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Creating an Effective Market
Higher education in the age of accountability

By Frank Newman

As the new millennium gets underway, higher education finds itself facing increasingly intense questions about "accountability." To what should higher education be accountable, and to whom? Why is this such an issue now?

First, I believe that there is a longstanding mutual commitment between American society and American higher education, an unwritten but powerful compact. Society provides academic freedom, the right to discuss controversial subjects openly, funding, tax exemption and-most importantly-respect and trust.

Higher education warrants in return that it will provide students an education that is fair and objective (not an indoctrination), and of the highest quality, in order to prepare them for a life of workforce and civic participation, as well as trustworthy scholarship and research. Recently, the need to ensure quality (not just espouse it) and efficiency has been added to our responsibilities by the public officials representing the society.

Today, these commitments are more important than ever. Higher education has become more central to the performance of both the economy and the civic development of the community-as every state governor has argued. For the individual, it has become the essential ticket to the middle class. Higher education, in short, matters greatly to society.

At the same time, major flaws in the operation of higher education have become visible in a system long renowned for its quality. Research over the last 40 years has documented that, in general, college students gain in knowledge, intellectual skills and personal development at a rate that substantially exceeds that of non-attendees of comparable promise. More recent research has documented the sizeable premium in lifetime earnings of graduates. Across the globe, American universities and colleges remain the gold standard in the eyes of students, academics and political leaders alike.

However, there are some cracks in the armor. The learning level is strikingly uneven among students, even students at the same institution. The low rate at which students complete their degrees is alarming. The average five-year institutional graduation rate is approximately 51 percent. Among the lowest-income college entrants, an abysmal six percent gain a degree within five years.

As the National Science Foundation has reported, few graduates understand math or science well enough to apply their knowledge to actual problems. The business community, in a series of reports over the last decade, has identified key skills that graduates lack. A report by the Business-Higher Education Forum, "Spanning the Chasm," called for "cross functional skills" such as leadership, teamwork, problem solving, time management, self-management, adaptability, analytical thinking and global consciousness.

The political community (particularly state governors and legislators) has seconded those key skills and has added two issues: the need for assessing student learning, and the urgency of addressing the cost and efficiency of the education process. In other words, ours remains the best higher education system in the world, but one with important issues that must be addressed.

Is it realistic to expect improvement across the face of the system? I believe the answer is yes, absolutely. For one thing, the last several decades have seen a significant gain in the research on pedagogy, about how students learn. We now know how to structure the teaching and learning that goes on so as to greatly increase the quality, and the enjoyment, of the learning experience.

The steady advance of information and communication technology is also of great benefit. New software is demonstrating a growing capacity to improve the effectiveness, the excitement and the efficiency of learning. While, for many reasons, the application of technology to the process of learning has moved ahead at a rate that seems slow to many, American universities and colleges are still well ahead of the rest of the world.

While the low rates of attainment and graduation are widespread across the system, there are also a number of programs that have successfully addressed the problems-enough to make plain that these are not simply one-shot solutions, but approaches that can be applied broadly. Institutions such as the University of Texas at El Paso, the Community College of Denver and LaGuardia Community College in New York City have demonstrated that, with the proper programs in place, low-income students can graduate at the same rate as the national average.

Here are some of the approaches that have been proven to work for such students: early outreach programs, carefully structured retention programs, academic support programs, effective remedial programs, early warning systems that identify students in trouble, learning communities that promote active learning, and replacing loans with grants. All of these programs have been shown to increase graduation rates for first-generation students, low-income students, and students of color.

Colleges and universities need to create and foster a campus culture that is welcoming and supportive of all students, a culture of attainment. It helps a great deal if faculty and staff reflect the color and diversity of the student body. All students need role models with whom they can identify.

Most important, however, is that institutions must move beyond creating an isolated program serving a limited number of students to an institutional commitment to this concept: All students can and should learn.

With regard to the measurement of learning, it is interesting to note that all universities do regularly assess the depth of learning, intellectual skills and the ability to apply those intellectual skills to real problems of those students that they care about most-their Ph.D. candidates-through oral exams, dissertations and defenses of dissertations. This is, of course, a complicated, labor-intensive and expensive process hardly appropriate for bachelor's candidates. But it does make plain that it can be done, and that within the academic community we, deep down, believe it should be done.

At the undergraduate level, more institutions are beginning to assess learning. The techniques used, pioneered by such institutions as Alverno College, the University of Tennessee and Truman State University, focus on critical areas of intellectual skill.

Two further examples of this are the British Open University (non-profit, public) and University of Phoenix (for-profit). Each of these large and complex institutions assesses the learning of every student, for every course. They also use these assessments to evaluate each instructor in terms of how well students are learning-not based on the instructor's grading but on the independent assessment.

Although higher education is far more complex to assess than elementary and secondary education, it is clearly possible to do so. Learning can be assessed in a meaningful and economical way, and as the use of technology advances, our ability to improve the quality and sophistication of assessment, while keeping the costs down, will grow.

Why, then, aren't these practices widespread? The Futures Project recently ran a series of focus groups with state legislators, with other political leaders, and with university and college presidents. While the political leaders were quite clear that these problems are important, in fact critical, the presidents saw them as minor, small in comparison to the more urgent problems of inadequate funding and over-regulation.

While funding is important, it is necessary to put the problem in perspective. This year, and surely next, there is indeed a difficult and painful funding issue facing the public colleges and universities. The cuts in state appropriations are likely to do real harm to higher education. However, this has not been the case over the longer haul. State appropriations to higher education actually increased over the last two decades, even on an after-inflation and a per-student basis. In the past decade alone (1993 to 2003), the amount spent on higher education by state governments increased by an average of 60.2 percent. Clearly, even as state funding was expanding, colleges and universities were aggressively tapping other sources of revenue (such as tuition, sponsored research, corporate contracting and fundraising).

Tuition grew rapidly during that same period. In the first half of the 20th century, college costs rose more slowly than family income. As a consequence tuition remained affordable through the 1950s. Public college tuitions began to increase in the 1960s and 1970s, and then took off in the early 1980s. Since 1980, the average cost of four years of college has increased at a rate more than 115 percent over inflation. Between 2000-01 and 2001-02, tuition rose 5.5 percent at private colleges and 7.7 percent at the public colleges.

It is not the case, therefore, that starvation budgets from the states have driven the institutions to constant tuition increases in excess of inflation. Rather, the subject of efficiency simply hasn't been addressed. Academics often argue that to even think in terms of efficiency is to fundamentally misunderstand the nature of the collegiate experience. In terms of cost, however, there is some new and encouraging information. In several settings, universities have found innovative ways to reduce the costs of teaching while improving student learning.

Perhaps the most useful experiments were conducted by the Pew Grant Program in Course Redesign, funded by the Pew Charitable Trusts and run by Carol Twigg. The emphasis was placed on large, introductory courses, and on reducing cost, improving learning, and increasing student satisfaction. In the first round involving ten universities, every project reaped cost savings ranging from 16 percent to 77 percent, with an average of 33 percent. Half of the institutions also reported improvements in learner outcomes (no institutions reported reductions in learner outcomes), and all of the participants remained committed to maintaining their redesigned courses.

Two powerful traditions within the academy make the spread of these commonsense, workable and needed changes difficult. The first is the rhetoric/reality gap. Over the years, we have become expert at fending off criticism by a now well-polished argument about the importance of higher education, the danger to the process (and to academic freedom) of external meddling, and the mystic and immeasurable basis of a liberal education. We need to move out from behind these defenses and openly acknowledge and work at correcting our problems. In an encouraging step, the National Association of Independent Colleges and Universities has begun surveying its members to determine what they are doing to begin to address these issues of accountability.

The second tradition is the faculty reward structure, which remains focused on scholarship and publication, not on teaching, even at many institutions that are not truly research universities (though not at community colleges). While we often criticize faculty for their lack of attention to the opportunities to improve teaching, they are simply acting logically in light of the current structure. Real change will require revising the rewards for faculty.

There is a further force for change that must gain our attention. Higher education is moving rapidly from a regulated public sector toward a market. This change is going on right across the globe. States-and governments elsewhere-are giving universities and colleges more autonomy but, at the same time, are insisting on more clearly defined accountability. How will institutions measure and improve learning; how will they increase retention and graduation; how will they report their performance? Here, and abroad, governments are authorizing private, for-profit institutions to give degrees up to and including law degrees and Ph.D.s. The goal is to use the force of the market to bring a new sense of responsiveness and accountability.

Markets, however are not easily tamed. The gains can be great, but the risks can be great as well. There is, therefore, an urgency to understanding how the market is emerging and how government policy can structure it to serve the public purposes and restore the great compact between higher education and the public. Every market needs to be structured by government policy to function effectively.

Federal efforts should be focused on helping the states (who are the owners and operators of the public institutions that enroll three quarter of the students) to create an effective market. The history of both federal and state efforts demonstrates that using regulations to achieve accountability rarely works except in extraordinary cases where government is prepared to use its full power and authority-as in the desegregation of higher education or the Title IX programs aimed at ending gender discrimination.

Markets need information in order to work. The federal government has a long history of collecting, analyzing and disseminating available information. Today, carefully gathered and analyzed information on the key issues is more needed than ever-particularly information on learner outcomes and retention.

Two new voluntary efforts, the National Survey of Student Engagement and the Community College Survey of Student Engagement have been measuring activities that have been shown to relate to student learning, such as the amount of student engagement with faculty, both in class and outside of class. Federal policy can help ensure institutional willingness to participate in these surveys and to make the resulting information public.

Perhaps nothing the federal government can do would be as useful as focusing on ensuring that the information necessary to allow the higher education market to serve the public is available. Recent studies of the role of information as states move toward performance-based budgeting and performance-based funding have shown that there is a correlation between open information and institutional performance.

The federal government can also build on its greatest policy success-the development of the peer reviewed, competitive grant program for university research. Until this program was introduced in 1945, the United States was an also-ran in research. Since the system's introduction and growth, American university research has become the leader in essentially every field, to the huge benefit not only of this country but the entire world. It is time to think about how this approach can be applied to higher education's two other great tasks-teaching and learning, and service to the community.

The advantage of the grant system is that the institutions respond, quality and efficiency are rewarded, and innovation is encouraged-without the federal government meddling in the institution's internal affairs. The federal government, incidentally, is better at this than the states, as it is better able to resist institutional pressures that undercut the competitive grant system.

Another opportunity also lies in a traditional area of federal involvement-helping the least-advantaged students gain a college education. There are two particular areas where the federal capacity can help overcome the crises of low retention and attainment noted above. Better information, in the form these students can use and in the settings where it will reach them, is essential. This includes key information they need as early as middle school. Affluent students already have access to the key information they need, which gives them a great advantage.

The other key federal role is financial aid. The federal forms of aid are the last remaining bulwark of need-based assistance, and expanding this is urgent.

What could be better, in a world in which a college education matters so much, than for a growing competition to break out over how much students are learning, rather than the current competition over prestige?

Frank Newman is Director of the Futures Project, a higher education research organization based at Brown University. This article was adapted from his recent testimony before the Committee on Education and Workforce of the United States Congress.

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