Arnold Kling  

Holding Universities Accountable

It's Official: You Won't be A... Rajan and Reinhart...

Glenn Reynolds writes,

Make institutions of higher education partially liable when students are unable to pay student loans. A really strict system would make the school a co-signer, but making it even 5 or 10% liable for missed payments would really change the dynamic. Give schools some skin in the game.

Suppose, however, that institutions have very little control over the quality of education, and that their main driver of student performance is the admissions office. Making them partially liable for student loan repayment would mostly lead them to be stricter about admissions. Not that this makes institutional liability a bad idea, but I'm just sayin'.

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COMMENTS (9 to date)
Jlonsdale writes:

Couldn't universities also get around this by raising the price? It doesn't seem like much of an impact if they lose 5% on a student loan that was used to pay themselves.

Foobarista writes:

Maybe they'd be more selective about who takes random "studies" majors? You can only major in trisexual studies if you are independently wealthy, since it will lead you to a rewarding career in the housekeeping or janitorial service industries. But if you major in chemical engineering, you're good...

Personally, I think I'd rather see a "loan to value" formula used with college finance, just as it is with mortgages. Maybe something like a loan-to-value of no more than 50% (meaning the rest would have to be out-of-pocket, direct grants, etc).

ZW writes:

Isn't better control of admissions itself a powerful lever on the quality of education?

Silas Barta writes:

Couldn't some clever lawyer find some common law doctrine under which to sue colleges *before* such a measure is taken? Something maybe related to "fraudlent representation"?

And would that be a good or a bad thing (consider the ex-post-facto nature of it)?

Arthur_500 writes:

Actually this is a requirement already in place - for some schools. There are two classes of schools and one of them is deemed lower education in that they prepare students for the workplace. Many of these schools can offer Associates and Bachelor Degrees but because they are oriented towards the workplace rather than pure education (whatever that is) they must make sure their students are repaying their loans or they can be eliminated from access to Federal Student Loan Programs.
This manifests itself in two ways. Yes one aspect is in trying to get students in to the schools that they think will be successful and go on to repay their loans.
The second action comes in student success support and post education job assistance. What a concept!
I was shocked several years ago when my son was at orientation and they said the average student took 5 1/2 years to graduate and that was down from 7. The school never cared about the student or how long they were there (Doonsbury) as long as the cash kept coming in.
Schools have been poorly run for many years and maybe this will get them more in line with teaching useful education that students can use upon graduation. Right now, I would argue, there is really little need for most college.

Troy Camplin writes:

Stricter admission requirements certainly wouldn't be a bad thing.

Might make them work a little harder making sure students got jobs, though. I might not even have to be working at this hotel with a policy like that.

Ted Craig writes:

Between this post and your previous one about campus drinking, I'm starting to believe our better high schools are better run that many of our universities. One reason for this is top-down control. Colleges are an "inmates running the asylum" situation, where students control most aspects. As I said yesterday, there will be no other time in your life when this occurs unless you obtain immense wealth. Even people who own their businesses answer to their customers. The other is high schools focus only on education, while universities have two goals - education and research, with research often trumping education.

ajb writes:

Anything that moves schools to stricter admissions standards and penalizes low performing social admits (for reasons of money or diversity) can only be a good thing for the US. If that strains the current system and leads to conflict, so much the better.

Jim Collins writes:

Wouldn't that create an incentive for grade inflation? If the university becomes liable for unpaid loans then wouldn't they want to inflate the student's GPA to improve their chances in the job market? Every failed student would be a potential financial liability to the university. They'd be better off passing everyone.

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