End the Higher Education Cartel and Secrecy

By Richard Vedder

When Jim Bradfield, a former colleague and economics professor extraordinaire at Hamilton College contacts me for the first time in 39 years, telling me to read an article, I take notice. When former Spellings Commission chair Charles Miller emails everyone he knows (and that includes some powerful people in the higher education establishment, such as U of California President Mark Yudof) and tells them the same thing --I take double notice. So I actually read the article in question, an extraordinarily good piece by Kevin Carey in the Winter 2010 issue of Democracy. I urge everyone to read it as well.

Kevin, who works for a think tank that wants to promote egalitarian principles of the Democratic Party, thinks liberals have barked up the wrong tree on higher education. They stress increasing Pell Grants. That was the one and only thing that ex North Carolina Governor Jim Hunt pushed while on the Spellings Commission, for example. The Obama administration wants a huge increase in Pell coverage. Yet Kevin, echoing a frequent message of mine, notes that all the vast increase in federal student aid has been accompanied by a reduction, not an increase, in the proportion of college students from low income groups. The college cost explosion has worked to discourage participation amongst the poor, while having lesser effects on the rich. The federal government has promoted elitism and discouraged the principles underlying the American Dream in their pursuit of a wrong-headed higher education policy.

The real problem Kevin thinks, and I largely agree, is the veil of secrecy surrounding higher education (and second problem: the non-profit nature of higher education). Parents and prospective students don't know much about what schools really teach, whether students are learning, whether they get good post-graduate jobs, etc. Kevin does not add, but I would, that even donors to colleges (including governments) really are also in the dark about how resources are distributed.

All of this causes huge problems. It adds to the elitism of higher education, since reputationally based surveys largely determine prestige, the coin of the realm, since there is no academic bottom line. Secondarily, spending counts for a lot. The top schools on the US NEWS & WORLD REPORT rankings today are the same ones showing up on predecessor surveys as early as 1940, with very minor exceptions. But who knows whether students going to Princeton really learn a lot while there, or develop critical thinking skills? The secrecy that colleges maintain favors the old, established and rich colleges relative to newer upstarts. Those seeking better information, such as I have in doing rankings for FORBES, are often frustrated by the lack of good indicators.

All of this makes colleges more elitist and more mediocre. Prestige comes from turning students away, and from neglecting teaching and seeking research grants. The federal government's dubiious involvement in higher education, far from promoting universal access and egalitarian principles, has perpetuated and extended elitism. And the liberals are to blame as much as anyone.

Solution? Kevin proposes tying federal assistance to full disclosure. Schools should use and report information on such instruments as the National Survey of Student Engagement and the Collegiate Learnign Assessment. The kind of data that payscale.com publishes on post-graduate earnings of students should be expanded, something that can be done without violating personal privacy by integrating social security and income tax data into college information systems. What are average earnings of XYZ University five, ten or 20 years after graduation? The Social Security Administration knows (or can find out), as can the IRS.

The Problem? The Higher Education Cartel. which rivals some Middle Eastern terrorist organizations in the damage they are doing our country. But unlike the terrorists that we try to eradicate, we subsidize the higher education quasi-terrorists. At the minimum, the government should force institutions to pay taxes on monies contributed to such forces promoting high college costs and low information as the American Council on Education or, the absolute worst, the National Association of Independent Colleges and Universities, whose leader David Warren is the Doctor No of Higher Education. Why should we give tax privileges to groups that conspire to keep information from their customers and financial providers? Also, should the anti-trust folks in the Obama administration look more closely at meetings of higher education folks and question whether there are conspiracies in constraint of trade in violation of the antitrust laws? Shouldn't accounting standards of public corporations enforced by the SEC be applied to universities? Do you keep giving candy to misbehaving babies or liquor to alcoholics? You shouldn't. It is time universities undergo adult supervision and tough love. Three cheers for Kevin Carey.