College 101: A Call for New Colleges (Part 5 of 5)

An established set of US colleges, largely fixed in number, has dominated our higher education sector for the last 50 years.

Dense law and a powerful college accreditation system protect these established colleges from new entrants, back them with large public subsidies, and leave them free to mop up student enrollment and to raise prices relentlessly.  To date, the college establishment has resisted or avoided almost all forms of hard-nosed accountability, including accountability for the employment and salary outcomes of their graduates.

What will it take for this college sector to improve in a meaningful and lasting way?

What new higher education policy will create a US college sector that is far less expensive to families and our governments and far more successful at graduating students with job-ready skills and knowledge?

The answer, in my view, is an ambitious, intelligently regulated move by the US Congress and the US Department of Education to admit new organizations – specifically, high-quality non-profit organizations and talent-hungry operating companies – into higher education.

With new entry into the college sector – and only with new entry – would come meaningful innovation, cost containment, and quality improvement.



A. The Limits of Policy Reform of the Establishment

Before I turn to my plea for new entry into higher education, I should recognize that it surely makes good sense to regulate anew and again the college establishment.  It is after all the establishment.  As I type this, the establishment – that unchanging set of 3,200 colleges about which I have been writing here – is educating some 20 million American college students.  It needs incremental regulatory attention, of course.

The project of designing the next best wave of college oversight plays out perennially in Washington, D.C.   Higher education policy, in contrast to K-12 policy, is heavily centralized in Washington, D.C. since so much of public funding for college, unlike public funding for K-12 schools, originates in Washington.

In my opinion, recent history in Washington, D.C. is a story, on the one hand, of good efforts and clear thinking at higher education policy reform and, on the other hand, of the drag and incrementalism that invariably arise in trying to regulate an entrenched status quo.

A few observations on this point:

  • Slow Progress on Accountability in the Establishment.  The US Department of Education, in the Obama era and in prior administrations as well, showed genuine interest in requiring colleges to collect and publish quality outcome data, particularly on the economic and employment consequences of a degree.   

For obvious reasons, this policy agenda makes sense and needs to be pursued.  If implemented fully, it would sharpen consumer choice, augment competition among colleges, and create a data backdrop against which the government could revoke or curtail funding for underperforming colleges.

Unfortunately, as far as I can tell, the project – while clear-headed and implemented diligently – has struggled to break through in practice.  I have yet to meet a college-goer who can shop among colleges with reliable, complete data on their jobs outcomes.  And I know of few colleges (other than the for-profit colleges that were rightly and heavily scrutinized in recent years) that have come under meaningful pressure for lack of outcomes.

  • Modest Accreditation Reform in the Establishment.  Relatedly, several past administrations have sought to pressure accreditors – particularly the six large regional accreditors that review most of our colleges and powerfully control the flow of public aid into colleges – to evaluate colleges based on outcomes and, ideally, to approve new college models more speedily. 

(Note: college accreditors are private membership organizations comprised of, paid for, and governed by the very colleges they evaluate.  They are generally beyond the direct regulatory reach of the US Department of Education, even though Congress has chosen legislatively to limit students’ use of federal grants and subsidized loans to accredited institutions.)

The Obama administration’s critical interest in accreditors was backed with encouraging candor.  At one point, US Secretary of Education, Arne Duncan, dubbed accreditors “watchdogs that don’t bark.”  That summation of things seems fair.  The the six large regional college accreditors in the US, in monitoring 3000+ colleges between 2000 and 2015, revoked institutional accreditation only 26 times.¹

In the end though, efforts stretching back over multiple administrations have made only small progress, as far as I can tell, towards redirecting the hidden world of accreditation.  It remains in place and largely unchanged.

  • Loud Calls for Increased Aid to the Establishment.  Over the last few years, even as the college establishment has carried on mainly untouched by hard-nosed accountability or accreditation reform, calls for more public aid to colleges have intensified among voters and elected politicians.

College is so expensive now that voters – up and down the income ladder and across the political spectrum – feel panic and demand relief.  Recall, about two-thirds of US households can no longer afford college without the Pell Grant, a federally subsidized loan, or some other form of public college assistance.

Proposals for increased public aid for college range widely in their specifics.  Most frequently heard of late are proposals for free or price-controlled public college.  Also popular these days are demands for increases to the Pell Grant, debt forgiveness programs, and other forms of student-side relief.

Increasing aid to higher education would generate all manner of effects in higher education and in society.  I will not cover them in any detail here.  I will just make one cautionary point: more public funding for college will not, in itself, drive institutional change on college campuses.  It does not correlate with cost containment, innovation, accountability, or quality improvement by colleges.

In fact, if history is any lesson, the opposite is likely.  Our governments have funded colleges lavishly for 50 years and – in the absence of new entry and accountability – the college establishment has responded with higher prices, expansion, and yawning results.

In all, Washington, D.C. of course needs to carry on regulating (again) the college establishment.  It needs to reach for another round of regulations aimed at accountability, governance, and funding reform inside the status quo.

That this incremental regulatory project is worthwhile does not make it adequate, though.  It is likely, in my view, to yield the same slow progress over the next 10 years as it has over the past 15 years.  I cannot imagine a regulatory program clever, powerful, and persistent enough to trip our 3,200 existing colleges, en masse, into meaningful and lasting innovation, cost containment, and quality improvement.  

We need more than just another wave of regulation aimed at existing colleges.  We also need new colleges.

B.  New Entry: The Centerpiece of Reform

Higher education in the US has been voucher-ized.  Nobody set out to voucherize it, as far as I know.  But that is in fact what has happened. 

College students, as we stand now, can shop among 3,200 private and public colleges and make autonomous purchase decisions with their publicly issued loans and grants. 

What we lack, in my view, is a public policy that allows college students to choose from a wider, more competitive, and more innovative set of college operators.  Washington, D.C. should aim for that higher education policy goal, I think.

More specifically, Congress and the US Department of Education should amend our federal higher education act and related regulations so as to allow alternative organizations – and I am referring here specifically to high-performing non-profit organizations and operating companies in need of talent – to operate novel degree-granting and job training programs.  Picture Amazon.com and General Electric.  Picture high-grade, mission-driven nonprofits focused on workforce development and economic mobility.

These new operators should be offered a clearly defined, stringently regulated and quick pathway – free of typical accreditation rules and process – into the college sector.  This pathway can be created legislatively in Washington, D.C. in a variety of ways and could be administered by the US Department of Education.  The mechanics of what I propose are easy if politics will permit them.

Students who choose to purchase college education from this new set of providers should be able to do so with the help of their federal financial aid – notably, their Pell grants and subsidized federal college loans.  This point is vital.  We need to free college students to shop for quality educational programs both inside and outside the college establishment.  Their choices, funded with public money, should no longer be limited to the existing set of colleges that generally struggle to innovate, constrain costs, and deliver employment outcomes.

In exchange for access to students with financial aid, these new nonprofits and operating companies should be held unrelentingly accountable for high graduation rates and strong employment outcomes for their students.  Outcome contracts for new providers should be negotiated and reviewed regularly and unapologetically by the US Department of Education.  Our government should be as merciless on outcomes with new college entrants as it is permissive on outcomes with existing colleges.

Along these conceptual lines, the US Department of Education recently launched a pilot college program called EQUIP (Educational Quality through Innovative Partnerships).

The program is small.  It is currently available to only a few thousand students.  But what it lacks in size it makes up for in clarity of mind.

Under EQUIP:

  • Non-traditional organizations (exactly the sort of operating companies and mission-driven nonprofits for which I am advocating) can design and deliver degree-granting programs in slim partnership with an existing and minimally involved college.
  • Students attending these alternative degree programs can use Pell grants and federal student loans to pay for them.  Significant federal financial aid can pass to the non-traditional education and training provider from its upstream college partner.
  • These programs are evaluated for quality by independent organizations, and the US Department of Education exercises total control over their good standing and has promised to close them if they fail to deliver outcomes.
  • In one example of this program, here in Boston, General Electric is setting out, in partnership with Northeastern University, to design and deliver degrees in advanced manufacturing.  Another example, based in New York, allows students to use their federal financial aid to access coding academies that have agreed to deliver strong employment outcomes and viable career paths in programming.

Though small, the EQUIP program is a bright idea.  It delivers on a small scale what higher education needs in large quantity: new entry and, with new entry, a dynamic that can lead to innovation, quality, and cost-containment. 

In all, the time has come to invite new actors to the work.  In the years ahead, we cannot rely exclusively on incremental improvement and further regulation of the college establishment, as important as those tasks are.  We also need new organizations with fresh ideas, and they can be found among high-quality non-profits and talent-hungry operating companies that want — as part of their mission or because of their hiring needs — to take a run at college.  With well-regulated new entry — and only with well-regulated new entry — might we get the level of design innovation, cost control, and outcome improvement that we need.

 
 

Footnotes:

(1) Fuller, Andrea and Douglas Belkin. "The Watchdogs of College Education Rarely Bite." The Wall Street Journal. <www.wsj.com/articles/the-watchdogs-of-college-education-rarely-bite-1434594602>