While educational reformers have focused primarily on the K–12 system since the 1983 publication of the influential report A Nation at Risk, which called attention to the declining quality of U.S. public education, the skyrocketing costs of higher education and the apparent decline in the quality of college education have moved concern over the nation’s colleges and universities onto center stage. Now, the Secretary of Education’s Commission on the Future of Higher Education has released its long-awaited final report, and it calls for “urgent reform.”

At first glance, our higher education system does not appear to be broken at all. Our universities continue to be the envy of the world; foreign students spent about $12 billion in tuition and other fees in 2000, making education our fifth largest export of services. Moreover, the proportion of high school graduates who immediately go on to college has risen substantially in recent decades—from 47 percent in 1973 to 62 percent in 2001. Looking at enrollment rates broken out by race or income, the general trend remains similar: more high school students are going to college, but some sub-groups—white and high-income students in particular—continue to exhibit consistently higher enrollment rates than others.

But the commission’s careful assessment reveals that our higher education system has numerous and severe challenges.

About one-quarter of our high school students fail to graduate; many of those who do are inadequately prepared for either college-level work or for the changing needs of the workforce. At the same time, average tuition and fees rose by about a third at private four-year colleges and by more than half at public four-year institutions. Financial aid, though, has not adequately met the rising costs. The Advisory Committee on Student Financial Assistance estimates that in the first decade of the new century, financial barriers will keep nearly 2 million low- and middle-income college qualified high school graduates from attending college. Together, these factors lead to a troubling result: about one-third of whites have obtained bachelor’s degrees by age 26–30, while just 18 percent of blacks and 10 percent of Latinos in the same age cohort have earned degrees by that time.

The commission also noted that, while we still are educating many foreign students, our higher education system is no longer the best in the world. We are falling behind other nations and not even doing a high quality job of educating those students who persist. According to the Organization for Economic Cooperation and Development, we have slipped from first place about forty-five years ago to ninth place in 2003 in higher education attainment. More troubling is that about 44 percent of our students fail to complete college in six years; of those that do, the National Assessment of Adult Literacy found that less were literate in 2003 than in 1992.

A number of relatively simple solutions could go a long way toward increasing access, reducing costs, and improving the quality of higher education. For example, in The Century Foundation’s report, America’s Untapped Resource: Low-Income Students in Higher Education, researchers found that increasing need-based aid, especially Pell Grants would significantly increase access for minority and low-income students. Institutions could reduce costs through streamlining financial aid or state regulations. States also could provide incentives for technology-driven, quality-adjusted cost savings.

Most importantly, the commission recommends that “higher education must change from a system primarily based on reputation to one based on performance.” Parents and students have no solid evidence, comparable across institutions, of how much students learn in colleges or whether they learn more at one college than another. Assessing benchmarks such as student access, retention, learning and success, educational costs, and productivity could go a long way toward improving student learning. The commission suggested that a standardized college exit exam as well as a searchable database documenting outcomes, costs, and institutional performance would lay the foundation for a performance-driven system. Unlike the other proposed reforms, this one would represent a sea change.

Some commission members objected to the proposed introduction of accountability and transparency reforms to higher education. For example, David Ward, president of the powerful American Council on Education, refused to sign the report. Ward claimed that he opposed “one-size fits all” prescriptions that fail to reflect the differing mission of colleges. Another council member, the National Association of Independent Colleges and Universities (which represents 900 private institutions including liberal arts colleges, major research universities and church- and other faith-related colleges), attacked the recommendation to develop a national database to follow individual students’ progress, calling the proposal a dangerous intrusion on privacy.

Performance measurement may also threaten other institutional practices. For example, assessing performance across universities might expose grade inflation or poor quality teaching due to the intense pressure to “publish or perish.” What’s more is that requiring transparency could expose the substantial overrepresentation of wealthy students (one Century Foundation study found a ratio of 25:1) on campuses, especially at more selective institutions. And yet these are exactly the sort of practices that performance measurement could and should eliminate because they hinder student learning.

Some observers, however, realizing that the system must change, have begun to initiate some urgently needed performance reforms, with positive results. A subsidiary of the RAND Corporation developed a test that is used to assess student learning in college. Instead of testing discrete pieces of knowledge, the Collegiate Learning Assessment tests higher-order critical thinking, analysis, and communication skills that all college students should learn. Several hundred colleges and universities now administer this assessment. In addition, the National Survey of Student Engagement (NSSE) evaluates institutions and provides a detailed statistical analysis of how well students are being academically engaged. As of 2006, nearly 1,000 colleges opted to be evaluated.

These initiatives represent critical first steps down the rocky road to higher education reform—away from a system based primarily on reputation and toward a performance-based system. But many more associations and institutions must buy into performance in order to fully implement the commission’s much-needed reforms.

Jonah Liebert is a research associate at The Century Foundation.