How Should Higher Education be Regulated?
The Case for Management-Based Regulation
For much of the 20th Century, the government relied on a command-and-control form of regulation in their oversight of organizations across many sectors. In other words, the government mandated that these regulated entities undertake specific activities and then monitored their compliance.
In the late 20th Century, reaction to the burdens and inefficacy of command and control led to a shift in some areas to performance-based regulation. Under this model, the government determines targets for outcomes and regulated entities choose the means by which they will meet those targets. Performance-based regulation has its own critics, who worry about the difficulty of setting targets and a resultant narrowing of focus on that which is easily measured.
A problem with both the performance-based and control-and-command models is that neither handles the diversity of goals, capacities, and context of regulated entities well.
What’s the alternative? The past two decades have seen the emergence and increasing scholarly attention to a different form of regulation, referred to as either management-based or experimentalist regulation. In its basic form, regulators require regulated entities to determine and submit for approval their own goals and plans for accomplishing them. Once approved, regulators monitor both the implementation of the plans and progress on the goals, benchmarking each institution’s results against those of others like it. When well-designed, such regulation couples flexibility in means and ends with responsive government oversight and accountability for outcomes. (See my 2015 California Law Review article for an elaboration of these concepts in the context of K-12 education governance.)
Wendell Pritchett, former chancellor of Rutgers-Camden and now a professor at Penn Law School, recently published a series of blog posts at Penn’s Regblog deftly applying management-based regulation principles to the higher education context. He makes a powerful case for strengthening management-based regulation of higher education, and offers a political pathway for getting there.
Currently, colleges are subject to a great deal of command-and-control regulation, including especially burdensome reporting requirements. Some states also use performance-based targets to determine some portion of public institutions’ funding. But, as Pritchett points out, one major feature of regulation under the Higher Education Act (HEA)—in which colleges’ eligibility for federal financial aid is determined by the periodic review and approval of government authorized accreditation agencies—is management-based, to an extent. Colleges’ plans and goals are considered, along with other institutional and curricular features, in the accreditors’ review.
The major problem with the current accreditation system is that these reviews rarely have bite—very few colleges lose their accreditation. Furthermore, accreditation is a binary determination, which, in Pritchett’s words “prevents comparison of institutions,” making it “difficult for students (and regulators) to determine which institutions provide a quality education and which ones should be avoided” and limiting “incentives to improve educational outcomes.”
As Pritchett writes, the current regulatory scheme
…layer[s] an inflexible, command and control regulatory structure on top of the flexible if weak existing management-based structure. This has created a system in which higher education institutions are less than fully accountable for their primary function—education—at the same time that they are highly regulated in many other areas of their operation.
Pritchett suggests that a reauthorized HEA could introduce management-based regulation “with teeth.” For example, it could
…require each institution to develop a plan that states its own specific goals for access and outcomes. Institutions would then need to decide, and communicate, their goals for students of color and economically disadvantaged students. Further, institutions would need to set goals for retention and graduation, and explain the processes that they will implement to achieve these goals. Finally, institutions would set their own goals for career placement and success.
Pritchett also envisions a requirement for institutions to set similar goals for financial stability. In addition to reviewing their plans and progress on the goals with accreditors or regulators, colleges and universities would be expected to publish accessible versions of them and the federal Department of Education would publish analysis and comparisons across institutions.
According to Pritchett, these changes would result in better consumer information as well as increased motivation for institutions to improve their students’ outcomes. If anything, he undersells the potential benefits. The leaders of many colleges and universities have ample motivation to improve but lack an understanding of how much improvement might be possible or by what means it may be achieved. By encouraging and facilitating institutional processes of reflective planning, monitoring, and revision, and management-based regulation can lead to the discovery of new ends and the development of capacity to reach them. Articulating and sharing these processes among institutions can further accelerate the learning that happens at each.
Would higher education leaders (and their advocates in Washington) be willing to accept such an increase in the rigor of the accreditation process? Pritchett suggests they would if, as part of the legislation, they also saw a significant reduction in their reporting and compliance burden. He points to last year’s report of the bipartisan Task Force on Federal Regulation of Higher Education for a long list of regulations with the potential to be streamlined.
Pritchett notes that features of President Obama’s legislative proposal and regulatory actions with respect to accrediting bodies would fit into his management-based framework. This includes the EQUIP experimental site, which would permit unaccredited providers of educational programs (like coding boot camps) to partner with accredited institutions in order to be eligible to receive federal student aid, subject to a quality assurance plan with management-based features.
Of course, whether these changes secure bi-partisan support and whether the next administration will take the same view as this one are far from certain. Judging by the legislation proposed by Senators Michael Bennett and Marco Rubio, which would make financial aid eligibility conditional on meeting student-achievement and job-placement targets, Congress is more focused on performance-based models.
Regardless of its immediate political future, Pritchett has put forward a promising and thought-provoking model for higher education regulation, a practical compromise that might make it feasible, and a conceptual framework for evaluating it against alternatives.