Why Federal College Ratings Won’t Rein In Tuition

Career College Central Summary:

  • College costs have been rising for decades. Slowing — or even better, reversing — that trend would get more people into college and help reduce student debt.
  • The Obama administration is working on an ambitious plan intended to rein in college costs, and it deserves credit for tackling this tough job.
  • Unfortunately, I don’t think it’s going to work, at least not in controlling tuition at public colleges, which enroll a vast majority of students.
  • The plan might dampen prices at expensive private colleges, but some of them may close if they can’t survive on lower tuition.Yet here is a surprising fact: Public colleges are collecting about the same revenue per student today as they were 25 years ago.
  • In 1988, educational revenue per full-time equivalent student at public colleges was $11,300; in 2013, it was $11,500. (These amounts are adjusted for inflation and are expressed in 2013 dollars.)
  • When it comes to private colleges, I am more optimistic that the rating system could affect consumer choices and college prices.
  • Many private, four-year colleges compete nationally for students.
  • A transparent rating could help a student who is wavering among several such schools to pick the least expensive one. And many private colleges have close substitutes in the public sector, where tuition prices are much lower.
  • In particular, community colleges and two-year, for-profit colleges (known as proprietary schools) offer many of the same training programs — but the proprietary schools almost always charge much higher tuition, and their students take on larger loans.
  • A rating system could nudge these students toward the cheaper community colleges.

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