Last week was an eventful one for higher education. On March 18, President Trump released his proposal for reauthorization of the Higher Education Act. Three days later, the president issued an executive order focused primarily on campus free speech.
The order also contains some exciting news about expanded reporting on how much students earn by program (e.g., accounting, chemistry, etc.). This is a huge step forward, as up until now, the only data available has been an average for the entire college. This is very exciting for two reasons.
First, it allows students and parents to make more informed decisions about which college to attend and what to major in. It has always shocked me that we ask young students fresh out of high school (and returning adults for that matter) to make such an expensive and life altering decision of whether to attend college and which one with so little information. Until recently, there was little reliable information about what students could expect to earn after graduating. That all began to change in 2015 when the Obama administration started releasing the average earnings for each college via the College Scorecard. I think of this as the 1st generation of earnings data, and it was a dramatic improvement over the status quo. But the first-generation data suffer from the fact that earnings can vary widely by major, so an aggregate average for an entire college still leaves a lot to be desired.
Trump’s executive order, by adding program level earnings to the College Scorecard, moves us to the second generation of earning data. This should have a much bigger impact on student choices, as a student who knows they want to be a nurse can compare earnings for nursing programs at different colleges. The data will also now inform student choices as they change majors once enrolled at a college (about one third of students change their major at least once).
The second reason program level earnings data are so important, is that it could and arguably should be a component of accountability mechanisms for colleges (though certainly not the only component). We currently use default rates on student loans as an accountability mechanism, but default rates are less reliable than earnings data since not all students borrow and other policies like loan forgiveness can distort the default rate data. The gainful employment rules provide one template for what this might look like. The Trump administration suspended the Obama era gainful employment rule because it was unreasonably restricted almost exclusively to for-profit colleges, but a universally applied gainful employment rule using program earnings data could be a very valuable accountability mechanism and should certainly be on the table for discussion.
Moreover, earnings data doesn’t just need to be used as a stick to punish colleges that fall below some floor of performance. It could also be a carrot to reward colleges that exceed some ceiling of performance. For example, high performing colleges could be granted waivers of the requirement that they be accredited or some other federal regulation to reward them for their superior outcomes.
In all, the program level data expansion in Trump’s executive order is a big step forward. It will provide more accurate information for consumers, so students and parents can make better informed decisions. It also provides the potential to create finely tailored approaches to college accountability that would do a better job rewarded high performing colleges and sanctioning low performing colleges.