Today the U.S. Department of Education released the much anticipated framework for a college ranking system.  The framework summarizes the basic categories, institutional groupings, data, metrics, and tools that the Department is currently weighing in designing the ratings system.

The purposes of the rating system are to: (1) help students and families make informed choices when searching for and selecting a college; (2) help colleges measure, benchmark, and continue to improve across the principles of access, affordability, and outcomes; and (3) enable the incentives and accountability structure in the federal student aid program to be properly aligned to these key principles

The first version of the rating system will include four-year institutions and two-year institutions and only take into account undergraduate students.  Graduate-degree only and non-degree granting institutions will not be included.

The rating system will use broad categories to highlight significant success and challenges of institutions. This will not be a numerical ranking of institutions. The ratings will be limited to three performance categories: (1) high-performing, (2) low-performing, and (3) those falling in the middle. The Department argues that this system will allow the identification of institutions that are performing well and those that are facing challenges without suggesting more than the data can support. The Department is currently conducting data analyses to determine the thresholds.

The Department is also interested in the issue of improvement over time. The Department is considering inclusion of some form of recognition that an institution is demonstrating meaningful improvement in partnership with the institution’s ranking.

With regard to institutional groupings, the Department is conducting additional analysis to determine what specific groupings will be used. To date the Department has determined that groupings will differentiate between four-year and two-year and is considering accounting for differences in institutional characteristics such as degree, program mix and selectivity.

The rating system will use existing sources of data for the first version of the rating, including IPEDS and NSLDS as well as individual data such as the FAFSA. The data will inform several metrics used in the rating system. Efforts to measure performance over multiple years and offer intermediate measures are also being considered. Metrics under discussion by the Department include:

• Percent Pell: The percentage of a college’s enrolled students who receive federal Pell grants
• Expected Family Contribution (EFC) Gap: The average difference between some focal EFC level and each student’s individual EFC.
• Family Income Quintiles
• First-Generation College Status
• Average Net Price: The cost of attendance after accounting for all federal, state and institutional grant aid
• Net Price by Quintile
• Completion Rates
• Transfer Rates
• Labor Market Success:  Discussing the use of a combination of a short-term indicator  of “substantial employment” with a longer-term more specific earnings measure such as the mean or median earnings of former students ten years or more after entering the institution. A threshold measure for substantial employment would be a way to express an institution’s share of graduates who earned above a specific level, such as a percentage of former students earning above 200 percent of the federal poverty line for a family of one or a multiple of the full-time minimum wage earned over one year.
• Graduate School Attendance
• Loan Performance Outcomes

Finally the Department is also taking into consideration a series of additional issues and how to respond, including how to present the information, account for student and institutional characteristics, make the system consumer friendly, and provide the opportunity for institutions to share additional information.

In the months ahead, the Department will arrange and participate in many structured discussions about the ratings system to continue and focus on identifying, assessing, and refining the best ways to improve access, affordability, and outcomes in higher education. Sessions will be announced by early January.

The agency expects to publish the college ratings system before the 2015-16 school year and will continue to refine the ratings system over time based on user and institutional experience, input from the field, and the availability of additional data.