As promised in last night’s State of the Union Address, today the Administration unveiled its new College Scorecard. By providing information about colleges’ costs and outcomes in a clear and comparable format, it has the potential to be a game-changer for higher education. We have long touted the importance of the Scorecard and other tools designed to help students and families pick a college, and we applaud the Administration for supporting and promoting a higher education agenda that puts students first.
Overall, the data provided on the Scorecard are what students and families need to better understand their college options. Today’s version of the Scorecard includes some marked improvement over earlier drafts: it is more interactive and now links directly to colleges’ own net price calculators. However, two types of data on the Scorecard are less helpful and even downright misleading:
- Loan default rates are provided without any context about how many students at the college borrow and are therefore at risk of ever defaulting. For instance, American River College’s default rate of 27.5% is much higher than the national average of 13.4%. But what consumers can’t tell from the Scorecard is that only 8% of American River College students actually borrow federal loans. The default rate only represents the share of borrowers – not students – who default. Certainly American River should work on improving its default rate. But when 92% of its students never borrowed in the first place, implying that the default rate alone is indicative of student outcomes more generally does a disservice to would-be students.
- The median borrowing figures provided are for all federal loan borrowers who entered repayment, regardless of whether the student entered repayment after graduating or dropping out after a semester or two. This makes colleges with high drop-out rates look like a good deal, compares apples to oranges, and undermines the value of other outcome information. Here’s an example. The Scorecard shows that the median federal debt of borrowers entering repayment at Grand Canyon University and Duke University (which both primarily grant bachelor’s degrees) is very similar: $9,500 at Grand Canyon and $8,840 at Duke.
Meanwhile, other federal data not reflected on the Scorecard show that these figures represent very different student outcomes. Because 41% of entering first-time, full-time students at Grand Canyon didn’t return for a second year, the low median debt for borrowers entering repayment reflects just one year of loans in many cases. Indeed, the average federal loan amount for undergraduate borrowers at Grand Canyon in 2010-11 – what they borrowed in just that one year -- is a remarkably similar figure: $9,444. In contrast, all but 3% of entering first-time, full-time students at Duke return for a second year. And the average annual federal loan amount for undergraduate borrowers is $3,751, less than half their median debt at repayment. That makes sense considering 94% of their entering students leave with degrees.
In these cases, bad comparisons are worse than no comparisons. Fortunately, both of these data problems have simple fixes. It would be easy for the Department of Education to add the share of students borrowing to the loan default rate box and provide the necessary context for interpreting default rates. For the median borrowing figures, the Department is already taking steps to collect cumulative federal debt at graduation -- which would be an apples-to-apples comparison of students at the same point in their academic trajectory. Until those figures are available, the Scorecard should take the same approach to median borrowing as it already does to earnings information: make clear that federal data aren’t yet available and encourage prospective students to ask the school for more information.
For more about how to improve information for students and families and other ways to increase college affordability and completion, see TICAS’ new white paper (released yesterday): Aligning the Means and the Ends: How to Improve Federal Student Aid and Increase College Access and Success.