The June 7 issue of Inside Higher Ed published a Liam Knox article about a bill proposed in Ohio’s legislature that would require public colleges and universities to provide information about the cost of their degree programs and the expected wages that graduates of their programs would earn.
The bill would require Ohio’s public colleges and universities to send admitted students who qualify for financial aid a “one-page financial cost and aid disclosure form” in their aid packets. The form would break down the net cost of a degree including how long the financial aid package applies, clear definitions of grants versus loans, and the minimum monthly loan payments that students will have to pay after graduation. The colleges would also have to provide information on postgraduate earnings outcomes.
Mr. Knox mentioned a 2022 Government Accountability Office (GAO) report that claimed 91 percent of colleges reviewed (more than 200 were included in the sample) understate the total cost of their degrees and 65 percent omitted critical details about aid packages. Reportedly, 31 percent listed loans as grants meaning that students at those institutions are unaware that they must pay them back. Ohio’s bill requires that the average income for alumni be reported one year and five years after graduation for the institution as a whole and for the student’s major if they have declared one.
I found it interesting that the bill requires income to be reported by major if the student has declared one given that most colleges don’t require a student to declare a major until the end of their sophomore year. Notable exceptions would be students admitted to engineering schools, nursing schools, and business schools. Ironically, it’s those students whose income is likely higher in the first five years post-graduation than students graduating from liberal arts programs. So, it’s unlikely that students majoring in lower-earning programs will declare a major before enrolling.
One of Mr. Knox’s interviewees expressed a similar opinion as mine when he mentioned that liberal arts majors sometimes earn more 10 or 15 years after graduating than an accounting major. His concern was that the bill could become a self-fulfilling prophecy.
Mr. Knox mentioned that Ohio’s bill is not the first time that a state legislative body passed a bill requiring more transparency in higher education. In 2021, New Jersey passed legislation requiring all public and private institutions to break down all costs and opportunities for grants in aid packages to prospective students. Virginia passed a law in 2022 requiring that similar information be distributed to its high school students though the requirement for distribution was assigned to K-12 school districts and not higher education.
Mr. Knox also noted that a similar bill (the College Transparency Act) passed in the U.S. House of Representatives in the fall of 2022. This bill stalled in the Senate. If approved, the bill would repeal a 2008 ban on collecting individualized student data across agencies.
The state of Colorado’s Higher Education Commission proposed calculating the economic value of state institutions’ degree programs (I wrote about their proposal in February). A drawback of pursuing legislation versus a statewide data collection project is that it places the burden of the costs of collecting the data on the colleges and universities versus another entity.
Matt Sigelman, president of the Burning Glass Institute, was also interviewed by Mr. Knox. Mr. Sigelman said that lawmakers could have “hostile” motivations for introducing transparency bills even though the data shows that bachelors’ degree holders earn 84 percent more over their lifetime than people with only a high school diploma. I note that the earnings gap between high school and college degree completers is substantially less when you eliminate the top 10 percent of wage earners. A substantial percentage of those top wage earners major in less than 20 percent of all degrees.
I applaud the latest initiative from the state of Ohio to make the cost of college more transparent to prospective students. I also applaud asking colleges to provide expected earnings data for graduates. I don’t like the idea that earnings by degree will only be required for prospective students who have declared a degree. At a minimum, the colleges should provide a range from low to high (eg, if you major in child and family development, our graduates earned an average of $32,000 per year and if you major in electrical engineering, our graduates earned an average of $84,000 per year).
Prospective students and their families who are fully informed are going to be more satisfied about college than those who are not. Will more transparent information about costs and earnings reduce the number of students enrolled in college? I think the answer depends on how much valid information will be available about costs and earnings for alternative education options. If students can complete a microcredential for 20 percent of the cost of a degree at 20 percent of the time to complete a degree and earn the same money, it’s likely that more than a few of those students will opt for the microcredential. If Ohio’s legislature wants to increase transparency, they’ll bolster their bill with a more expansive bill that covers these non-degree options.
