The Government Just Made It Much Easier to Tell Which Colleges Are a Waste of Money

Harvard University: Not a waste of money.

Photo by Joe Raedle/Getty Images

President Obama caused a rash of heartburn in the world of higher education two years ago when he announced that the government planned to start ranking colleges based on their students’ outcomes, such as their graduation rates, salaries, and success paying back loans. The idea was to help young adults make more informed decisions about applying to school while humiliating the worst-performing institutions into mending their ways. Longer term, the administration wanted to tie schools’ eligibility for certain kinds of financial aid to their performance on the new grading system.

The concept was controversial for two reasons: because colleges don’t want to be held accountable for students who flounder once they leave campus, and because it wasn’t clear Washington could come up with a single rankings methodology that could apply fairly across the entire scope of higher-ed, from Ivy League universities to community colleges to cosmetology schools.

This weekend, the administration changed course. The rankings appear to be dead. On Saturday, the Department of Education unveiled a new website known as the College Scorecard, which still allows students to compare schools based on what their alums earn, along with price, financial aid, student retention, and diversity, among other details. It also made public the vast and unprecedented trove of data underpinning the site. So the White House seems to have given up on rating colleges from best to worst, while still making it easier to figure out which schools are a waste of money and which are worth it.

There has never been good official data on what students at specific colleges and universities earn after school. Instead, researchers and consumers have had to rely on sources such as PayScale, which are based on self-reported numbers. But by combining figures from the Department of Education’s student aid database with tax information, the government could gather earnings info for every former undergraduate who borrowed a federal loan or received a Pell grant at more than 7,000 institutions. It’s not perfect—students who never borrowed or received federal financial aid aren’t covered. But it’s a huge step forward for transparency.

Now, a high schooler deciding if he wants to apply to, for example, Sarah Lawrence can pop onto the federal site and get a snapshot like the below, which contrasts how much the median former student earns 10 years after enrolling with the average cost of attendance and graduation rates. The truly inquisitive can pop into the larger database to find out what former students at the 10th, 25th, 75th, and 90th percentile earn as well. (These figures include dropouts as well as graduates.)

A few clicks away, they can get a clear picture of what how indebted students are.

There are many who don’t think colleges shouldn’t be held accountable for what their ex-students earn, because to some degree it’s out of their hands. Ultimately, what people earn in their career has more to do with their family background and the skills they already have by the time they arrive on campus than precisely where they went to school. While that might be an argument against grading colleges based on their students’ earnings, making the information public is clearly the right thing to do. Students deserve to know what they can realistically expect to earn after attending school, and whether that justifies the tuition they will potentially have to pay.

That information might not be absolutely crucial for the sorts of students who are considering a parent-funded humanities degree at an expensive liberal arts college, but it’s certainly important for the legions of Americans who might be considering getting a vocational degree at a for-profit, for instance. To make that sort of cost-benefit analysis simpler, the Department of Education has come up with an especially great metric, which shows the percentage of students from a college who earn more than $25,000 a year 10 years post enrollment—the average salary of a young high-school diploma holder. As Vox’s Libby Nelson reports, there are hundreds of institutions in the federal database where less than half of former attendees hit that mark, which is a pretty good indicator that many of these schools are a waste of cash.

As for the rankings themselves, there may be hope for them yet. By making its data free to the public, the Department of Education is basically inviting other organizations to come up with their own grading systems. Already, PayScale is incorporating the numbers into its annual report on colleges’ return on investment. Presumably, other creative organizations will follow suit. Expect college administrators to complain bitterly.