Why We Need College Ratings

The more expensive a purchase, the more important it is to be a smart consumer. Many Americans value labeling and rankings from food (nutrition labels) to appliances (energy ratings) to vehicles (gas mileage and crash safety) to health plans (Obamacare’s bronze, silver, gold, and platinum). Yet for one of the most expensive purchases a person will ever make – a college education – there is a dearth of reliable and meaningful comparable information.

In August, President Obama directed the U.S. Department of Education to develop a federal college ratings system with two goals: (1) to serve as a college search tool for students and (2) to function as an accountability measure for institutions of higher education.

Under the president’s proposal, ratings will be available for consumer use in 2015, and by 2018, they would be tied to the colleges’ receipt of federal student aid. Many colleges and universities have been protesting ever since, especially about the accountability goal.

But improving the information imbalance about higher education outcomes is a key step toward improving graduation rates and slowing the rise in student loan debt. Although accountability mechanisms are a complex issue that may well take somewhat longer than 2018 to develop, student advocates agree on the following: We must move forward now with the multifactor rating information that higher education consumers desperately need. Furthermore, the administration’s rating system should provide comparable data on several factors relevant to college choice so that students can choose which are most important to them, rather than imposing the government’s judgment about which handful of factors should be combined into a single institutional rating.

As we evaluate the case for federal consumer ratings, let’s first set aside the 15 percent of college students who attend the most selective institutions and enjoy generally very high graduation rates. They may feel well-served by rankings like Barron’s and U.S. News, which emphasize reputation, financial resources, and admissions selectivity.

But for the 85 percent of students who attend non- or less-selective institutions, the institution they choose has far greater consequences. For these “post-traditional” students, college choice could mean the difference between dropping out with an unmanageable debt load or graduating with a degree and moving on to a satisfying career.

To share a real example, consider three Philadelphia universities: a suburban private, a Catholic private, and an urban state. These institutions are all within 30 miles, enroll students with similar academic characteristics, and serve similar percentages of Pell-eligible students. If you are a local, low-income student of color who wants to attend college close to home, how should you decide where to go?

What if you knew that the suburban private school’s graduation rate for underrepresented minority students (31 percent) scored much lower than the Catholic private (54 percent) and urban state school (61 percent)? Or that the urban state and private Catholic schools have lower net prices for low-income students? Would that affect your choice? (Thanks to Education Trust’s College Results Online for these great data.)

A rating system with multiple measures (rather than a single one) could greatly help this student. Armed with facts about comparable graduation rates, admissions criteria, and net prices, she can investigate her options further, ask informed questions, and ultimately make a stronger decision about which institution is the best fit for her

A ratings system designed for the 85 percent of students going to less-selective institutions will help students get the information most important to them. Many consumer rating schemas include multiple measures. Car buyers can compare fuel efficiency, price and safety ratings as well as more subjective ratings of comfort or “driver experience” from a variety of sources. Some buy Honda Civics for gas mileage and safety, others choose more expensive options for luxury features or handling.

Similarly, prospective college students need to know not just about accessibility/selectivity (average GPA, SAT/ACT scores), but also about affordability (net price by income tier, average student loan debt, ability to repay loans) and accountability (graduation rates by race and by income). The information should be sortable by location (to aid place-bound students) and by institution type (two-year, four-year, public, private) for students to compare side by side. 

The data to fuel the rating system are for the most part already available, although some are in need of improvement. As is now widely acknowledged, we must change the federal calculation of graduation rates as soon as possible to account for part-time and transfer students, and we must collect and report institutional Pell Grant recipient graduation rates as part of the federal data system (IPEDS). Over the long term, we should also find a valid way to assess work force outcomes for students.

But let’s not delay a ratings system that will serve students any further. Once the system is up and running, we can turn to the more complex and politically difficult question of how to use federal financial aid dollars to incentivize better institutional outcomes.