Recently the President announced a new rating system for higher education institutions.
The heart of the proposals is a controversial plan to rate colleges based on measures of access, affordability, and student outcomes, and to allocate aid based on those ratings. Under the plan, students attending higher-rated institutions could obtain larger Pell Grants and more-affordable loans.
The Obama administration and its supporters say the ratings would empower consumers with fresh information and would pressure colleges to keep costs down. They describe a “datapalooza,” in which prospective students would be able to compare institutions on measures such as debt levels, graduation and transfer rates, and graduates’ earnings.
I’ve done some thinking on this and believe it will actually accelerate the demise of the current higher education system. Here’s what I think will happen.
- A big part of this plan is to tie the amount of student aid to the amount of students who graduate. Less grads means less money next semester.
- There are two ways to increase the amount of graduates of course: Teach them dramatically better and spend a ton of money on support services, or make the classes easier.
- Making classes easier doesn’t cost any money and will happen naturally. Teachers will be given a quota of students they have to pass and then left to make it happen.
- As a result, the employers of the country will not be able to rely as much on a student having a degree as a signal of certain competencies.
- Employers will develop their own set of automated tests to start to weed out the good graduates. MOOCs are developing how to do this.
- Eventually those tests will become much more accurate and useful, leading some employers to drop the degree requirements completely.
- As employees drop that requirement, the value of a college education will drop, leading less students to go to college. This drop in enrollment will require schools to raise tuition costs to make up the shortfall. This only works in the short term.
- The end game is that credentialing will be disaggregated from the university system. Keep in mind that is what universities are selling, not an education.
This grade inflation has gone on for a long time already. Now watch it go to 11.
The government is no doubt going to build in waivers with which to reward their favored schools and punish the others. Still, it’s not going to save the system. Once again we see the law of Unintended Consequences in effect. This is what happens when you think that politics can trump the laws of economics.