• Tying aid to college ratings
    June 26,2014
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    The New York Times said the following in an editorial:

    College and university leaders have been up in arms since President Obama announced last year that the administration would soon deploy a

    rating system that evaluates schools based on factors like affordability, graduation rates, student earnings and how well institutions serve low-income students. Obama wants Congress to use the ratings to help guide the allocation of federal student loans and grants.

    This is immensely controversial among college presidents, who have argued, unconvincingly, that such a system would elevate financial concerns above academic ones and that it would be difficult, if not impossible, to compare schools with different educational missions.

    Yet graduation rates, loan defaults and percentages of low-income students enrolled are extremely useful indicators of which colleges are serving their students and the country well and which are not. The federal government also has a compelling interest in getting the best possible return on its $180 billion annual investment in higher education.

    One way it can do so, says a new report from the Education Trust, a nonpartisan foundation, is to tie federal aid to performance — penalizing low-performing schools and rewarding good ones. Overall college graduation rates in America are among the lowest in the developed world. And the worst schools are easy to spot. The report points out that 600,000 students attend colleges where dropout rates exceed 85 percent and above or where nearly 3 in 10 students default on student loans.

    The report finds pronounced differences between colleges that energetically recruit low-income and working-class students — able kids eligible for the federal Pell grant program — and those that do not. Among the poorer performers are the flagship campuses of public universities, which are increasingly behaving like private universities. To take just one example, the report notes that 13 percent of freshman students enrolled at the University of Virginia in 2011 received Pell grants, while comparable schools like the University of North Carolina, Chapel Hill, and the State University of New York at Binghamton enrolled 20 percent and 26 percent Pell grant students.

    Suitably alarmed, three-fifths of the states have taken steps to increase graduation rates, sometimes by rewarding schools that do a better job of helping students get their degrees. Meanwhile, the study notes, “the federal government sits passively on the sidelines, writing check after check for higher education with almost no consideration of institutional performance.”

    The study says the federal government should set minimum performance standards for all colleges receiving federal aid: at least 17 percent enrollment of poor and working-class students; a six-year graduation rate of 15 percent; and three-year student loan default rate of no more than 28 percent. Colleges that do not meet these standards could face escalating sanctions — including the loss of federal grants and charitable interest deductions for donors.

    Dropout factories and diploma mills that fail to improve would face the ultimate penalty: loss of eligibility for federal aid, which would have the effect of shutting them down. The performance standards would be updated periodically as a way of steadily raising the quality of schools rated at the very bottom.

    The report outlines useful steps Congress can pursue should it bestir itself to listen to the president and allocate federal aid along the lines he has suggested.
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