The Emerging Bipartisan Era of Accountability

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US Congresswoman Virginia Foxx announced last week that she is close to securing the votes needed to pass the College Cost Reduction Act (CCRA) in the House of Representatives. This bill introduces sweeping changes to various aspects of higher education, including accreditation, student financial aid, and data collection. Notably, it also proposes a fundamental shift in higher education’s accountability for student outcomes through a risk-sharing proposal. Under this proposal, institutions would be responsible for a portion of their students’ unpaid student loans.

What is most notable, however, is that this push for accountability mirrors much of the approach from the current administration under the Gainful Employment & Financial Value Transparency regulations. We have a rare moment of bipartisanship, and this general trend will increasingly impact how U.S. higher education is funded and assessed in the years ahead. The higher education sector would be well-advised to pay close attention to these metrics and work proactively to be prepared.

The CCRA

The risk-sharing proposal in the CCRA relies on an earnings-price ratio (EPR) to be calculated by the Department of Education (ED). The EPR is determined by dividing students’ post-graduation median earnings (minus 150% of the federal poverty line, or 300% for graduate programs) by the total price students paid while enrolled, excluding scholarships.

Separate calculations apply to students who do not complete their programs within a specified timeframe—150% of the standard program length for undergraduates and graduate students, and six years for students in two-year programs. In this case, the percentage of non-completers is used to determine the percentage of unpaid student debt the institution must repay to the Department of Education.

Although the details are complex, and the bill is likely to change as it makes its way through the legislative process, it is critical to focus on the key metrics being used:

• Student earnings in the first years after graduation

• The price students paid to attend the program

• Program completion rates

Should some version of the bill become law, its impact on higher education would be swift and substantial. The American Council on Education (ACE) estimates that 86% of institutions would face risk-sharing payments to the government. While these payments could be offset by PROMISE grants—designed to reward institutions that are lower-cost and whose students earn more soon after graduation—ACE predicts that only 30% of institutions would qualify for such grants. Consequently, 62% of institutions would experience a net loss of income.

For many institutions, the risk-sharing payments could be significant. Congress have provided estimates of which institutions are likely to face the largest payments (shown below, but the ACE estimates are similar). It is important to note that these payments would be annual, not one-time expenses.

Bipartisan consensus

The CCRA represents a significant shift from the longstanding tradition of universities not being held liable for student loan defaults, and many organizations have expressed opposition to this aspect of the proposal. However, the House Committee on Education and the Workforce’s analysis of the CCRA highlights that it reflects a growing consensus on the need for increased institutional accountability.

In this regard on bipartisanship, they are not wrong. The Gainful Employment (GE) and Financial Value Transparency (FVT) rules finalized by the Biden administration reflect similar concerns about student outcomes, particularly post-graduation earnings and student debt. By adding in institutional financial accountability, the CCRA can be seen as GE/FVT on steroids.

As a reminder, GE is the portion of the regulations that directly could impact federal financial aid eligibility for programs, and FVT is the broader portion that is a transparency effort. See this post for more details.

• The CCRA applies to all types of institutions—nonprofit and for-profit alike—whereas GE is limited to for-profits and certificate programs at nonprofits.

• The CCRA has a more immediate impact. Under GE, failing programs would lose access to federal financial aid after a grace period. By contrast, the CCRA imposes immediate financial penalties, with non-repayment resulting in institutions losing eligibility for federal aid.

• The CCRA also incorporates program costs into its calculations and imposes penalties for low completion rates, making non-compliance more consequential.

Even beyond the federal government, there are growing signs of a broader interest in holding institutions more accountable for student costs and outcomes.

One example is a recent white paper from Arnold Ventures titled Degrees of Accountability. The paper references the CCRA but argues that current accountability measures for student outcomes are either too lenient or too punitive. Instead, it proposes a graduated accountability system to address low-performing programs.

These programs are generally defined by the following characteristics:

• Low completion rates

• Low earnings (relative to high school graduates)

• High debt-to-earnings ratios

• High loan default rates

Like the CCRA, the paper suggests combining incentives with penalties to encourage institutional improvement. While the proposed "carrots" include regulatory relief, the paper focuses heavily on the "sticks." The authors propose a tiered system of sanctions.

• Low-level sanctions: Warnings issued to students or by accreditors

• Mid- and high-level sanctions:

  • Caps on enrollment or enrollment growth

  • Caps on tuition

  • Caps on executive compensation

  • Prohibitions on participation in State Authorization reciprocity agreements (they will take any opportunity to gut this)

  • Limits on access to Grad PLUS loans

  • Limits on federal financial aid eligibility at the program level

Though the enforcement mechanisms differ, the metrics of accountability remain largely consistent, with the notable addition of program costs. These metrics include:

• Completion rates

• Earnings after graduation

• Student debt

The severity of the proposed sanctions underscores a growing consensus that institutions must be held more accountable for the cost and outcomes of their programs.

What this means

I am not typically given to predicting the future, but it seems plain to me that higher education will face increasing scrutiny of its outcomes, accompanied by significant penalties for poor performance. Institutions would be wise to focus on improving their performance on these metrics. However, I fear this will be a challenging task for several reasons.

• External factors beyond institutional control
  Many factors influencing these metrics are outside the control of higher education institutions. For example, post-graduation earnings are not solely determined by a student’s field of study. Unfortunately, certain occupations and demographic groups (such as women and minorities) are systematically paid less than others. Institutions serving these groups or offering programs in lower-paying fields have limited ability to alter these outcomes.

• Complexity of underlying issues
  Poor performance on metrics like completion rates often stems from multiple, interconnected causes. Addressing these issues comprehensively is difficult, requiring nuanced strategies that many institutions struggle to implement effectively.

• Over-reliance on technology solutions
  In my years of observing student success initiatives, I have noticed that universities often seek simple, technology-driven solutions to complex problems. Vendors are quick to offer such solutions, but they rarely produce meaningful improvements. While the technology may generate useful signals (e.g., identifying students at risk of dropping out), the critical follow-up actions are often under-emphasized or neglected. This focus on the signal rather than the subsequent intervention undermines progress.

• Challenges for large, complex institutions
  Institutions at the greatest risk under metrics like those in the CCRA are often large, research-intensive universities. While these institutions may have substantial budgets, their decentralized structures make it difficult to coordinate the kind of cross-unit efforts needed to address performance issues effectively.

• Cost pressures and trade-offs
  Cost is a central focus of the CCRA’s proposed regulations, yet it remains one of the most challenging issues for universities to address. Tuition has been declining for some time, and the trade-offs between cost-cutting and maintaining quality grow more difficult over time. Moreover, institutions are increasingly burdened by the costs of complying with a growing array of regulations, further complicating efforts to manage expenses.

Higher education faces significant obstacles in adapting to this new era of accountability. Addressing these challenges will require a combination of strategic planning, institutional collaboration, and a willingness to engage with the complexities underlying these metrics. And yes, lobbying.

Parting thoughts

Despite these challenges, universities and colleges should start (or continue) identifying strategies to improve their performance on these metrics. Even if the CCRA doesn’t pass in its current form, it is almost certain that we will see some form of regulation and sanctions tied to cost, completion rates, graduate employability, and earnings. And sooner rather than later.

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