How the feds might rate universities

The federal Department of Education is working on its own rating system for universities, one under which those with the lowest rating would no longer be eligible for federal student aid support.  Bloomberg Businessweek recently ran a story on how Tennessee has been rating its institutions of higher education, a system cited as a model by the President.

Tennessee used to base educational funding entirely on enrollment.  Now it has a system where state-supported schools are evaluated on 10 criteria, including graduation rates, degrees awarded, research grants, and job placement.  The weights given to these factors vary by class of school, so research grants count a lot at the flagship school UT-Knoxville but it gets zero weight at schools where teaching is the primary mission.

Tennessee's system applied to state-supported schools, but the federal system will apply to private schools as well. Forcing disclosure on key variables such as graduation rates and job placement would be a useful step forward.

The way in which the rating system is designed will have a significant effect on university behavior.  Already schools take steps to game the ratings in US News.  For instance schools US News rewards schools with a large percentage of classes with fewer than 20 students and punishes those with a large percentage of classes with 50 or more.  So some schools have literally changed their class size constraints; there are a lot more classes with 19 and 49 students than there used to be.

The feds promise to rate schools in categories, such as exceeds standards, meets standards, near standard and deficient.  That may mute the gaming in some dimensions.  But wait until the feds try to deny financial aid to a school; you can bet they will hear from that schools congressperson and senators.