Peter Wood, conservative president of the conservative National Association of Scholars, has given us a hint about how a DeVos led Department of Education might seek to change higher education. It could be important.
Wood’s open letter titled "My Counsel to President-elect Trump on American Higher Education," outlines an agenda that we think resonates with the incoming administration and with nominee DeVos in particular.
If you have an above average interest in federal policy, you will want to read Wood’s entire letter. In this Executive Briefing, we have singled out those among Wood's recommendations that meet two tests. They are closely aligned with what we have been able to learn about DeVos’s worldview and, if effected, would represent a significant change of the federal role in higher education. This briefing ignores the openly partisan arguments in Wood’s letter, including his empirically unjustified support for concealed carry rights on college campuses, and for gutting federal actions to protect female students.
Wood is correct in asking higher education’s leaders to "embrace competition." Creating a market for higher education has been a core mission of InterEd since its founding in 1994. True markets require that the value proposition of the product or service be transparent and accessible to the consumer. For college degrees, this means that colleges must cough up hard competitive data including defacto admissions practices, wait lists, time to degree (not nominal degree time), term-to-term and aggregate cohort retention to graduation rates, all-in costs, time to employment, salaries, employer evaluations, and return on investment. Colleges must provide these data by program and not in the aggregate, where it is meaningless, and they must show averages and ranges. Having access to this kind of information allows consumers to become more sophisticated (rational) in comparing the value added by colleges offering programs of interest to them. In many cases, having this kind of information permits students to compare outcomes per dollar and/or per year, including determining the opportunity costs of delays in achieving degree outcomes (the latter being a major factor in determining true costs).
Not surprisingly, leaders at traditional colleges – Peter Wood among them – have mightily resisted being held to public standards of transparency and accountability. Assessing the value of schools and programs based on value added paints a picture different from the one commonly held by the public and even by some academics. The public does not understand that elite universities can provide low added value. Many who attend elite colleges for a while and then drop out tend to do just as well in life as those who graduate. This is because elite admissions criteria screen for people who will succeed with or without the services of a particular college. Community colleges, on the other hand, are often at the top end of the value added chart. When they work well, they move people from dead-end underclass jobs into solid middle-class careers and lives, and they do it at a low cost.
Even though he is embracing competition in January 2017, Wood’s articles written for the Chronicle of Higher Education over the years show him to hold a 1906 apodictic view of quality in higher education, a view that invokes admissions standards that guarantee success, the qualifications of professors, library resources, endowments, and brand. He resists the kinds of accountability that would permit the development of a true market. In the above article, Wood wants to roll back the few modest requirements that have evolved to require that colleges publish graduation rates and a few watered down indicators of performance. Why, given his interest in competition? Because they are federal requirements. We are unsure if the inconsistencies between his expressed desires and the conditions that fulfill them arise from a double standard or from a lack of understanding about what it means to have real competition.
Wood correctly criticizes the regulatory apparatus around higher education, a structure recently employed by the Obama administration in its attempt to eliminate the for-profit sector. While we agree with the general idea that current regulations are sub-optimal, we disagree with the idea that "fewer regulations" is the answer. Curtailing regulations will create an unhealthy feeding frenzy of inappropriate marketing and enrollments not only among the for-profits but also among a large number of independent colleges which, today, have divisions that are being run exactly like those among the for-profits in need of better regulation (not all for-profits fit this picture; this administration’s brush was too broad and too crude).
Rather than rolling back regulations, we propose a regulatory structure that eliminates the economic perversity common to current regulations. Such a system would elucidate the objectives of a proposed regulation, provide metrics for determining that the regulation is or is not meeting its objectives, and provide a "sunset" mechanism for the regulation if it fails to meet its goal. Such a system may or may not reduce the number of regulations. Counting numbers of this kind is meaningless. It would reduce the economic and other behavioral perversity common to regulations in higher education. We propose an example of how this would work under the next heading.
Reduce Student Debt
Wood discusses the problem of student indebtedness - a large and still growing problem - and, again, proposes solutions that will not solve the problem. Instead of having the federal government punish what he sees as liberal thinking (our take on Wood's solution), why not work smarter to ensure that regulations are based on an explicit national interest (goal) and that they be associated with sunset metrics that suspend the regulation if it does not end up achieving its intended outcome. For example, regulations that governed a non-perverse student aid system would (a) identify the goal or goals of the regulation (i.e., provide more Americans a college education and address the economic recidivism in opportunity for access), (b) structure the system to reward schools and students more for graduation than for attendance, and (c) remand the regulation to mandatory revision should it fail to achieve its agreed upon outcomes in terms of rates of persistence, graduation, etc. A policy that rewarded graduating rather than attending (which current regulations reward) might involve incremental back-loaded compensation for the institution and the student, and would provide economic disincentives for the institution and the student for certain types of failures to persist. As it is today, schools and students are rewarded so long as they are in the pipeline. This economic perversity is a significant factor in total costs. From the institution's point of view two students who make it 50% of the way before dropping out are almost financially identical to one student who graduates. The differences in social end economic costs to the students, however, are dramatically different. Sound higher education policies are not difficult to develop and refine. They face only a few small obstacles in the form of Congress, perhaps the White House, special interest groups, and many leaders in higher education. Other than those . . .
Again, be sure to look at the entire letter if you are a policy wonk. Otherwise, stand by. We are following this topic and will keep you posted.