Education 'deserts' show limits of relaxing regulations on colleges

The Trump administration is moving to replace punishment of underperforming colleges with “market-based accountability” in which students will get more information about their range of enrollment choices. This is part of a group of regulatory changes aimed at promoting innovation in higher education.

But the market for higher education is different from traditional markets in ways that mean merely providing more information, while helpful, is not enough.

Moreover, approximately 11 million Americans live in “education deserts” that are more than an hour’s drive from a public college that accepts at least 30 percent of applicants. And millions more have sparse options, such as a single community college.

The relaxing of oversight can be a problem in any market in which consumers cannot choose from a diverse array of providers. Education Secretary Betsy DeVos plans to eliminate Obama-era regulations — the gainful employment rules, which apply mostly to for-profit colleges — that restrict federal money to colleges whose graduates do not earn enough to make their loan payments.

The Department of Education proposes replacing these regulations by publishing new data to the consumer-facing College Scorecard website, “which would improve transparency and inform student enrollment decisions through a market-based accountability system.”

Potential students do need more and better information when deciding where to enroll in college, what to study and how much to borrow. The proposed creation of an expanded College Scorecard — which provides average earnings for former students broken down by college and major — seems a clear step in the right direction, given that outcomes can vary markedly across different academic programs at the same college.

But Kristin Blagg, an education policy researcher at the Urban Institute, and I estimated that only 36 percent of students in Virginia can use earnings data to meaningfully shop for their preferred academic program. Many students have only a single program within reach and even if they have a choice, the earnings data may not reveal a substantial difference.

Even when relevant information is available, it is not clear that students will use it. In Virginia, there was relatively little interest among high school students in accessing the kind of information the Trump administration plans to release.

More broadly, research indicates that information alone is rarely enough to affect educational decision-making. Peter Bergman of Columbia, Jeffrey Denning of Brigham Young University and Dayanand Manoli of the University of Texas found that providing information on higher education tax credits had no effect on college enrollment. Another team of economists found no impact from providing low-income families with information on their eligibility for financial aid while they were completing their taxes at H&R Block.

President Donald Trump has been criticized at times for not delivering on campaign promises to help those he has called his “forgotten” supporters. In this case, the release of earnings information will do little to lessen social stratification in higher education and may make it worse. Education deserts are especially prevalent in rural areas and millions of Americans lack an internet connection suitable for online study.

Some evidence shows that people who are already positioned to take advantage of educational investments are most likely to use new data sources to better identify them. A study by the College Board researchers Michael Hurwitz and Jonathan Smith found that the initial introduction of the College Scorecard affected college application behavior only among well-off students and high schools.

Market failures matter not just for the students who make educational choices that do not pan out, but also for the taxpayers who are helping to pay the bill. The federal financial footprint is especially large, at $60 billion in grants and tax benefits and $96 billion in loans each year.

Federal investments provide access to opportunity for millions of students, especially those from low-income families. But if students drop out of college — or earn credentials that are not valued in the labor market — their grant dollars have yielded little return for society and their loans are much less likely to be repaid.

The current gainful employment rules are by no means perfect. For example, they do little to address poor performance at public and nonprofit colleges. A recent analysis of federal data by Jason Delisle of the American Enterprise Institute found that students from the University of Maryland’s online division had more trouble repaying their loans than students at many major for-profit chains.

There is surely more both the Department of Education and Congress could do to ensure the effective use of federal support for higher education, including making changes to existing regulations, but those efforts are more likely to be successful if they build on a better understanding of the problem.

This article originally appeared in The New York Times.