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In a wide-ranging policy address on Tuesday, Utah Senator Mike Lee laid out a proposal to change how the federal government regulates access to more than $150 billion in student financial aid.
Since 1965, the federal government has farmed this gate-keeping job out to third-party accreditation agencies that are closely allied with existing higher education institutions. So while what we demand of higher education has changed tremendously since that time, we’ve clung to a regulatory system designed for a totally different era. As I explained in National Review earlier this month:
[T]his gatekeeping power is built on a conflict of interest: Accreditors were created by existing colleges, subsist on fees from the campuses they evaluate, and use faculty from one accredited institution to assess another. Accreditation reviews enshrine the traditional college model by focusing on such things as faculty credentials, facilities, and even the number of books in the library.
Lee echoed these concerns on Tuesday, arguing that this regulatory regime “restricts access to higher education and inflates its cost, inuring unfairly to the advantage of special interests at the expense of students, teachers, and taxpayers.”
To open up room for new competitors, Lee proposed a policy that would allow states to set up and run their own alternative accreditation regime. Under the proposal, interested states would enter into an agreement with the Department of Education to set up their own process, and providers certified via this new path would then be eligible to receive federal financial aid money.
In theory, the new path would allow states to certify a wide variety of postsecondary options, from existing institutions to apprenticeship programs to providers of specialized courses, offered by a wide variety of actors, from firms to labor unions to community organizations. It could also open opportunities to create offerings that are customized to a state’s particular labor market needs.
There’s a lot to like about Lee’s idea.
First, it’s a concrete proposal to reform a system that has been criticized for decades. Policymakers of different political stripes seem dissatisfied with the existing system. But in the absence of credible alternatives, reform conversations tend to bog down.
Second, it doesn’t seek to replace the existing accreditation regime, but create an alternative (and potentially a competitor) to it. This is a savvier play than trying to dismantle a system with lots of powerful stakeholders head-on. It resembles the charter school and alternative teacher licensure movements that have successfully taken root in K-12 (see Jal Mehta and Steve Teles’ excellent AEI paper on this approach to education reform).
Third, it devolves decision-making power to leaders who are well-equipped to recognize the specific needs of their local economies and employers. Some accreditation reform proponents on the left seem to favor a more centralized approval process run out of the Department of Education or a nonpartisan federal commission. But those same reformers are suggesting that this centralized body would in some cases certify individual courses. How could we expect a centralized commission to judge courses across a wide range of disciplines and occupations? In theory, anyway, the Lee proposal would empower an array of certifiers to focus on what they know best.
There are, however, a couple of areas to keep an eye on:
First, some states have their own high barriers to entry, and endowing them with accreditation power would allow them to be even more “academically protectionist” than they already are. As Daniel Lautzenheiser and I wrote this past summer, the authorization process often “borders on the absurd.” As of 2012, one state required new colleges who wished to be authorized in the state to hand over:
the name, address, phone number, and amount invested for all investors; character references for institution directors and each academic program director; and “a flow chart, outline or similar document depicting how the class will be taught on a day-to-day basis, including as a minimum the completion time for each graded objective.”
Ideally, the approval process by which states would earn this power from the Secretary of Education could guard against this kind of behavior, or even require states to lower these barriers as a prerequisite for applying.
Second, it will be important to hold states that sign onto an agreement accountable for how well their new system performs vis-Ã -vis taxpayer dollars. Presumably, the Lee proposal would call for periodic review of states to ensure the agreement was being adhered to. But you could also imagine putting states and/or the providers they accredit on the hook for a portion of defaulted federal loan dollars. In the Food Stamp program, for instance, states must pay the federal government back when they make errors in giving out benefits.
These are issues that can be debated as the policy takes shape. At the very least, Lee’s proposal gives reformers a concrete place to start a discussion about what a more productive approach to regulation might look like. That alone is a step forward.
Andrew P. Kelly is director of the American Enterprise Institute’s Center on Higher Education Reform.
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