On March 23, 2015, U.S. Senator Lamar Alexander (R-TN), chairman of the U.S. Senate Committee on Health, Education, Labor and Pensions (the “HELP Committee”) released staff white papers about the following three issues, as related to the upcoming reauthorization of the Higher Education Act (the “HEA”): accreditation, risk-sharing and data transparency/consumer information.  The HELP Committee also seeks input from the higher education community on these issues, with comments on the white papers requested by April 24, 2015.  The following are summaries of the three white papers, which are available here on the HELP Committee’s website.

“Higher Education Accreditation: Concepts and Proposals”

This white paper expresses concerns about the current system of postsecondary accreditation and proposes potential reforms, specifically the following: 

  1. Refocus accreditation on quality:
  • Proposal #1: Repeal accreditation-related regulations and statutes that are unrelated to direct institutional quality and improvement.  Federal regulations require accreditors to review a myriad of criteria, some of which the white paper suggests are unrelated to academic quality and/or duplicative of requirements issued by states and other Department of Education (the “Department”) regulations.
  • Proposal #2: Permit flexibility and nuance in accreditation reviews.  The white paper suggests that accreditors could be given authority to establish “risk-adjusted” or differentiated reviews for schools based on their accreditation compliance history, which would allow them to focus on schools that need the most assistance and give expedited reviews to schools with “superior track records.”
  • Proposal #3: Encourage gradation, distinction and clarity in accreditation status and reviews.  The white paper proposes that accreditation could be granted based on distinctions and gradations, such as: “accredited and meets standards; accredited with distinction; or accredited and greatly exceeds standards.”  It suggests this could result in improved consumer information and could provide incentives for schools to strive for enhanced performance.
  • Proposal #4: Delink accreditation from institutional eligibility for federal student aid.  The white paper states that while it is difficult to obtain regional accreditation, once a school is accredited, accreditors rarely withdraw accreditation, even for repeated violations of accreditation standards.  As such, the white paper questions whether accreditors place enough emphasis on student achievement, and notes that due to their gatekeeping role, accreditors have been criticized for being “overly prescriptive, intrusive and sometimes usurp[ing] institutional autonomy.”  The white paper suggests that by ending the gatekeeping relationship between accreditors and federal financial aid, accreditation could become a private process focused on institutional improvement rather than a process dictated by federal government enforcement.  
  1. Redesign accreditation to promote competition and innovation
  • Proposal #1: Establish new pathways to accreditation and/or Title IV eligibility for non-college providers of higher education.  The white paper proposes potential quality review models for such providers including: 1) Utilizing the current accreditation infrastructure; 2) Authorizing states to enter into agreements with the Secretary of Education to develop accrediting agencies to accredit such providers; or 3) Establishing a new accreditor.
  • Proposal #2: Eliminate the geography-based structure of regional accrediting agencies.  The white paper proposes potential non-geographic structures of accreditation including: 1) Those based on basic institutional classification (e.g.,doctorate-granting universities, master’s colleges and universities and so on); 2) Those based on selectivity; and 3) Dissolving the regional boundaries, making all regional accreditors national in scope and letting institutions choose the accreditor of their choice.  
  1. Keep recognition of accrediting agencies independent and free from politics
  • Proposal: Ensure NACIQI’s independence.  The white paper suggests this can be accomplished by limiting expansion of the Department’s authority in making policy-related recognition decisions outside of the law and authorizing NACIQI to hire its own staff.

Risk-Sharing/Skin-in-the-Game: Concepts and Proposals

This white paper addresses the notion that colleges and universities are incentivized to increase the volume of students enrolled, due to the associated grant and loan funds, yet federal policy has limited consequences for schools that leave students with massive amounts of student loan debt and defaulted loans.  It specifically notes the following issues of concern: (1) Generous cost of attendance policies can allow for significant student debt unrelated to tuition and fees; (2) Some institutions have high cohort default rates; (3) Taxpayers and students bear the burden and consequences of default; and (4) Some institutions have low student completion rates.

Although a number of federal policies currently exist to address these issues – such as institutional cohort default rates, the 90/10 rule and the gainful employment regulation – the white paper asserts that such policies are “not well focused, represent top-down government mandates, and are enormously complex in design and implementation.”   Further, the white paper states that the Department’s enforcement of the cohort default rate requirements is “uneven and inconsistent.”  It describes the 90/10 rule on proprietary institutions as creating a “perverse incentive” for institutions to raise their tuition to generate revenue that does not count as federal funds.  It also takes issue with the Department’s regulation on Gainful Employment programs, stating it relies on “arbitrary and elaborate definitions of what is a manageable amount of student debt….”  According to the white paper, these and other “accountability” measures require institutions to allocate significant funds and, reportedly, an additional 7 million hours of staff time to comply.  It proposes the following concepts for constructing a legislative framework to address these issues: 

  1. Repayment of federal student loans: Colleges and universities would assume a liability based on one or more factors related to their former students’ repayment of federal student loans.
  2. Loan guarantees on completion/retention: Colleges and universities would guarantee a percentage of loan amounts for current students.
  3. Cost structure: Colleges and universities would assume liabilities that differ based on the loan amount associated with some portion of an institution’s cost of attendance.
  4. Federal student aid insurance fund: Colleges and universities would pay a yearly premium into an insurance fund that is based on a percentage of the institution’s previous year’s volume of federal financial aid and other risk factors.  Each year, this payment would increase or decrease based on a variety of risk factors.  

The white paper further notes that institutions lack regulatory authority and tools to properly manage student debt levels, as federal student aid recipients are entitled to their full amount of federal student loans, regardless of whether all funds are necessary for educational expenses.  It states that any new risk-sharing policies must be conditioned upon the examination of other provisions in current law, and that any new policies should be reviewed to ensure they do not result in harmful unintended consequences, such as institutions admitting only students who are at low risk of default, dropout, or failure.  The white paper further also states that any proposals to make institutions partially responsible for the repayment of federal student loans should take into account difficult labor markets and other factors outside of an institution’s control.                        

Federal Postsecondary Data Transparency and Consumer Information:

Concepts and Proposals

This third white paper discusses the following concerns about data transparency and consumer information: 

  1. Some federally collected data may serve no purpose for policymakers or consumers.
  2. Despite expansive data collections, the federal government lacks key information regarding student success necessary for policymakers evaluating the effectiveness of federal programs and informed consumer decision-making.
  3. Data collection and preparation is highly burdensome for colleges and universities.
  4. Consumers do not use federal postsecondary data, consumer disclosures or tools when navigating the higher education marketplace.
  5. Federal data is being manipulated – diminishing its comparability and obscuring transparency.

In response to the above concerns, the white paper suggests that the upcoming HEA reauthorization should adopt the following concepts: 

  1. Eliminate data collection or disclosures unrelated to the needs of federal program management or consumer decision-making.  For example, the HEA could contain a subpart on data collections and disclosures, to help prevent the overgrowth of data collection in the future.
  2. Increase data quality and transparency for federal program management and for informed consumer decision-making.  This could include allowing the new Outcomes Measures Integrated Postsecondary Education Data System to go into place before making new improvements.
  3. Make federal data useful and usable for consumers.  For instance, schools should use currently existing Bureau of Labor Statistics data on average salaries and information collected for federal student aid purposes to provide prospective students and families with relevant information to guide their postsecondary decisions.
  4. Constraining the federal role: Protecting privacy and preventing abuse.  This could include safeguarding the federal ban on student level data.