Conversations in Washington about higher education have long been dominated by concerns over rising costs for students. And for good reason. Since 1980, average college costs have risen almost 170 percent, while earnings for young people ages 22 to 27 have increased less than 20 percent. Not surprisingly, student debt has ballooned, up 75 percent over the last 10 years to a collective $1.75 trillion.
Most proposed reforms have focused on subsidizing college costs. More recently, the debate has shifted to one over canceling debt for some borrowers. Those are important conversations to have; investing in higher education is an investment in the public good. But we also need to ensure that government funding for higher education goes into a system that is transparent, accountable, and equitable.
Fortunately there is a solution for rising costs that relies on transparency, and it begins with something that has been hiding in plain sight: the College Scorecard. The Scorecard, introduced by the Obama administration in 2015, aggregates and reports earnings and debt data from college students and graduates. Thanks to that — and similar — transparency tools, prospective students can assess what their return on investment might be across not only institutions but also programs. That second part is crucial because it opens the door for the market to sort programs based on value.
Traditionally, a college degree has been presented as a bundled package. A four-year institution, for example, charges a set price for a bachelor’s degree, so an English major, a political-science major, an electrical-engineering major, and a chemistry major each pays the same price. Unbundling the system at the program level would allow institutions to set different tuition rates for programs depending on student demand.
For the most part, higher education has resisted specializing, instead serving all students, cafeteria-style. Colleges offer hundreds of options, and their comprehensiveness is a key selling point. But in reality, each student partakes of only a small sampling. The cafeteria approach is not only inefficient; it is unsustainable for many institutions. Unbundling at the program level would enable colleges to finally specialize.
The cafeteria approach is not only inefficient; it is unsustainable for many institutions.
In practice, unbundling means enabling academic departments to offer programs independently, with their own tuition rates. For example, at one college, students majoring in engineering could pay $10,000 more in tuition annually than would those majoring in English. Although both programs are competitive, the return on investment from engineering is higher over a career, and there’s greater demand among students to attend that program. A few colleges use that pricing approach already, but more should follow suit.
A shift in that direction would recognize that, for most students, field of study matters most for future earnings. Disparities in returns from college majors add up to big differences over a career. Median lifetime earnings for education majors, for example, are $2 million, compared with $3.8 million for architecture and engineering majors. There is also substantial variation in outcomes for different majors at the same institution. As a result, 28 percent of associate-degree holders earn more money than half of workers with bachelor’s degrees, and 36 percent of workers with bachelor’s degrees earn more money than half of those with master’s degrees.
With the College Scorecard, prospective students have years’ worth of data to help guide their decisions. The Education Department has built an information system with data on thousands of institutions and programs. More recently, the bipartisan College Transparency Act was passed by the House; if enacted, it would give the department access to more inclusive and robust data to use in tools like the College Scorecard.
We need to make those data more accessible to students and their families, as well as to college counselors and policy makers. More information about employment opportunities, earnings, and debt from college programs will empower students to choose the ones that offer the greater likelihood of financial success.
The focus on value at the program level could prompt significant changes — and finally break the cost curve — in higher education. The cost of college has risen significantly in large part because of operating expenses: facilities and maintenance, amenities, and ballooning numbers of staff members and administrators to manage it all. But by shifting the focus to the program level, colleges would focus on educating students without extra services adding to the cost. To further reduce costs, colleges would need to teach more classes online, which a lot of students want anyway. Savings from a more efficient system would lower costs, and could help finance counseling and mental-health services, career services, and other wraparound support for students.
As consumers evaluate programs rather than institutions, they are likely to opt for programs with relatively high payoffs.
For public-college systems, this reshuffling would create an opportunity to streamline program offerings and reduce costs across campuses. Rather than offering European history on all campuses in a state university system, for example, one or two campuses could specialize in that program, and students at other campuses could take those courses online. The Pennsylvania State System of Higher Education is an example of the impending consolidation of many public university systems. Amid declining enrollment and increased competition with online programs, the system is in the process of merging six of its 14 campuses into just two. Likewise, Georgia’s state-university system merged 14 of its colleges into seven new institutions from 2011 to 2017.
By contrast, private colleges cannot be restructured so easily. Institutional prestige will probably continue to draw applicants to selective colleges despite their high price tags, especially given the growing share of students with two parents who each have a college degree. But less-selective private colleges may struggle to compete against selective private colleges and increasingly efficient public higher-education systems, particularly as they face long-term enrollment declines.
Community colleges are likely to lean into transparency because many of their training programs have a direct payoff in the labor market. However, accountability is important for those programs because, unlike many degrees, they are intended to lead to specific jobs. If those jobs aren’t available, graduates’ specific skills usually aren’t transferable.
The Biden administration is considering gainful-employment rules for nondegree programs that would compare graduates’ earnings with earnings of workers in the same state with a high-school diploma or GED. The programs that do not meet the earnings threshold could lose eligibility for federal funding — representing roughly 40 percent of programs covered under the rule, according to an Urban Institute analysis.
Those are good developments. After all, a majority of students reported in a survey that they had pursued postsecondary education to improve their job and career outcomes. It is our responsibility to make sure that that they are armed with the information and guidance they need to find a strong return on their investment.
