High Standards for Higher Education

In the United States, many students are graduating from college with enormous amounts of debt, little or no job experience, and a shortage of skills necessary to attain employment in their desired fields.  The most recent statistics show that over 44 million Americans hold over $1.3 trillion in student loan debt.[1]  This amount is equal to the gross domestic product of the country of South Korea.[2]  Some scholars argue that the potentially negative effects of higher education on many students necessitates state-driven accountability for colleges across the nation.  However, state-driven accountability systems designed to improve the education sector likely harm students and societies through homogenization, discrimination, rising costs, and deteriorated standards.

Proponents of top-down accountability measures in the K-12 education system claim that they are necessary since young children cannot make completely rational decisions about school attendance.  In addition, they lack the funding necessary to pay for private school tuition, and their parents may not have the resources, knowledge, or incentives to purchase homes based on school quality levels.  Importantly, families face colossal transaction costs associated with opting out of residentially-assigned public schools.  Oftentimes, perceived quality differentials are not excessive enough for families to make the move, so children must remain in low-quality educational institutions.  In this sense, top-down accountability driven by the state is necessary to ensure minimum quality levels in K-12 institutions.

Imperfect Rationality

Some scholars argue for top-down accountability systems in higher education as well.  After all, students are graduating from college with student loan payments of around $350 per month, and over a tenth of student loans become delinquent.  Since many students graduating from college end up arguably worse off than they would have been (buried in debt and four or more years of unexploited on-the-job training), we need to hold these institutions accountable to higher quality standards, they contend.  It is also argued that the standards be determined by state officials since young adults lack expert wisdom and doctorate degrees.

However, the rationality argument is not as strong as it is for K-12 settings.  College students are adults that can seek information on how to select higher education institutions.  Similarly, young adults can go to the grocery store without being nutritionists.  Sure, individuals with imperfect information may make suboptimal decisions; however, doing so can help them realize a level of responsibility and improve their future choices.  In addition, of course, dictating the types of minimum standards in place may prevent some students from making poor decisions.  Nevertheless, doing so would ensure that most students would be harmed in unintended ways.

Lowering the Bar

Obviously, having a state-driven standard requires that a small number of bureaucrats determine what the measure ought to be.  In the case of higher education, accountability standards have been based on simple measures such as retention, graduation rates, and job placement.[3]  These indicators all seem important at first glance.  We want students to persist through college, attain a degree, and finish with the skills necessary for desired employment.  The problem is strongly related to Campbell’s Law; in the political sphere, an incentivized measure can become useless through corruption and gaming of the system.  For example, if colleges were financially incentivized to have high graduation rates, they would be more likely to allow students to pass right through.  Similarly, job placement incentives could lower the bar for the types of employment that are pursued.


If I were to pay you each time you smiled at your child, you would have an incentive to do so more often.  Therefore, at the margin, you would smile at your child even when they were not behaving as well as you would have otherwise liked.  The financial nudge may very well result in parents inadvertently conditioning children to behave worse in society.  The overall result is that the child is harmed through ineffective priming and society is harmed through costly rewards for smiling.

Perhaps most striking is the fact that these types of financial incentives push universities to admit students that have shown promise in the traditional K-12 setting.  If a disadvantaged student did not perform very well on standardized tests, or they are from a minority group that is less likely to graduate from college, a specific institution would have an incentive to discriminate against them.  Of course, the institution would believe they were being selective on merit; however, the measures could systemically favor non-minority students.  At the margin, institutions that would not admit students based on K-12 merit would now have to determine what merit means to the state.  Oftentimes, this type of selectivity comes in the form of cutting student off starting from the bottom of the distribution in terms of test scores or GPA.  In this way, students from disadvantaged households will be less likely to have the chance to attend a selective institution.  Importantly, colleges may be missing out on diverse talents that are not easily captured by ordinary academic achievement.

Less Specialization

The largest impact is on the supply side of higher education.  If all educational institutions are incentivized by state-driven accountability measures, we should expect colleges to construct similar educational products.  Similarly, if the government paid automobile manufacturers large sums of money to produce fuel-efficient cars, the market for cars would undoubtedly consist of automobiles with higher fuel efficiency, even if individual consumers did not care about that specific feature.  If the supply of higher education gravitates towards homogeneity, specialized instruction will be less likely to occur.  Since children are unique in their skills and interests, homogenization would limit the strength of the match between educators and students.  A less specialized educational product could lead to lower quality levels and could harm students and even employers seeking diverse talent.

If higher education institutions and their missions were uniformly shaped by top-down accountability measures, the K-12 system would be affected as well.  Traditional K-12 schools and their leaders would recognize the measures adopted by universities for admissions.  In addition, if K-12 institutions have the goal of preparing children for college, they will attempt to adopt a system that is the most efficient in doing so.  The result: students from the age of five to around twenty-two must narrowly focus on measures deemed important by a relatively small number of officials.  Instead, an individual could use those seventeen years of their lives determining what type of education will provide them with the skills necessary to gain desirable employment and a higher standard of living.

[1] https://studentloanhero.com/student-loan-debt-statistics/

[2] http://www.tradingeconomics.com/south-korea/gdp

[3] http://journals.sagepub.com/doi/pdf/10.1177/0002716214541042


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