Is there enough transparency at US universities?

As university tuition costs increase and the job market remains weak, with many college graduates unemployed or underemployed, the choice of university for young US adults becomes increasingly a financial one. And to make a good financial choice, one needs good information.

Consider these facts: even after controlling for inflation, between 1980 and 2010 the cost of tuition, room and board for full-time undergraduate students in the United States more than doubled. At the same time, in 2012 unemployment and underemployment rates for bachelor’s degree holders under the age of 25 reached 53.6 per cent, the largest share in 11 years. Various sources report that unemployment will remain high in 2013 and things are unlikely to get better with the prospect of sequester and significant spending cuts.

It’s no surprise that college applicants are increasingly looking at universities from a financial cost–benefit perspective. It is therefore crucial for applicants to be able to weigh the cost of a degree against future opportunities and expected income.

Job placement data

While graduates’ job placement and salary data have become essential indicators for US college applicants, the availability, quality, transparency and reliability of the data have lagged far behind. Very few US universities publish job placement data online. Those that do often issue encouraging figures indicating that a great majority of students, frequently over 90 per cent, find a job soon after graduation. These figures do not always tell the whole story. There are many cases of inaccuracies, manipulations and abuses undertaken to inflate job placement rates and ultimately attract more applicants.

Job placement data provided by US law schools and for-profit universities represent particularly interesting case studies, for various reasons. On the one hand, for-profit universities, which offer professional training programmes, tend to attract the most vulnerable categories of students. On the other hand, law schools, which are currently experiencing a crisis due to increasing costs and a weak job market for law professionals, are under scrutiny for their inconsistent transparency policies.

Of course, to people outside the United States this argument may appear preposterous: for instance, virtually no European universities publish information on the professional outcomes of their graduates. However, attending university in Europe is not even remotely as expensive as it is in the United States: college students in the United States pay an average of US$13,856 per year in tuition, compared to US$5,288 in the United Kingdom, US$933 in Germany, US$596 in Norway and US$585 in France. Unsurprisingly, US student loan debt has been a growing concern over the past few years (in 2010 it surpassed auto and credit card debt as one of the main sources of personal debt in the country).

College rankings

The lack of transparency goes beyond job placement and salary data. In the fall of 2012, after months spent researching these issues for an article that will appear in the Global Corruption Report, I opened the newspapers one morning to find that my very own Alma Mater, George Washington University, had been caught misstating class rankings for incoming freshmen. Other reputable universities such as Bucknell, Claremont McKenna, Tulane and Emory, were recently involved in similar practices.

Class rankings for incoming freshmen are among indicators collected by the magazine U.S. News and World Report to build its famous College Rankings. By misrepresenting these statistics, colleges can improve their standing in the ranking and ultimately attract more applicants. Despite recent criticism, college rankings provide useful information to applicants. But providing false information entirely defeats the purpose and misleads students.

Student loan debt

The importance of providing accurate and transparent information to college applicants cannot be overstated. US college students often take on huge amounts of debt to pay for college, with the expectation that their education will yield significant financial gains. If the student does not benefit financially from their education – for example because the university has fuelled unrealistic employment or salary expectations – then students, especially needy ones, are unlikely to be able to repay their loans.

Positive developments

The balance is not completely negative though. The Obama administration has already taken some important steps to impose greater levels of accountability through the “Gainful Employment” regulations, which apply to for-profit colleges. Other efforts are being undertaken by the American Bar Association Section of Legal Education, the body accrediting US law schools, which in 2012 approved strengthened transparency requirements.

In recent months, some additional, positive initiatives have emerged. Both the federal and local governments are increasingly recognising that more transparent information provided by universities to applicants can help create more realistic employment and salary expectations, and ultimately help reduce student loan default rates. The ultimate goal is to “hold colleges accountable for what happens after graduation.”

As reported by the Wall Street Journal, the Obama administration is preparing a “College Scorecard” that would provide an overview of key factors such as expected salaries for graduates, average debt load, graduation rates and loan repayment rates. In Congress, legislation has recently been introduced that would require states to make average salaries of college graduates available on the US Department of Education’s website. Some states have independently taken steps in the direction of increasing transparency. Virginia recently started publishing graduates’ salary data, with other states soon to follow.

These initiatives undoubtedly represent steps in the right direction, but there is still significant room for improvement.