Home > News > Will a Ratings System Fix the College Cost Problem?

Comments 0 Comments
Advertiser Disclosure


The 2014 higher education financial freak-out is underway.

Earlier this month, the Obama administration released several hundred pages of comments from schools, advocacy groups and other interested parties with regard to a rating system that, when implemented, would hold colleges in the U.S. accountable for their performance—or lack thereof.

Certainly, consumer-learners (and their parents) are eager for greater transparency: an estimated two-thirds of all college students take on debt while they’re there, only half end up graduating and more than a third of those who do are underemployed and underpaid. What’s more, if all the delinquencies, defaults, forbearances and payment deferments were taken into account, we’d probably find that nearly half of all the loans that are currently being repaid are also in trouble.

Unsurprisingly, many schools and their advocates are challenging the administration’s efforts to put their feet to the fire on these matters. After all, there’s a lot of money at stake in the form of federally sponsored aid and loans.

Wouldn’t it be more productive, however, if the schools and their supporters instead turned their attention to upgrading and delivering a more affordable product, especially when the funding that would be needed to do that is within reach?

What Would It Take?

Some of the money is “buried” in the land the schools own and the buildings they’ve constructed atop it. Dormitories and cafeterias could be sold and the structures converted into fully functional, self-contained apartments, grocery stores and eateries. As a result, not only would fresh capital flow back into institutional coffers, but doing so would also help students to learn about self-sufficiency, a life skill that colleges and universities need to do a better job of inculcating.

As for the fabulously outfitted sports centers that are used to attract the attention of students (and the parents who long to be in their sneakers) these, too, can be privatized with memberships sold to the community-at-large. Classrooms that are no longer needed because of expanded online and hybrid-course offerings could be rented out to local companies for use as conference and training centers. The space could even be transformed into incubators for fledgling startups that may, in turn, rent a portion of the schools’ administrative and technological capacity, as well.

Speaking of capacity, according to a Goldwater Institute policy report, per-student spending on full-time administrative personnel grew by more than 60% between 1993 and 2007, when adjusted for inflation. That’s nearly twice the rate for instructional spending, which is mind-boggling: the delivery of quality educational content is what distinguishes institutions and hones competitive position.

Consider, for example, a state that has a half dozen private colleges and universities of roughly the same size. Undoubtedly, each has its own area of specialty and other unique attributes. But each also has its own leadership hierarchy (president, provost and chief financial officer), administrative functions (accounting, purchasing and human resources) and technological platforms.

Imagine the savings that might be wrung out of the system if the back ends of these institutions were consolidated. In fact, if these were public companies, they would have already been acquired and restructured because, as anyone who’s lived through a corporate takeover knows, when you don’t do it for yourself someone else will do it for you.

Back to Basics

While we’re at it, let’s not forget the foundational role that high school plays in preparing our children for the next step in their academic pursuits. In particular, rather than shoe-horning students into college—any college, for that matter—just to bolster the numbers, guidance counselors should ensure that students are indeed ready for the academic challenges they’ll face and the costs they should expect to incur along the way.

So when it comes to establishing a set of measurements that’s useful to those who pay the bills—students and parents that struggle to make ends meet, taxpayers who support the government’s educational programs, employers that offer educational assistance, alumnae who contribute to endowment funds and lenders that provide mortgages and other types of financing—it all boils down to three fundamentally important categories of data: completion rates, student-loan payment performance and employment versus underemployment.

Everything else is either secondary—or just plain noise.

This story is an Op/Ed contribution to Credit.com and does not necessarily represent the views of the company or its affiliates.

More on Student Loans:

Image: Peter Spiro

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Credit.com receives compensation for the financial products and services advertised on this site if our users apply for and sign up for any of them.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team