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Commentary

A Good Idea: More Job Earnings Data on the College Scorecard



I have claimed for years that three words beginning with “I” hold the key to major positive changes in higher education: information, incentives and innovation. Education Secretary Betsy DeVos is proposing taking a major step to improve information provided to students and their families, a positive step in terms of rationalizing our otherwise inefficient and sometimes dysfunctional colleges and universities.

Specifically, Secretary DeVos wants to greatly expand one positive contribution of the Obama years, the College Scorecard, to provide students with much greater amounts of information on earnings potential after college. Right now, the Scorecard gives average earnings received after attending each school. There are two huge problems, however. First, the data only include a subset of those attending each institution, specifically those receiving federal student financial aid—and not transferring to other schools. Thus a large number of students—sometimes even a majority—of students are excluded, so reported earnings data may not accurately represent the student body as a whole.

The second problem, one DeVos wants explicitly addressed, is that within institutions earnings of graduates vary enormously by field of study. Petroleum engineer earnings typically are about double those of art history majors. Some schools with mediocre reputations have a few highly regarded programs whose students typically get good high paying jobs. By providing average earnings by major, prospective students can gain much better information on the institution best for them. Also, it appears average student debt levels will be provided by major, so students can roughly assess not only the benefits (earnings) of studying their prospective major field of study, but also costs (debt obligations).

Some parts of the higher education establishment will fight this proposal vehemently, especially the trade association for the liberal arts colleges, the National Association of Independent Colleges and Universities (NAICU). They have argued providing this information raises privacy concerns, in my opinion an almost completely bogus argument since data will not be reported for individual students, and the raw data will be existing IRS tax information. Somewhat more legitimate is the assertion that getting this information is costly. Also, there are some statistically related issues. For example, some schools have only a few recent graduates in some majors, leading to the possibility of distorted numbers if one or two graduates have exceptionally high or low earnings. It may be necessary to provide data for a smaller number of fields to overcome this problem.

NAICU argues that there is more to the college experience than simply the job obtained at the end. True, but so what? The earnings data still are useful, even though there is also other useful information of interest to prospective students. Moreover, the data provided are helpful not only to consumers but to universities themselves. If a college is turning out large number of, say, sociology majors whose earnings after attending average only $33,000 (in part because many take jobs as baristas or Uber drivers), but a smaller number of economics majors average $50,000 a year, perhaps the school should redirect more of its resources to training economists, and less to promoting sociology.

I have testified before Congress that I think the U.S. Department of Education has had a negative impact on higher education in America, contributing to excessive regulation and bureaucracy and reducing the ability of individual schools to do their own thing, being distinctive, innovative and entrepreneurial. That said, however, the Department exists, and it (or companion federal agencies) collect lots of useful information, information that can help consumers, university officials and governmental policy makers make intelligent resource decisions.

Simultaneously, the Department is moving away from having a “gainful employment rule,” requiring schools receiving aid from the federal government to have a certain proportion of recent students who have decent jobs. While conceptually not a bad idea, it has been used largely to browbeat for-profit institutions, and there are issues in defining gainful employment. The new approach is cleaner and more inclusive.


Richard K. Vedder is a Senior Fellow at the Independent Institute, Distinguished Emeritus Professor of Economics at Ohio University, and co-author (with Lowell Gallaway) of the award-winning Independent Institute book, Out of Work: Unemployment and Government in Twentieth-Century America.


From Richard K. Vedder
CAN TEACHERS OWN THEIR OWN SCHOOLS?: New Strategies for Educational Excellence
In Can Teachers Own Their Own Schools?, Richard Vedder examines the economics, history, and politics of education and argues that public schools should be privatized. Privatized public schools would benefit from competition, market discipline, and the incentives essential to produce cost-effective, educational quality, and attract the additional funding and expertise needed to revolutionize school systems.







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