Government Meets Higher Education - What You Need to Know About the Federal Rating System

March 31, 2015

For years, the U.S. government has provided billions in grants and loans to the higher education system while leaving questions of its quality to others. Private publications like U.S. News & World Report’s annual college rankings focus largely on factors like faculty quality, acceptance rates, and test scores of incoming students, but do not assess how much students learn and how they thrive financially after they leave a college or university. In 2013, President Barack Obama proposed a plan for a federal Postsecondary Institution Ratings System (PIRS) that would provide a way for the government to rate the nation’s schools, holding institutions accountable for performance and rising tuition costs.

What are the goals of this system?

When he announced the plan, the President said the current private college rankings systems can create the wrong idea about college quality and colleges sometimes put their own interests above those of students to boost their standings. White House Director of Public Policy Cecilia Munoz reiterated this, stating Obama's plan is meant to directly compete with the U.S. News rankings system.

Recently the Department of Education published its framework for the ratings system, which they plan to fully build out before the 2015-2016 academic year. According to the release, the system aims to achieve three goals:

  1. Help colleges and universities measure, benchmark, and continue to improve the shared principles of access, affordability, and outcomes
  2. Help students and families make informed choices about searching for and selecting a college
  3. Enable the incentive and accountability structure in the federal student aid program to properly align these key principles

Once the system is fully established, the administration hopes to tie the ratings to the $150 billion in annual federal aid it gives out to higher education institutions. Essentially, schools that earn a high rating on the government’s list would be able to offer more student aid than schools at the bottom. Since such an action would require congressional approval, they hope to enact this part of the plan by 2018.

How will these ratings be formulated?

In the first iteration of the ratings, institutions will be separated based on whether they are a four-year or a two-year college. Four-year colleges are classified as institutions that primarily award baccalaureate degrees or higher, while two-year colleges are viewed as degree-granting institutions that primarily award associate degrees and/or certificates. Since the rating system only takes into account the undergraduate programs at these schools, any graduate and non-degree programs will not be considered in the institutions’ ratings. Once qualified schools have been determined, the focus of the system will be based on the measures of:

  • Access (e.g. percentage of students receiving Pell grants)
  • Affordability (e.g. average tuition, scholarships, and loan debt)
  • Outcomes (e.g. graduation and transfer rates, graduate earnings, and advanced degrees of college graduates).

Currently the Department of Education is seeking advice from various thought leaders in order to determine which metrics work best to cover these categories. Many of the metrics that the department has come up with so far – such as the percentage of students receiving Pell Grants, net price by family income, completion rates, and loan repayment outcomes – have been discussed at length during a series of negotiated rulemaking discussions held throughout the last several months. It's still unclear, however, which ones will be used and how much weight they will carry in determining school ratings.

One major difference between the PIRS plan and private publications is that the federal plan is a rating system, not a ranking system. The Department of Education believes that a rating system better fits their goals because it allows them to provide a simple focus without showing any signs of false precision. In order to achieve this simplicity, the Department is not assigning numerical values to categories, but instead categorizing them into one of three level grades: high-performing, low-performing, and those falling in the middle. This will allow the ratings system to identify institutions that are performing extremely well or those that are struggling, without suggesting more nuanced distinctions than their data can meaningfully support.

Criticism of the plan

In general, politicians and higher education institutions agree the issue of college affordability and student debt must be addressed. The majority of people agree with providing prospective students with data that will help them make informed decisions and objective information to help them decide their future. For example, several college presidents said they were open to the government requiring more information about tuition increases, graduation rates, the amount of debt their students incur, and the success of their graduates in the workforce. However, there are still a handful of individuals who do not believe the current plan for the college rating system would be the best solution to helping prospective students.

According to Molly Corbett Broad, President of the American Council on Education, there are concerns “that a federal rating system will carry considerably more weight and authority than those done by others.” This would become a problem because the system currently accounts only for quantitative metrics, leaving out important qualitative characteristics of colleges and universities. By creating a system partially based upon affordability numbers, financial concerns could be elevated above academic ones and could punish schools with liberal arts programs and large numbers of students who major in programs like theater arts, social work, education, or other disciplines that do not typically lead to lucrative jobs.

While many higher education leaders are trying to shoot down the system completely, others are trying to find ways to improve it. For example, President Joseph E. Aoun of Northeastern University proposes that graduates’ actual employment outcomes should focus less on salary data and more on employment rates and alumni feedback as to whether their institutions prepared them well for career and personal success. Another suggestion from several institutions is to create a system that strives to focus on the accountability of schools, instead of being a platform for consumer information. Under this idea, schools would simply have to pass a set of essential standards set by the government instead of being rated on a breadth of information.

The Department of Education realizes that there is much more work to be done and they are actively seeking advice on how to make the system better. It has yet to be determined how much of an impact this system will have on the academic landscape for higher institutions, but criticism will not stop the plan from moving forward. Stay tuned everyone - the Postsecondary Institution Ratings System is coming this summer.

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