Dec 19 5:17 PM

Making the grade: Is plan to rate colleges consumer news people will use?

The White House Friday rolled out a draft of plan to evaluate U.S. colleges and then link federal aid to a series of metrics in an effort to prod institutions to produce more degrees for a broader pool of students, and with less accrued debt.

The Department of Education will grade institutions on graduation rates, populations of low-income students, costs, employment prospects for graduates, and student loan repayment. The system will then give schools an overall rating of high, middle or low performing.

The department said it hoped the evaluations would help students and parents weigh choices the way consumers consider other large expenditures. The program is the long-expected result of 2013 pledge from President Barack Obama to curb the rising cost of higher education and stem the deepening student debt crisis.

Average student debt, then and now

Note: Costs include tuition, fees, room, and board at 4-year institutions.
Source: College Board.

With student debt now outpacing auto loans and credit card debt in overall dollars outstanding, those are admirable goals. But established private colleges and newer for-profit diploma mills both criticize the plan as unfair and inaccurate — saying there are just too many apples-to-oranges comparisons to provide a meaningful universal rating. And Capitol Hill Republicans have rushed to label the plan as yet another government intrusion on the free market.

Education advocates, too, caution that the plan might not do exactly what the administration imagines.

“For many students, the set of choices is not the thousands of colleges sprinkled across the country or the name brands clustered at the top of U.S. News & World Report’s rankings,” writes Becky Supiano in The Chronicle of Higher Education. “It’s the contained, sometimes even sparse, group of colleges within a reasonable radius of home.”

Because most students still go to state institutions, which tend to be less expensive, and because they are factoring family and job options into their choices, simple market metrics might not be as influential as the White House wants.

In the end, though, cost, whether directly out-of-pocket or seen through the lens of future debt, plays a dominant role in decisions about college and graduate education.

Average annual cost of college

Note: Costs include tuition, fees, room, and board at 4-year institutions.
Source: National Center for Education Statistics..

Over time, increased government oversight and involvement in the financing of higher education might have a greater effect on giving more students a shot at a college degree without shackling graduates to crippling amounts of debt.

In June, Obama announced a plant to help some graduates adjust their loan payments, but the program applied to only a small part of the mountains of student debt. Alexis Goldstein, communications director for, where she has been tracking the issue, called the program “a Band-Aide on a gaping wound.”

A stronger hand might come from the Consumer Finance Protection Bureau (CFPB), which has more tools to crack down on lenders. The Department of Education “isn’t really designed as a consumer protection agency,” noted Mark Huelsman, Senior Policy Analyst at Demos, a Washington, D.C.-based think tank.

The CFPB is, however, a high-value target for incoming GOP congressional majorities, with some of its powers already taking a hit in the recent Continuing Resolution omnibus spending bill. What the agency will be able to do with predatory lenders and ballooning student debt will be a developing story at best.

In the end, the administration’s Consumer Reports style approach to “bending the cost curve” (ironic ACA reference intended) for college degrees might yield some interesting metrics, but the number crunchers at the Education Department might find that the invisible hand of the market is a lot weaker than the thumb colleges and lenders put on the scales.

Percentage change in the cost of college vs. inflation since 1970

Note: Costs include tuition, fees, room, and board at 4-year institutions.
Source: Bureau of Labor Statistics, National Center for Education Statistics..

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