Regulation in Higher Education

by Peter Bredlau on December 19th at 6:54 pm EST

Colleges and universities like to have something for their website that attracts students and parents to useful information. Not so much at the end of October, when the federally-mandated Net Price Calculator debuted on college websites across the country. It asks colleges and families to input financial data to create a sample aid package and cost for that institution that can be compared with other schools. Some hail it as transparency and empowerment for students and families; others see it as further complicating an already complicated admission process. One thing is certain; it is more federal regulation for our higher education system. Colleges don’t like it, but it’s a sheep in wolf’s clothing because this sort of mandated regulation is good for colleges and universities

We all live with limits. The government tells us how fast we should drive, what drugs are safe, and what can be said on TV. Regulation is part of our everyday experience. Most colleges and universities have to answer to more than 100 local, state, and federal regulations like zoning laws, crime reporting, and IRS form 990. Then there are accreditation organizations like Middle States, and regulatory agencies like the NCAA. Increasingly active and activist parents are pushing demands for internal regulatory policies. There’s no shortage of people and legislation telling colleges what to do. Why shouldn’t there be?

The effectiveness of the Net Price Calculator will be determined in time, since it was mandated for implementation just more than a month ago, but effectiveness is not the real issue. The powerfully negative reaction to the Net Price Calculator is the real story. There are bad feelings about this because it is believed that colleges don’t need the Net Price Calculator. They are home to America’s brightest minds, people who are invested with the public trust, and leaders in ethics. They don't need a dubious, and perhaps spurious, instrument to explain what they are giving and charging relative to other colleges. They know better than the rest of us about their market and pricing, right?

It is this kind of thinking that gave birth to the Net Price Calculator, and it is a strike at the heart of the privileged position of the academy. It is no secret that college costs rise well ahead of the rate of inflation. That inflation happens because colleges have enjoyed an uncritical trust for generations. Now, the market (and Congress) is waking up and asking about cost inflation and the associated value. Parents are becoming more activist because the bills are getting harder to pay. Congress is looking for a symbolic “win” in a troubled economy. And, recent developments in the financial and housing markets have created a demand for accountability. The financial and housing sectors cultivated a "don't ask questions, we know better" attitude. They had their collapse, and with that attitude, higher education could be next.

Comparing our higher education system to failed financial and mortgage corporations are not a stretch. Each has a powerful impact on the economy, each has leadership that makes national policy, and each considers regulation as a hindrance to doing their work. Today, “regulation” is just another word for “accountability”. Consider the Net Price Calculator a corrective, not a threat. Colleges are being asked if they have made good on their promises relative to price point. Graduation rates are being scrutinized along with costs. Colleges should be prepared to be under the same scrutiny that academics demand of their own disciplines. What looks like a wolf threatening the integrity of colleges and universities will be a sheep that warns against the hubris that claimed other sectors. If higher education is not more transparent, there isn’t a bailout large enough to save it.

America needs colleges and universities to be the best that they can be. For the most part, they are doing a good job under challenging circumstances. But, the Net Price Calculator, despite its flaws, allows for an unwelcomed peek inside the ivory tower. The market is asking “Why should we pay what you’re asking”? How colleges answer that question will make all the difference in their success and survival.