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U.S. Higher Ed Leadership at Risk Without Bolder Action

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When President Obama convened leaders from more than 100 colleges and 40 organizations Thursday at his higher education summit at the White House, there was a hard truth he needed to put on the table. While America's preeminence in both elite and mass institutions of higher learning fueled its economic leadership in the last century, that preeminence (and the rising generation's standard of living) is at risk unless the sector overhauls its traditional practices to lower costs while lifting quality.

The case for change is overwhelming. Tuition rates have climbed dramatically and student debt has ballooned. Achievement gaps for minorities and low-income students are shockingly wide. The perceived value in the marketplace for many so-called degrees is plummeting. Graduation rates from U.S. public universities are often no better than 50 percent. And employers complain that graduates lack needed skills.

Meanwhile, other developed countries, and even some developing ones, continue to gain ground in producing the world's most highly skilled and well-educated workers. To stay on top, America's higher education sector needs to exploit the radical new educational options that technology is making possible. And it must focus on improving the employability of students once they graduate.

In August, President Obama rightly set his sights on this challenge. He urged colleges to value demonstrated competence over "seat time." He made the case for them to be judged on outcomes rather than the current rankings, which emphasize inputs such as student-teacher ratios.

These proposals point in the right direction, but they need to go farther. This week's White House summit provides a great opportunity to raise the bar for reform. The central challenge is to break the iron link between cost and quality. When technology meets other sectors of the economy, quality goes up and cost comes down. Why isn't that happening in higher education? If it did, it would make higher education available to students without them having to pile up massive debt.

How could the president help make this possible? Here are three ideas.

First, increase transparency for students by encouraging the development of a student-centric ranking that would enable them to compare degrees in relation to employment prospects, cost and value for money. While the Obama administration has proposed initial metrics for such a scorecard, they've left out measures of the quality of teaching, learning and mentorship, all factors of great importance to a high-quality, well-rounded education. Student surveys would make this possible.

Second, federal financial assistance for students needs a stronger emphasis on employability and innovation. Even with the economy picking up, employers still complain that graduates are not ready for the 21st-century labor market and too few students are equipped to start their own companies. New opportunities of great value to young people have emerged outside universities -- boot camps for learning software engineering, for example, or opportunities for service learning abroad -- yet these are ineligible for federal aid. Also, within institutions, some programs and courses have high value in the workplace, while others simply don't. Financial aid should be attached to course completion rather than degree completion. At the moment, the financial aid rules inhibit innovation. They need to be redesigned to encourage it.

Third, the president should take on the rules now governing accreditation. This sounds dull, but because these rules serve as barriers to entry in the sector, they can be used by incumbent institutions that control the process to block useful change. Today, for example, the federal government accredits whole institutions rather than departments or programs within them. And new entrants to the education market providing excellent and innovative learning opportunities are excluded altogether. This counts against the new players who might use technology to disrupt the traditional models and provide better quality at lower cost.

Last year was a year of MOOC-mania and no doubt experimentation will continue until the MOOCs find the elusive way forward. All the hype hid the wider changes going on beneath the surface: the use of technology in combination with face-to-face teaching, rather than as an alternative to it, for example. A few universities also embarked on a more radical shake-up of what they offer. Wisconsin, for example, with its UW Flexible Option, is offering progression on the basis of assessing competence rather than seat time, with students receiving guidance from a personal academic success coach. Programs such as this could finally break that link between cost and quality.

For all its economic travails in recent years, America has maintained an enviable track record of innovation. This could be the year it shows the world new educational models which could benefit not just millions of young Americans but many more millions in emerging economies. Without more agile, adaptable regulation focused on providing good education at reasonable cost, however, America could find itself further ceding its leadership, and its young people's prospects dimmed.

When I left No. 10 Downing Street after eight years working on domestic policy for Tony Blair, he and I concurred that we'd made progress, but we should have been bolder. President Obama should aim high while he has the chance.

Sir Michael Barber is coauthor of the report "An Avalanche Is Coming: Higher Education and The Revolution Ahead."