Monday, October 19, 2015

What Price Quality?

There has been a lot of press lately about the skyrocketing cost of higher education (and the corresponding rise in student debt). One of the “culprits” that proponents of deregulation love to point to is the burdensome expense of regulation. This issue was brought to the forefront earlier this year when the Chancellor of Vanderbilt University testified before Congress that Vanderbilt spends $11,000 per student on complying with federal regulations and accreditation costs.

That figure was immediately picked up and cited over and over again by anti-regulation folks in Congress.  Senator Lamar Alexander (R-TN), in an op-ed piece in the Wall Street Journal said, “In one year Vanderbilt University spent a startling $150 million complying with federal rules and regulations governing higher education, adding more than $11,000 to the cost of each Vanderbilt student’s $43,000 in tuition." The implication, of course, is that if the federal regulatory burden went away, Vanderbilt’s tuition would be reduced by $11,000 per student. But it isn’t quite that simple!

In an article posted on August 3, 2015, pointed out at least one major flaw in the numbers being cited by Vanderbilt:
“Of the $146 million the university spent that year on compliance, according to its calculation, $117 million went toward complying with research regulations. Research at a major institution like Vanderbilt – which received $473 million in federal funds for research in 2013 and is one of this biggest conductors of federal research in U.S. higher education – is mostly faculty driven. And the federal government picks up part of the tab for compliance, with additional funding to cover the overhead costs of university research.”

Now comes a follow-up study that expands on the one cited earlier this year. This one looked at data from 13 institutions and through extrapolation, it concludes that collectively they spend $27 billion a year complying with federal regulations. Of course that $27 billion is the headline but when totals for research activities and other federal regulations governing all businesses get subtracted, what remains ($11.1 billion) is said to be specific to complying with federal regulations related to higher education and is estimated to include $6 billion for accreditation – $3 billion for regional and $3 billion for programmatic.

Of course this new report is already causing controversy and the numbers will be “sliced and diced” as the political battle between pro and anti regulation proponents unfolds. But any way you look at it, there’s no question that regulation and accreditation cost money. But rather than looking just at costs, it will be important that policy makers look also at the benefits. And it will be our job to make sure that they understand the value of quality assurance through accreditation.