In August 2022, President Biden signed an executive order canceling a limited amount of student loan debt for 43 million borrowers. The announcement was welcome news to many graduates who have received degrees but who do not have jobs that allow them to pay off their student loans in a timely manner. But the order does nothing to protect future students from incurring similar debt that they will unlikely be able to repay in pursuit of higher education. To help students make more informed decisions about whether they can afford to take out a loan to pursue a particular degree at a particular university, Congress should require the Department of Education to collect and provide better data on expected outcomes, such as graduation rates, earnings, and more, and incorporate this information in student loan disclosures.
The inflation-adjusted costs of higher education for public and private four-year colleges have nearly tripled in the past 40 years. In order to pay for their degrees, many students obtain student loans from the federal government or private financial institutions. During the Obama Administration, the Education Department created the College Scorecard, an online tool with information on student aid, total costs, and student outcomes for institutions across the United States, to help students compare higher education options.
However, the scorecard mostly only provides institution-wide data on student outcomes and fails to disaggregate the data to provide more detailed information on fields of study, student demographics, enrollment or attendance status, credential levels, and more. Essentially, students looking to make a more informed choice about their education may not find adequate information on their expected outcomes. For example, students considering Pennsylvania State University cannot access data on the earnings, size, or debt loads for specific fields of study.
Unfortunately, the Education Department does not have more detailed information to report because Congress prohibited it from implementing or maintaining a database with personally-identifiable data on students in the Higher Education Act. To address this issue, Congress should pass the College Transparency Act, a bipartisan bill introduced by Rep. Raja Krishnamoorthi (D-IL). The bill, which passed the U.S. House of Representatives, authorizes the Education Department to collect student-level data to better report on student outcomes. Specifically, the bill authorizes the Education Department to collect data on college students’ enrollment statuses, demographic information, program of study, Pell Grant recipient or federal loan status, credential level, and whether the student is enrolled in a full-time program, part-time program, or in a distance education program. It also authorizes the Education Department to enter into data-sharing agreements with other federal agencies, such as the Internal Revenue Service and Bureau of Labor Statistics, to better ascertain postgraduate results, such as earnings or labor market outcomes. Finally, it requires the Education Department to make the anonymized data publicly available on a user-friendly website where students can filter information by data categories and compare institutions.
With more detailed information, students can make more informed decisions about their chosen institutions and fields of study before receiving any student loan debt. Moreover, the publicly available data will place pressure on higher education institutions to improve their students’ outcomes, such as ensuring they are providing their graduates with in-demand job skills and helping them succeed in the workforce after graduating.
As the costs of higher education continue to rise, policymakers should help students make more informed decisions about their education, expected financial outcomes, and the return on investment for any student loans. The College Transparency Act would enable the Education Department to update the College Scorecard and provide this detailed information. The U.S. Senate should follow their counterpart’s lead and pass this bill.