There are a number of preliminary conclusions that one can possibly extract from the AAEA’s research results on College Affordability Rating (CAR).

1.      State or flag universities tend to perform well on two components–lower tuition and smaller amount of their student debt compared to other private colleges.

2.      State-run institutions’ graduation rate tends to be higher compared to others’.

These findings have very important consequences for private institutions, both for-profit and not-for-profit higher education institutions.  The negative impact on the survival and going-concern will be greater on privately managed colleges when the federal funding gets smaller.  One may see that some of these colleges may have downsized their learning centers or campuses before the implementation of the CAR in 2015.  Some may keep denying that such regulations may finally impact their operation.  However, those that keep ignoring possible decreasing future federal financial assistance may face greater risk of financial failures compared to their counterpart.  Learn what is happening at Harvard University.

The CAR regulation then can be interpreted as one of the effective means for the regulator to shut down inefficient and dying institutions which is in-line with the American’s public interests.

Please let us know what do you guys think?