Students and Taxpayers Deserve Outcome Transparency

Public confidence in higher education has plummeted to historic lows. Parents, students, and even colleges are increasingly aware that not all college degrees are likely to meaningfully improve students’ future earnings. And, college is certainly not cheap. Today, the average student borrower takes out $39,075 in loans and misses out on four years of potential earnings on the assumption—the gamble, really—that they will be financially better off for having done so.

For most students, this risk will pay off; however, for too many, three-in-ten to be exact, it will not. It shouldn’t be this way. American students, families, and taxpayers (who underwrite all of this) deserve better.

There has been much recent attention on linking federal grant and loan support to meaningful return on investment and cost containment, from both educational institutions and local businesses. These provisions were crucial aspects of the recently passed Working Families Tax Cut Act. However, there is another critical piece to the education reform puzzle: tracking what happens to students after they graduate and move into the workforce.

If we want to know how higher education leads to better lives, and not a lifelong debt trap, we need to connect some of the data states already have, especially student education records and unemployment insurance wage data.

Currently, every state collects wage data for individual workers from businesses every quarter through their unemployment insurance (UI) program. These records cover roughly 96 percent of American workers.

Over the past two decades, the Departments of Education and Labor have worked closely with states to bolster the ways they track student records across K-12 and post-secondary education, and into the workforce. Collectively, the federal government has invested more than $1 billion to help states tie all these data together.

These efforts are already paying dividends. Today, about 35 states connect postsecondary records to employment and wage data. This means most states already can report whether graduates of a given program are employed and what they earned.

But state and federal policymakers need to know more. For example, the current systems do not typically distinguish between full and part-time employment. They cannot tell us whether the work is actually related to the education they received and, most tellingly, whether the wages they receive are competitive in the local marketplace.

Currently, policymakers at both the state and federal level often know only that graduates are “employed,” but they don’t know are working as a welder or an Uber driver. This is a real problem—for students, families, and taxpayers.

Some states have solved this problem by asking employers to enhance their reports with just a few additional data points such as the employee’s occupation title, work location, and hourly payrate/hours worked.

When these enhanced wage records are connected to education data, students and policymakers can see the real outcomes of specific programs, allowing them to make informed decisions on whether to pursue a given program of education, or even whether it makes sense to offer it at all.

This outcome transparency is invaluable when assessing how to prioritize public investment for critical needs like nursing and engineering. Knowing college majors is not enough; 62 percent of young adults are not working their intended careers.

Connecting enhanced wage records to education data also creates new accountability, especially for investments in career and technical education and in workforce programs meant to lead to high-skill, high-wage, and high-demand jobs.

For students, these enhanced records can help them understand the prospective returns on a course of study. They can learn what proportion of graduates in their chosen field found related employment, how many hours people work on average to achieve a certain income in that field, and whether there are jobs available in their local community—or if they will have to relocate.

Fortunately, most states do not need to build a new system from the ground up because they already link education and wage data. All that is needed is for unemployment insurance programs to collect a few additional data points once per quarter.

Knowing the employment and earnings outcomes of college degrees at the program level enables serious reviews of programs, especially those that produce low or negative returns. Families and taxpayers should and will demand institutions justify their continued investments in these types of programs.

Because most institutions want to do right by their students, they will adapt.

State policymakers can usher in a new era of transparency and efficiency in higher education by adopting enhanced wage records and connecting them to graduate outcomes.

Students, families, and taxpayers deserve nothing less.