For market pressure to ensure quality and affordability in higher education, consumers must have not only the power to choose colleges, but also the power to compare those colleges on basic measures of cost and quality. If prospective students lack the information, ability, or motivation to make decisions on the basis of such comparisons, then the market is unlikely to reward high-quality providers and compel others to improve.
Compared with other big investments that we make in life--like buying a house or a car--the higher-education market is information-poor for most consumers, at least when it comes to measures of quality and cost.
Take college costs: Parents and students can easily track down "sticker prices," but few students actually pay full freight. In contrast, calculating what a prospective student can expect to pay in out-of-pocket expenses (a far more useful piece of data) is notoriously difficult.
Quality, in terms of how much students actually learn or how successful they are after they graduate, is even more difficult to judge. What kind of a return on investment can individuals expect from the colleges in their area? How do graduates' debt-to-income ratios vary from institution to institution? On questions of institutional quality like those, reams of federal, state, and institutional data are of little help to prospective students, because the information does not include answers to those fundamental questions.
That's partly because colleges and universities are loath to be compared on any characteristics that may differentiate them from their peers. Submitting to such comparisons could empower savvy students to vote with their feet, potentially unleashing the very market pressures that can drive improvements in quality. Until policy makers and institutions make a push to become more transparent about costs and student outcomes, the higher-education market will fail to ensure a level of quality that reflects our national aspirations.
Andrew P. Kelly is a research fellow at AEI.