Completing higher education can provide huge benefits to students that last throughout their lives. Decades of research have shown large returns to higher education in terms of labor market earnings, health, and happiness. Compared to those with a high school diploma, college graduates earn $1 million more over their lifetimes and have an easier time finding a job. In addition, the jobs of the future are higher-skill jobs: over the next decade, the number of jobs requiring some level of higher education is expected to grow more rapidly than those that do not, with more than half of the 30 fastest-growing occupations requiring postsecondary education.
In order to realize these benefits, prospective students, with the help of advisors ranging from parents and peers to guidance counselors, must make dozens of choices about higher education. These choices include whether to go to college, which school to attend or major to select, and what level of education or training to pursue. Despite the importance of these decisions, students, especially those who are low-income or first-generation, often lack clear, easy-to-use, and accessible information.
Research shows that when students have better information, they make better choices about their education. When choosing a college, students need information on college quality to know whether their investment in higher education will pay off. For high-achieving, low-income students, an experiment found that providing information that compares details about college quality, like graduation rates, enabled these students to attend schools that better matched their qualifications. Further research shows that clear and detailed information about earnings can lead students to revise their employment expectations and change their major choice. Accessible information about costs and economic outcomes thus plays a crucial role in encouraging students to make informed decisions about enrolling in higher education and choosing the best college for their needs.
In addition, students often have mistaken information about the actual costs of attending college, which deters them from applying or enrolling. One study of Boston public school students shows that low-income and first-generation prospective students overestimate the cost of college by as much as two or three times the actual amount. The same study finds that students who wanted to go to college and had the relevant qualifications frequently failed to complete financial aid forms or fee waivers. Students who overestimate costs, including those who do not fully understand the impact of financial aid, are less likely to attend college. Additionally, evidence shows that providing assistance with filling out the Free Application for Federal Student Aid (FAFSA) encourages students to apply for aid and enroll in college. In an experiment where tax professionals assisted families in filling out their FAFSA and provided personalized aid estimates, students were significantly more likely to file the FAFSA and enroll in college; the college enrollment impact was even greater for students from low-income families.
That’s why the Administration is taking steps to arm prospective students and families, along with other partners in the higher education community, with better information on college costs and quality. First, the new College Scorecard — available at https://collegescorecard.ed.gov/ — provides the first comprehensive data on costs and student outcomes at nearly all post-secondary institutions in the United States. For the first time, students and their advisors can search for the earnings of students who attended an institution, along with the most up-to-date information about other measures of a college’s quality, including the percentage of students who graduate or repay their loans. Students can also access a new measure of cumulative student debt for borrowers who complete their degree at each institution and an improved measure of students’ success in repaying their loans.
Additionally, the launch of the new College Scorecard data site provides an opportunity to engage researchers in the conversation. To facilitate improvements in the evaluation of college quality going forward, a new Council of Economic Advisers technical paper outlines considerations for using this federal data, methods for assessing the causal effect of institutions on student outcomes, and data driven lessons for performance measurement and accountability.
Taken together, the College Scorecard and data site offer students, researchers, and other stakeholders the most complete set of publicly available data available on the costs and benefits of a particular higher education institution, helping them gauge how college decisions might impact students’ economic futures.
The Administration has also made it easier to apply for financial aid: students can now apply to colleges and for financial aid in tandem. Beginning in 2016, FAFSA applicants will be able to complete the form on October 1st for the following academic year. The FAFSA will also utilize earlier tax information, enabling more families to use a tool that directly retrieves their tax information and reduces the time needed to fill out the FAFSA from an hour to about 20 minutes. This earlier and easier access to financial aid information will make it simpler for students to access critical federal student aid dollars and will offer more accurate information about college costs as students decide where to enroll.
In the twenty-first century economy, higher education plays a crucial role in helping students reach their full potential. By providing the most accessible and accurate information on higher education, the College Scorecard and FAFSA reforms will let students, families, and researchers better measure the impacts of higher education choices and help students make more informed decisions about their futures.
Sandra Black serves as a member of the Council of Economic Advisors.