Purpose

Imagine if a century ago free access to a high school education in the United States had been available only to the wealthiest families. Imagine, further, that anybody else who had chosen to enter high school could have made this choice only if they had been willing to take on crushing debt and risk not finding a job when high school was finished. If these had been the conditions restricting access to what was then a fundamental education, what would the US economy and our democracy be like today, 100 years later?

More than mere historical speculation, this question is now one about our future. And that's because college has become the high school of our age. The higher education degree has become the new high school diploma, an essential requisite for obtaining reasonable employment and achieving economic mobility in the 21st century.

Yet, despite the growing economic importance of the college degree, the proportion of US high school graduates going to college – a figure that increased for decades – is now declining The upward ratchet in tuition since the 1980's has progressively limited affordability and access to college education. In 1980, for example, college tuition took an average bite of 26 percent of the median family income in the US; by 2004, this figure had more than doubled, to 56 percent.

One of the main culprits driving the tuition increases, and thus one of the central impediments to economic mobility, has been higher education's pursuit of the rankings, particularly those put forward by US News & World Report. Asked to explain the factors behind tuition jumps at Cornell, economists there remarked that "how much the university spends per student for education and maintaining a low student/faculty ratio both weigh heavily in determining rankings. Any slippage in the rankings is extremely costly to the institution." A study published in Research in Higher Education by a former Provost at the University of Rochester added that if a college or university wanted to move into one of the top 20 slots in the US News rankings it would have to increase spending by tens of millions of dollars a year.

It's time to confront and change this dynamic – a dynamic that ratchets costs, restricts educational opportunity for American families, and thereby widens income inequality. Any factor that feeds income inequality injures our economy's potential for sustaining growth because it makes recessions more frequent and shortens periods of economic recovery. According to IMF economists Andrew Berg and Jonathan Ostry, "The key result from the joint analysis is that income distribution survives as one of the most robust and important factors associated with growth duration..... increasing the length of growth spells, rather than just getting growth going, is critical to achieving income gains over the long term...." The self-interested chase for US News "prestige" contradicts this key civic and economic responsibility.

One way to stimulate change in higher education would be to recast the competition for "prestige" around factors that improve access, affordability, and graduation, and that advance economic mobility for students. Competing around these factors, our higher education system would have clear incentives to invest in ways that promote the public interest. This is why we've developed the Social Mobility Index (SMI). The SMI measures the extent to which a college or university educates more economically disadvantaged students (with family incomes below the national median) at lower tuition, so they can graduate and obtain good paying jobs.

The new SMI rankings show that through wise policy-making, colleges and universities can be part of improving both economic opportunity and social stability in our country. Let's recast the chase for "prestige" to include lowering tuition, recruiting more economically disadvantaged students, and ensuring that enrolled students graduate into good paying jobs.

(excerpted from "How Higher Education Can Improve Economic Mobility in the United States")
http://bigthink.com/experts-corner/how-higher-education-can-improve-economic-mobility-in-the-united-states-2

Contrasting SMI methodology with other higher education ranking methods.

Unlike the popular periodicals, we did not assign a priori a percentage weight to the five variables in the SMI formula and add those values together to obtain a score. Instead, the relative weight of any variable was established by testing how much a realistic change in the value of that variable would move a school within a set of rankings derived from real data. Accordingly, the greatest sensitivity for movement in the SMI rankings derives from making changes in tuition or making changes in the percentage of students within the student body whose family incomes are less than or equal to the national median--$48,000. Simply put, a school can most dramatically move itself upwards in the SMI rankings by lowering its tuition or increasing its percentage of economically disadvantaged students (or both).

While tuition and economic background of the student body are the most sensitive variables in the SMI, three other variables in descending order of sensitivity are also critical. These are: graduation rate, early career salary, and endowment. While capable of producing big movements, graduation rate and early career salary carry approximately 1/2 the sensitivity of the first two variables. The rationale for this is not only that tuition and economic background are the most critical front end determinants for access, they are also the two variables over which policy makers have almost 100 percent, decisive control. By contrast, improving early career salary or graduation rate—critical outcomes to economic mobility-- require more substantial policy and system changes over a longer term. Finally, endowment carries 1/2 the sensitivity of the outcome variables. Although a strong indicator of power to act, endowment primarily serves a "tie-breaking" role in the SMI as explained below.

The relative sensitivity of the variables in the 2017 SMI are as follows:

Variable	Sensitivity
Tuition	291
Economic Background	318
Graduation Rate	207
Early Career Salary	160
Endowment	74

The integer associated with each variable indicates the average absolute position change each school experienced during testing when that variable was held constant. This sensitivity effect also works in reverse. That is, if the SMI formula had been calculated devoid of tuition to establish a ranking and then real tuition numbers were added back into the formula, each school's position would have changed, on average, by 291 places. Policy makers should note that the higher the sensitivity of an SMI variable, the more likely changes to that variable will advance a school's SMI ranking.

Among the five variables, two of them—tuition and endowment—carry an inverse effect. That is, the higher the tuition, the lower the SMI ranking. Although it is the least sensitive of all five variables, endowment works in the same inverse direction within the formula in the sense that hoarding endowment monies countervails against high SMI ranking. The basic logic is that all things otherwise being equal in the SMI between school A and school B, if school A has lower endowment than B, then school A is doing its work more efficiently. By virtue of its larger endowment, B has untapped potential to do more and therefore will appear slightly lower in the rankings than A. This view of the endowment corpus is the opposite of that taken by popular periodicals where stockpiling and sitting on endowment money is somehow taken as a measure of goodness and "prestige."

Source of Data

Data are collected from third party sources including Payscale, Inc., and IPEDS

Excluded Variables

Unlike other rankings that rely on reputation surveys, SMI dismisses altogether the use of such data. Factoring in "opinions" from college faculty or administrators about social or economic mobility would only perpetuate the biases and stereotypes collected in such surveys. Our effort is aimed at defining an "economic mobility" index on an independent, accountable, and quantitative basis.

Despite its widespread promotion as a marker for inclusiveness, Pell grant participation is, in fact, a very poor indicator of campus economic diversity. Pell Grant participation is misleading as an indicator for access because Pell Grants are not consistently given to students from disadvantaged family economic backgrounds. We broke new ground in the 2015 SMI by revealing, for each campus, the minimum percentage of its Pell Grant recipients who come from families making more than the median family income. The data show that at many campuses, over half of their Pell Grant recipients are from the richest half of our nation's population. Further, as reported by the US Dept of Education, deductions and exclusions in the Pell Grant formula now permit some families making over $100,000 per year to receive Pell Grant awards. The data make it clear that Pell Grant participation should not be considered a valid indicator of a college's commitment to access and inclusiveness and is therefore not included in the SMI formula.

Net tuition is similarly excluded from the SMI calculation. It would seem reasonable on the face of it to incorporate net tuition rather than gross tuition (aka sticker price) in the calculation of the SMI. After all, once discounts and aid are applied, the "real cost" of attending college declines substantially from the "sticker price." However, unlike measures that seek to cull the cost/benefit of attending college, the SMI focuses on the extent to which institutions advance social and economic mobility. Economic mobility happens when students from disadvantaged economic backgrounds apply to college, graduate, get hired and thereby move up the economic ladder. This sequence is immediately broken, however, if these students are repelled at the start by either the high sticker cost of tuition, or the byzantine financial aid processes that, only if carefully followed, may yield lower tuition costs. A key factor in this sequence suppressing college participation of the disadvantaged is its pricing opacity. Regardless of how skillfully and patiently an applicant navigates the financial aid maze, the level of any given university's institutional aid cannot be known by him/her in advance. The university must first assemble admission offers to its freshman class, wait for acceptances of those offers, and, depending on the need mix of the students, parcel out available funding as award packages. To understand the suppression effect of this byzantine process, imagine what would happen to sales of cars if their price tags had huge, unaffordable numbers that could only be reduced if potential buyers were willing to apply for the right to purchase, fill out more forms to demonstrate financial need, and then wait months for possible acceptance/denial as a customer. Car sales would plummet as consumers look elsewhere for alternative transportation. This same suppression on access is playing out today in the United States as students and families from disadvantaged backgrounds forgo college attendance. Owing to these powerful suppression effects surrounding net tuition, we believe it is irresponsible to formulate any measure of economic mobility around this datum. The simple fact is that to solve the economic mobility problem in the United States, the spiraling growth of sticker tuition must be reversed.

Retention data such as the freshman dropout rate are very important indicators of student engagement and no doubt indicate progress towards learning and economic mobility. But in the final analysis, graduating into paying jobs evidences economic mobility. Therefore, we subsume retention metrics by incorporating graduation rates in the SMI.

Variables such as reduced class size and higher faculty salaries (as a supposed measure of "prestige") are relevant, if at all, only in that they drive costs and tuition higher. Wasted attention to "improving" such variables countervails student access. One egregious example of policy sycophancy to the periodical rankings has a noted university mandating no class sizes beyond 19 despite a student body of 16,000 (19 is a cutoff for the periodical in terms of evidencing "small class" sizes). Not only is there no research to support that 19 students vs 20 vs 30 in a college setting carries any impact on learning outcomes, such arbitrary measures clearly increase costs and jeopardize accessibility. Another egregious example of periodical ranking sycophancy is a noted institution soliciting its graduates for $5 donations so as to "prove" widespread support of the institution for the rankings. The pitch averred that the more graduates who so contributed, the greater would be the "value" of their degree. None of the data around such self-aggrandizing "policy" has anything to do with a university's responsibility and role in addressing the national problem of economic mobility.

Student "selectivity"—i.e. SAT/ACT scores at admission—is irrelevant to measuring social mobility. In fact, since SAT/ACT scores correlate with high family income, it may be the case statistically that high entrance test scores could serve as a counter indicator as to whether a school is effective at recruiting and advancing students who are economically disadvantaged. Another argument against focusing on SAT/ACT scores could be that a college's contribution to social and economic mobility is greater when it is the college that has been genuinely responsible for improvements in the student's "aptitude," not an applicant's prep school or test prep course. Until there is widespread adoption of the CLA (Collegiate Learning Assessment) or some equivalent, data on aptitude improvement during the college experience remain unavailable. We therefore exclude any use of standardized test scores.

Why Salary Matters

It is a canard that education resulting in "good jobs" must necessarily be illiberal. We agree that undergraduate education, in particular, should support intellectual roaming. Fortunately, core requirements for undergraduates at most institutions encourage a diverse foundation of coursework. As we continue to move deeper into a knowledge economy, smart employers will increasingly recognize that the likelihood for quality work is enhanced by broad knowledge and skills. Metaphor is the partner of creativity and invention, and students who study most broadly carry the greatest potential for innovation. As far as we know, there is no research that demonstrates that achieving a high salary upon graduation correlates with experiencing a limited range of intellectual exploration and skill development during college. A high salary is only a proxy to be sure, but a validator nonetheless of a student's success at intellectual and skill development.

Other ranking systems abound. Our focus in developing the SMI is to comparatively assess the role of our higher education system in providing a conduit for economic and social advancement. While some other ranking system might value as "good" a circumstance where all the graduates of a given institution take low paying jobs in, say, civil service, it is not our intent to measure that good and certainly not our intent to deny it as a good. Many other ranking systems exist to measure many other "goods." Despite its broad national importance, the good we seek to measure is more narrow: the extent to which colleges and universities contribute to solving the problem of economic divergence in our country.