Helping the buyer beware in the higher education marketplace

As reported in today’s Boston Globe, the coming “crackdown” on higher education institutions with high student default rates is long overdue.

It’s no surprise that many of the institutions that will be affected are in the for-profit sector, a market with significant growth in recent years producing mixed results.  Perhaps it’s time to learn some Latin, like caveat emptor.

Step one with helping the “buyer beware” is strengthening college and career counseling.  Bulging student loan debt and high default rates is a significant problem for consumers, i.e. students.  As we document in our report Planning for College, the rising cost of higher education at both public and private colleges has significant consequences for students and society.  For example:

Foremost, this report shows how families have taken on greater risk and responsibility by borrowing increasingly large sums to pay for college. Like in other areas of American life, this shift requires sophisticated family financial skills and reliable information to make informed decisions about the price and quality of the educational experience they are purchasing. Because most families have not developed these skills, and even those with some sophistication lack access to the requisite information, too many students and families make choices that reduce return on their own investment and other public and private dollars that support them.

In addition to more counseling, greater transparency between the price of higher education and the outcomes of completing a degree—and we do mean completing—is also needed as students and families take on more financial risk. 

I’m not ready to throw the for-profit sector under the bus just yet.  For-profit institutions like the University of Phoenix have pushed traditional—or nonprofit—higher education institutions to be more responsive to the adult student marketplace and strengthen connections between careers and learning.  And, in Gateway Cities, for-profit schools can help meet the needs of nontraditional students seeking higher-level skills if public and nonprofit institutions, for whatever reason, lack the capacity or the right program mix.  In other words, competition is not such a bad thing as long as we all know what we’re paying for.

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