Round-Table with Secretary Duncan

Friday morning Secretary of Education Arne Duncan met with 15 college presidents of HSIs (Hispanic Serving Institutions) at the HACU national conference in Chicago. As president of Wilbur Wright College, I joined in the hour-long discussion. The Secretary’s aim was to ask for feedback about President Obama’s plan for college affordability. It was the first of many sessions Duncan expects to hold with leaders in the higher education community.

Entitled A Better Bargain for the Middle Class, the President’s plan has eight strategies:

Paying for Performance

  • Tie financial aid to college performance, starting with publishing new college ratings before the 2015 school year.
  • Challenge states to fund public colleges based on performance.
  • Hold students and colleges receiving student aid responsible for making progress toward a degree.

Promoting Innovation and Competition

  • Challenge colleges to offer students a greater range of affordable, high-quality options than they do today.
  • Give consumers clear, transparent information on college performance to help them make the decisions that work best for them.
  • Encourage innovation by stripping away unnecessary regulations.

Ensuring that Student Debt Remains Affordable

  • Help ensure borrowers can afford their federal student loan debt by allowing all borrowers to cap their payments at 10 percent of their monthly income.
  • Reach out to struggling borrowers to ensure that they are aware of the flexible options available to help them to repay their debt.

As might be expected, much of the interest and controversy centers around the linkage of financial aid to a new college ratings system. The morning’s discussion highlighted the challenges of designing a rating system and the Obama’s administration’s commitment to the concept. Duncan was clear that more ratings are coming.

Duncan emphasized that any fair college rating system has to compare like institutions to like institutions. He added that similarities in missions and populations would be part of this new rating scheme. However, Duncan is not sure how it would look. The rating system has not been designed yet, but he and the administration are confident that it would be a helpful improvement. Several of the presidents stressed the multiple challenges inherent in trying to rate different kinds of institutional or program effectiveness. It is a query that goes to one of the real issues in higher education: what do we value and what does success mean?

When we move away from traditional measures, which tend to be inputs such as SAT scores or the productivity of the faculty, agreeing on an alternative measure is quite difficult. Some institutions emphasize changes in salary outcomes in their students. For others, it is graduation rates, or completion rates, or the pass rate of particular exams. With so many different kinds of institutions doing different things for different students and markets, reductions in methods of measurements are fraught. Several presidents noted that the power of ratings and rankings are blunt and can be accompanied by dangerous unanticipated consequences. The conversation included other issues besides ratings, but measures and ways of thinking about successes were a recurring theme.

Toward the end of the meeting I raised the issue of higher education systems on individual institutional performance. Higher education systems allocate resources and students, set priorities and policies, and interact with the public and the government – all of which have a tremendous impact on institutional effectiveness. The movement of students from high schools to college, for example, can be eased when systems set up solid admissions and support structures. Successful higher education systems can also make student transfer from community colleges to baccalaureate granting institutions much easier. Wright College, like most public institutions of higher education, is dependent upon the effectiveness of its system.

Conversation among college presidents continued after the Secretary left. No one I talked with thought that the President’s rating system would do much to lower costs to students. All agreed, however, that the system would effect significant change. Looping back through the discussions were recurring questions about the real priorities of the Obama plan. Hoping for higher quality and greater effectiveness with fewer resources is always a tall order.

Reflecting upon the morning, I question the Obama plan’s reliance on rating and financial aid as a lever of change. Their assumption is that informed students and their families will use the rating system to make more rational decisions about where to attend college, leading to lower costs and higher rates of graduation. Considering how difficult it is to determine just how much a college education might cost a student, I think that the plan is unduly complicated. Many institutions supplement federal financial aid and the actual cost of an education depends upon time, student commitment, and variable opportunity costs. Complicating matters further, many of the students that we want to see in college are underrepresented in higher education. They have little experience with the process and need the most help navigating these issues.

In addition, the plan assumes that students will make enrollment decisions as rational economic actors. Economics matters, but higher education does not mirror a rational market, as anyone who has spent significant time around a college admissions office can affirm. The choice of a college for many students is tied up with multiples factors besides cost: identity, convenience, reputation, perceived value, and so on. It is less like buying a refrigerator and more like purchasing a house. An energy star rating may make us prefer one brand of appliance over another. When it comes to a home, we look at the furnace and insulation, but we also consider how the house looks, what the neighborhood is like, how the rooms are arranged, whether it will increase in value, and whether we are comfortable in the living room. There are many good reasons we do not have national rating system for three bedroom houses.

The administration might consider simplicity: they should incentivize higher education institutions by providing resources directly to institutions that do what they want. Want lower costs? Reward institutions that cut tuition with resources. Want greater graduation rates? Provide resources to institutions that increase rates. Want greater numbers of students who graduate in STEM? Reward institutions that raise the number of majors in those areas. Direct action has the benefit of simplicity and it can also help make unintended consequences clear. I know that the warring factions in Washington would look upon such an initiative skeptically, but sometimes the best path to a goal is a straight line.

David Potash

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