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Business Officer Magazine

Federal File

Coverage of legislation and regulatory activity that affects higher education

By Liz Clark

NACUBO Lends Its Voice to White House College Cost Plans

In response to President Obama's August 2013 plans and proposals for addressing rising college costs, the Department of Education (ED) in November hosted four open forums around the country, as a first step in designing a new rating system for colleges and universities.

One of the plan's key goals is that such ratings assist students to select schools with the "best value." The administration has proposed eventually tying financial aid to an institution's performance, based upon its rating. While the Department of Education has authority to introduce a rating system, to use it as a factor in federal aid allocation would take congressional action.

Partners in the Dialogue

At the department's November 13 forum at George Mason University, Fairfax, Virginia, Liz Clark, director, congressional relations, delivered a statement on behalf of NACUBO, commending the administration for its commitment to higher education. She expressed the association's eagerness to participate in the conversation about college costs and related ratings.

"From a business office perspective," said Clark, "we believe that by increasing the public's understanding of colleges and universities, [we will see emerge] a clearer comprehension of tuition rates, rising costs, and reduced support. Done well, making data more transparent can help the public understand the expenses that drive the cost of providing higher education—and that revenue to support those expenses is limited."

Considerations and Caveats

During the forum, Clark offered a number of recommendations:

  • Develop a rating system that accommodates the diversity of American higher education. Whether approached as a consumer tool, benchmarking product, or accountability measure, NACUBO encourages ED to allow for a system that recognizes the great diversity of colleges and universities. "Some institutions in this country may be spending $10,000 per student each year and providing an excellent education for their particular student population, while others, with different missions and resources, may spend upwards of $40,000 to $50,000 per student," said Clark.

"Indeed, individual students and their families have an enormous variety of choices, both within and among higher education sectors, which we believe they appreciate. The rating system must accommodate those differences and achieve a level of sophistication that does not result in comparing apples to oranges."

  • Devise a rating system that does not discourage investments critical to the education mission that are difficult to measure. NACUBO urged ED to remember this caveat, along with the fact that higher education's public good expands far beyond graduation rates, employment and earnings outcomes, and default rates. Clark said, "Communication skills, creative and critical thinking, civic participation, global knowledge, and healthier lives are all competencies that are nurtured, and invested in, by institutions as a part of the college experience."
  • Partner with NACUBO on efforts to communicate financial information. NACUBO offered to partner with the administration on such efforts, having recently embarked upon a major project to create a new set of innovative financial statements, with key disclosures, in an attempt to better explain to stakeholders higher education's mission and financial results.

The anticipated outcome: a statement to help the public understand and distinguish among types of revenue, endowment spending, institutional aid, and educational expenses—and to clarify how students pay for college. The project is aimed at the Financial Accounting Standards Board (FASB) and Governmental Accounting Standards Board (GASB), but could ultimately be useful to the Integrated Postsecondary Education Data System (IPEDS) finance survey, which collects information based upon accounting standards set by these boards.

  • Continue, as part of the ongoing conversation about making college affordable for American families, a discussion of the dramatic shifts in governmental resources. Clark stated, "Cutting costs and promoting efficiencies can only go so far in responding to the volatility of government higher education support. The recent recession's constrained resources and a transitioning economy required many institutions to seek new solutions and even new business models-stimulating innovation and changing what institutions teach and how they deliver instruction. In addition to efforts to keep costs down, colleges and universities had to seek ways to grow revenues, particularly with the significant decline in per-student state funding at public colleges."

While NACUBO highly commends these efficiency efforts, the impact of diminishing governmental resources must continue to be a part of the overarching conversation about making—and keeping—college affordable for American families.

NACUBO CONTACT Liz Clark, director, congressional relations, 202.334.2553

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