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Student Loan Bubble
Private Colleges Fight to Keep Data Away from Students

As the student debt crisis grows, prospective students are beginning to take tuition prices, post-college earnings, and graduation rates into greater account when choosing colleges. But they’ve mostly had little reliable data on these matters beyond the likes of U.S. News and World Report rankings.

That may be about to change. Over the past decade, policymakers have mulled over the creation of a “federal student record system,” using data collected by the federal government. Several agencies, among them the Department of Education and the Department of Defense (which oversees veterans’ education), have been amassing data for decades, but it has never been pulled together in one place.

But politicians on both sides of the aisle may soon put the plan into action. Republican Senator Marco Rubio and Democratic Senator John Wyden have been co-sponsoring bills to create such a system since 2012, and both Republican House Majority Leader Eric Cantor and President Barack Obama have expressed support for a similar measure.

The “federal student record system” has a daunting opponent, however. The National Association of Independent Colleges and Universities, an organization that represents private nonprofit colleges, has been fighting against the proposal since it was first suggested during the Bush Administration, according to a recent report from the New America Foundation. The NAICU has claimed to be acting out of concern for students’ privacy. It was behind a bill that banned a unified system and prevented the federal departments that collect the data from sharing it with each other. But the private schools may soon lose the war despite winning several battles: both political parties support the proposal, and now it’s picking up steam.

Yet the NAICU continues to fight, concerned, probably, that the federal government will use the data to set standards for schools that receive federal aid. If schools fail to meet these standards, they could lose access to the federal cash cow. Obama’s recent statements must also alarm them. Last summer, he declared:

“We’re going to start rating colleges not just by which college is the most selective, not just by which college is the most expensive, not just by which college has the nicest facilities – you can get all of that on the existing rating systems. What we want to do is rate them on who’s offering the best value so students and taxpayers get a bigger bang for their buck.”

We sympathize somewhat with the schools’ concerns. Like them, we are skeptical of programs that increase federal control over education, and this system could be used to do that. Instead, we’d like to see students apply market pressure to the schools, by declining to enroll in colleges that charge high prices or offer low-value degrees.

Unfortunately, it’s nearly impossible for students and their parents to be knowledgeable consumers without the sort of data that schools are loathe to release. Colleges are unwilling to give out too much information on their graduation rates or their student employment outcomes—and they likely don’t keep track of this data in the first place. The government may have to step in and collect the information itself, but it should take no more active a role in the marketplace than that.

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  • LivingRock

    “We sympathize somewhat with the schools’ concerns.” TAI

    As do I, but to me those are mostly shambolic excuses for an industry looking to avoid transparency and accountability. If institutions are going to continue to collect federal loan and aid dollars, then they need to be open with the gov’t whom is feeding those dollars and is trying to give spenders of those dollars more power in the market.

  • free_agent

    Public release of the actual cost of colleges and the actual values of their degrees should terrify the private colleges. It is likely to be as financially destructive as the publication of the “dealer’s cost” books were to the auto dealers, because it dramatically reduces the information asymmetry in the market.

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