. This renders the ratings severely biased against many schools. Without a strong foundation of data, it's hard to see how a ratings system could maintain a high level of trust amongst policymakers, the public, and affected institutions.

There are far better ways for the administration to accomplish its goals of improving the quality of American higher education. Among them:

1. Make better data available.

Just because students aren't flocking to government sites like the College Scorecard doesn't mean that they and their parents don't want more information. After all, the U.S. News rankings make waves every year. Private publishers are more likely than the government to come up with innovative ways to present this information, but they also lack access to meaningful data. As a result, publications often rely on measures like the average SAT score of a college's freshman class -- things more indicative of prestige than educational quality. Fortunately, there are bipartisan efforts in Congress -- such as legislation introduced by Sens. Ron Wyden (D., Ore.) and Marco Rubio (R., Fla.) -- to make better information about student outcomes available to the public.

2. Give colleges "skin in the game."

In the past year, members of both parties in Congress have proposed requiring colleges to pay back a portion of the federal loans their students default on. This is easy to implement because the government holds most of the loans. As a lender, the government has a responsibility to ensure that students aren't getting stuck with loans they cannot repay, and institutional behavior is much more likely to change if the largest source of federal funds is tied directly to student outcomes.

Unfortunately the administration seems intent on charging ahead with its flawed ratings initiative. This is a shame: While the ratings proposal continues to occupy time and energy, other, more promising proposals aren't getting the attention they deserve.

Kevin James is a research fellow with the Center on Higher Education Reform at the American Enterprise Institute.

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