Why Information Alone Is Not Enough to Improve Higher Education Outcomes

In the coming months, the U.S. Department of Education will consider changes to regulations affecting which colleges can provide students with federal student grants and loans through the negotiated rulemaking process. An important consideration is whether requiring institutions (or programs within institutions) to release information on former students’ outcomes provides sufficient pressure to improve future students’ success or, alternatively, whether a school’s access to federal student aid dollars should depend on specific measures of student outcomes.

As higher education economists and policy scholars, we have come to understand a simple fact, grounded in a growing body of research: Information alone is not enough to steer students away from poorly performing schools. Pretending otherwise will only exacerbate ongoing inequities in our higher education system and in society. The federal government has the data needed to put in place an accountability system that would improve outcomes for students while also saving taxpayer dollars. Now, it needs to act.

The market for higher education is far from the textbook version of a competitive market where the forces of supply and demand might lead poor-performing institutions to shut down without government intervention. Multiple market failures make this unlikely. Among the most important, the market for higher education is characterized by imperfect information. Institutions (and, in our view, the federal government) have more information on school quality and student outcomes than the students who are considering whether and where to enroll.

This lack of information is compounded by the fact that college education is an experience good, where the full value of a product (i.e., college) may not be known until after buying it (i.e., enrolling). Students have little way of knowing how well the institution will meet their needs until after they experience it—and after they have taken on debt to attend.

The federal government has the authority and the tools at its disposal to ensure that institutions provide value to students. There are many ways to measure value and assess the performance of institutions, including debt-to-earnings thresholds, high school earnings comparisons, and loan repayment rates. While it may not be clear exactly how to best enforce accountability on low-performing institutions, it is abundantly clear that information on the College Scorecard alone doesn’t cut it.