Limiting Choice or Protecting Consumers

“Choice” in higher education used to be part of “access and choice.” It meant that it wasn’t enough for low-income students to be able to enroll in just any postsecondary institution. They should be able to attend the institution best suited to their needs—including expensive private colleges. As postsecondary participation rates have increased over time and costs and prices have gone up,  the idea that this type of choice is a public responsibility has evolved into criticism of the institutions themselves for failing to enroll student bodies more representative of the nation.

The term “choice” has re-emerged as a tool in the debate over potential regulations likely to have their main impact on for-profit institutions. The sector’s advertisements claim that the government is about to limit the choices of low-income and minority students. Individual students protest that they should have the “choice” to attend whatever institution they prefer.

We should think carefully about the meaning of the word “choice.” Should consumers have the choice of driving cars that don’t meet federally imposed safety standards? Are we right to tighten the rules that permit “negative amortization” mortgages, or that limit the opportunities for credit-card companies to surprise customers with unexpected charges? Why do consumers have the choice to smoke cancer-inducing cigarettes but not the choice to take not-yet-approved experimental drugs for terminal diseases? Is it meaningful to say that employees have the choice of leaving their jobs with employers who exploit or abuse them in a labor market with few jobs available? Most people today would agree that the labor laws of the early 20th century that prevented women from working the same hours as men were discriminatory, but that child-labor laws are critical to our civilized society.

When is it paternalistic to limit the available options? How broad does the set of viable options have to be for the term “choice” to apply? How incomplete does information have to be, and how significant do the negative spillover effects have to be, to make consumer protection optimal?

Our economy needs workers with a wide variety of training and skills.   Funding for postsecondary education is tight. We haven’t figured out how best to support students to succeed in their efforts to earn degrees that will improve their life prospects. We need innovation and flexibility in postsecondary education. We shouldn’t rule out promising approaches.

The government doesn’t know which path is best for which student. But by definition, students beginning their postsecondary careers have a lot to learn.  Information about the quality of educational programs and the risks of unwise investments is far from adequate. If you buy a toothbrush and you don’t like it after one use you can throw it away and buy a new one. You can’t do that with your college education. Consumer protection is clearly necessary for students.

And of course taxpayers make large investments in postsecondary education. We fund public institutions (to a diminishing degree) and we provide significant (and growing) student aid dollars. We have a responsibility to use those funds well. The debate should be about how best to use our funds to improve students’ lives, not about whether an individual institution has the right to exist and be subsidized. The debate should be about how to inform and protect students. It should not be about whether or not students have the right to government support for whatever choice they want to make, however risky and ill-informed.

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