Monday, March 05, 2012

What College Students Need to Know

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February 19, 2012

What College Students Need to Know

The popular college rankings focus primarily on prestige as measured by the SAT scores of incoming students and how many applicants are turned away. An initiative started last fall by the Obama administration could help families go beyond these limited, and far too easily gamed, indexes to learn quickly and easily how a college stacks up against its competitors nationally on important metrics like graduation rates, what a degree actually costs and how much debt a student can expect to incur by graduation day.

If the federal government makes it mandatory to disclose this information in a clear and consistent way, as it should, families will be better able to make informed college choices. And this will help put pressure on colleges that fare poorly to improve.

Critics may cast this initiative as an example of government overreach. But given that the federal government spends nearly $190 billion a year on higher education aid to students, it has a legitimate interest in making sure that the money flows to the schools that best meet their responsibilities to families and students.

Congress has taken some steps to mandate greater transparency from colleges. The 1990 Student Right to Know Act, for example, required colleges and universities that receive federal aid to disclose graduation rates. And the 2008 Higher Education Opportunity Act required schools to offer a way for consumers to determine actual costs after student aid is taken into account.

But many colleges have done a poor job of complying with federal disclosure rules, and much of the available information is not in one place. The administration's new efforts would enforce reporting requirements and provide some new tools.

The new federal Consumer Financial Protection Bureau has developed a preliminary version of a one-page "shopping sheet" with data from the colleges that will allow students to learn how much they will need to pay, what they will owe, how the school ranks nationally in net cost, and whether students who have graduated are earning enough money to repay their loans.

The Department of Education has also created a preliminary version of a "college scorecard" with data to help students compare colleges on affordability and value. A scorecard for all colleges should be available later this year. (By federal regulation, for-profit schools are already required to report similar information, including student earnings and debt, to the government.) Some of this information can be gleaned from federal records, but making it readily available to students would be a new use of the federal data.

President Obama wants to expand campus-based aid to about $10 billion from the current $2.7 billion. He has proposed moving money away from colleges that fail to control tuition increases or provide good value to others that do a better job. That is a worthy idea in principle, but he will need strong data-based evidence to determine how colleges are doing.

The transparency initiatives are a good place to start and should be embraced by both parties in Congress. If students and families, facing higher tuition and rising debt, are to make sound choices, they need more and better information.

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