As you guys may be aware Yahoo! News has recently written an article that on December 11, 2013 the administrator will hold a day-long submits at the White House. The meeting is called College Submit and stated that “President Barack Obama is summoning college presidents and business leaders to a daylong Dec. 11 summit at the White House to discuss specific ways to make higher education more accessible to low-income students”. The report continues announcing that “The Dec. 11 summit is being run by the National Economic Council, the Domestic Policy Council, and the Department of Education, and will serve as the launching pad for a college affordability drive that will likely run for months — potentially right up to the November 2014 elections. First lady Michelle Obama is expected to play a role in next week’s kickoff event and going forward”.

The College Submit indicates that the newly proposed College Affordability Rating (CAR) will be promoted, campaigned and will become the law of the land in the future.  It will have big financial impacts and may affect the existence of some colleges if the CAR becomes the law.  AAEA has published the ‘PROXY RATINGS” to help US colleges to anticipate the impacts that it may have on them.

Please let us know what you guys think?

During a conference call between the US Secretary of Education and reporters as published in an article in Chronicle Journal of Higher Education on November 5, 2013 (please click here to read the whole article). Basically there are three points raised by the reporters on the application of CAR.

1. Data aren’t good enough to calculate the rating.
2. Ratings will penalize colleges that serve the neediest students; and
3. Ratings will punish colleges and students for factors they cannot control.

In this page, we are going to discuss the third point.  The statement itself is not correct:  CAR will not punish anybody including the students.  In fact, the regulation is introduced to protect students’ and the colleges’ interests.  There is no punishment and no one will be harmed by the CAR.  The regulation itself is geared to encourage and to protect both students’ and colleges’ long-run interests.  Students are encouraged to work harder, smarter and tactful toward learning and finishing their study as it supposed to in term of the completion time.  Colleges as service providers are expected to deliver the best quality of instructions at the best values.  That is all.  If there is any factor beyond one’s control, then it will be handled case by case.  However, ill motivations will not be part in the equation.  Both US colleges and students have to stop with all the excuses, whining and blaming games.   Take charge of your future in responsible ways.  In order to keep everyone in line, the US needs a compliance agency to ensure that every players in the education industry to comply with the rule of the game.  The current accreditation agencies have failed to accomplish their job.  The US needs Education Standard and Compliance Commissions (ESCC).  Does the CAR reflect the accreditation agencies such as those listed below have not achieved their objective optimally?

1. Middle States Association of Colleges and Schools – Educational institutions in New York, New Jersey, Pennsylvania, Delaware, Maryland, the District of Columbia, Puerto Rico, and the US Virgin Islands, as well as schools for American children in Europe, North Africa, and the Middle East.
2. New England Association of Schools and Colleges – Educational institutions in the six New England states (Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont).
3. North Central Association of Colleges and Schools – Educational institutions in Arkansas, Arizona, Colorado, Iowa, Illinois, Indiana, Kansas, Michigan, Minnesota, Missouri, North Dakota, Nebraska, New Mexico, Ohio, Oklahoma, South Dakota, Wisconsin, West Virginia, and Wyoming.
4. Northwest Accreditation Commission for primary and secondary schools and Northwest Commission on Colleges and Universities for postsecondary institutions in Alaska, Idaho, Montana, Nevada, Oregon, Utah, and Washington.
5. Southern Association of Colleges and Schools – Educational institutions in Virginia, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina, Alabama, Tennessee and Texas.
6. Western Association of Schools and Colleges – Educational institutions in California, Hawaii, Guam, American Samoa, Micronesia, Palau, and Northern Marianas Islands, as well as schools for American children in Asia.

Please tell us do you guys think, the US needs another watch dog such as ESCC?

During a conference call between the US Secretary of Education and reporters as published in an article in Chronicle Journal of Higher Education on November 5, 2013 (please click here to read the whole article). Basically there are three points raised by the reporters on the application of CAR.

1. Data aren’t good enough to calculate the rating.
2. Ratings will penalize colleges that serve the neediest students; and
3. Ratings will punish colleges and students for factors they cannot control.

A couple of months ago AAEA has published its research results and have made the above conclusion (second point).   One needs to understand the story why the CAR is finally—yes, finally is introduced.  It is long overdue regulations.  Though most of you have known the answer, let us reiterate here, “the motivation is to encourage US colleges to operate more efficiently”

Over hundred years US colleges have been given the privilege as a non-profit organization and whatever budget that they ask will be approved (mostly rubber stamped) by the lawmakers or school Board with minor adjustments.  Operating under leniency has made some of these institutions to forget that they are still required to operate based on “minimizing cost paradigms”, with its tax exempt status.

The prolonged inefficiency that has happened many years was reflected by college tuition increases without a sign of stabilizing, except in most recent years where the rate of increasing is slower, but the tuition still increases.  When the college graduates can find a job, no one cares enough to say something about the tuition hikes.  However, 2008 financial crises and starting in 2003, the society’s, students’ and tax payers’ outcries are much louder and almost every day the topics are covered by the media.  Therefore, the regulator just cannot ignore it anymore.  When the student loans hits the $1 trillion mark, things are getting really noisy.

AAEA has suggested that rather than whining, US Colleges are better off to do something useful which may help their institution to get a higher CAR rating.  AAEA has opened its arms and door widely to support US colleges that wanted to increase their graduation rate FOR FREE.  Four years may give enough time for an institution to get their graduation rate and other metrics improved.

Please write below what you guys think about colleges’ tax exempt status?  Should this privileged be granted forever or should there be any time limit?

During a conference call between the US Secretary of Education and reporters as published in an article in Chronicle Journal of Higher Education on November 5, 2013 (please click here to read the whole article). Basically there are three points raised by the reporters on the application of CAR.

1. Data aren’t good enough to calculate the rating.
2. Ratings will penalize colleges that serve the neediest students; and
3. Ratings will punish colleges and students for factors they cannot control.

AAEA would like to comment each of the issues which have been raised.  In this page we will comments on “Data aren’t good enough to calculate the rating”

Let us critically analyze the first comment on the data.  The skeptics argue that the ratings are calculated based on flawed data.  The Secretary of Education has admitted that the data may not be perfect.  He further said that “imperfect data should not be an excuse for inaction”.

AAEA’s comments:

1. Imperfection of data will always be there.  However, there are statistical techniques and approaches which can be used to minimize such an imperfection.  For example, if the benchmark is calculated based on the state’s average (statistical mean) number; one can apply the standard deviation to overcome such random errors.
2. Having said that in point 1, perhaps using the statistical average (mean) has advantages than of using the median.
3. However, the median is better if the sample size has a lot of missing values and if observations from different institutions are unequal in size.

Please let us know your comments below.  Should or should not data imperfection be used as a reason for not applying the CAR?