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August 24 2013

Let Students and their Families Rate Colleges Themselves

Vicki E. Alger

On Thursday President Obama was touting his latest college affordability plan—complete with a proposed College Scorecard.

But college affordability has little to do with a lack of transparency. Aside from the myriad non-government sources of information, the president and his education department have long compiled the very information students, their families, and taxpayers need to determine a college's value.

The U.S. Department of Education regularly publishes reports and statistics on tuition prices, socio-economic enrollment figures, graduation rates, and degrees attained. The Higher Education Opportunity Act of 2008 requires all postsecondary institutions participating in federal financial aid programs to post a net price calculator on their websites.

The U.S. Department of Education even has a Federal Student Aid clearinghouse, a user friendly College Navigator, and a more comprehensive but not so user friendly Integrated Postsecondary Education Data System (IPEDS) that we researcher types slog through.

With this information the president and his department have all they need to know about the colleges receiving billions in federal aid dollars each year. Consider, for example, the release on Thursday of the education department’s standard report on postsecondary student aid.

A leading affordability indicator conspicuously absent from the president’s laundry list of ratings is a comparison between institutional aid and federal student loan aid.

More than $105 billion in federal student loans was awarded in the 2011-12 academic year compared to just over $42 billion in institutional aid, according to the College Board.

If student loans, along with other forms of federal financial aid, really did contribute to college affordability, institutional aid would be at least as prevalent, not to mention generous, as federal aid. Institutions would also be dispersing aid primarily according to financial need. The facts tell a very different story.

Nearly twice as many undergraduates receiving any financial assistance had federal student loans compared to any financial assistance from the institutions they attended, 40% compared to 20% (Table 3, p. 9).

More than one-third of students receiving any institutional aid came from families earning $100,000 or more. In fact, a nearly identical proportion of dependent undergraduates receiving any institutional aid came from families in the highest and lowest ($20,000 or less) income brackets, 38% compared to just under 40% (Table 3, p. 9).

More undergraduates from the highest earning families are also receiving institutional aid compared to a decade ago. Back in the 2003-04 academic year less than one quarter (23%) of these students received aid, compared to 38% today. (Table 3.4-A, p. 115).

What’s more is the amount of institutional aid going to dependent undergraduates increases along with the income levels of students’ families.

Institutional aid for an undergraduate whose family currently earns less than $20,000 can expect institutional aid that averages $8,100, compared to average institutional aid of $10,400 for an undergraduate whose family income is $100,000 or more (Table 4, p. 9).

Back in the 2003-04 academic year, institutional aid for an undergraduate whose family earned less than $20,000 could expect institutional aid that averaged $4,200, compared to average institutional aid of $5,900 for an undergraduate whose family income is $100,000 or more (in unadjusted dollars, Table 3.4-A, p. 118).

Thus the president’s own U.S. Department of Education has documented patterns of greater aid going to more affluent students for years. Still, it continued to dole out billions of dollars in federal taxpayer-subsidized loans to institutions that do not put real financial need first.

What the president and his education department should be doing is simply making all the data it regularly compiles available so we can see which institutions work hard to direct institutional aid to needy students—and which ones don’t.

Presented in this way students and parents can come to their own conclusions about which colleges they—not politicians and special interest groups—believe have value. There’s no good reason to extend the federal government’s role in this matter—or higher education in general.

Independent Women’s Forum’s mission is to improve the lives of Americans by increasing the number of women who value free markets and personal liberty. Sister organization of Independent Women’s Voice.
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