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Callan: Let me begin by asking why you agreed to chair the commission.
Miller: Well, I was partially responsible for its creation in the sense that Margaret Spellings and I fretted together about higher education before she became Secretary of Education. She was involved with my being appointed to the Board of Regents of the University of Texas when Governor Bush asked me to join it in late 1998.
When she was domestic policy advisor and then during the 2004 presidential campaign, we continued to discuss some of the things about higher education that concerned me. I thought that higher-education issues ought to be on the national screen. Education is always way up there, but higher education hadn’t been that much a part of the national debate.
Although she was very interested, it didn’t get to the top of the priority list then. But when she was nominated to be Secretary of Education—I knew that was a really good choice—I renewed the conversation, and in spring 2005 we started pulling some people together for discussions. Late that spring she hosted a meeting at the department with a cross-section of education leaders, including some who became members of the commission.
We spent a good part of a day discussing higher-education issues—predominately college access and affordability and related matters. When we were discussing costs, it was hard to get the people from the academy to focus on what was causing a cost explosion. They talked about their problem with funding and their need to raise tuition, but not about the driving elements of cost.
Then in August we hosted a similar meeting of higher-education leaders at a community college in Denver. It had a different set of invitees, including other future commission appointees: James Duderstadt, Robert Zemsky, Richard Vetter, and Rick Stevens. By this time the Secretary was talking about creating a commission, and at the end of the meeting she asked me to chair it.
Callan: At the outset, did you have particular issues in mind that had emerged out of the Secretary’s meetings or out of your experience as chair of the University of Texas’ Board of Regents?
Miller: For nearly six years, I had had a lot of experience with higher-education issues. I went through the period of squeezing down expenses in the early part of the decade. I thought the financial system was in deep trouble, and I still feel that way. I also came to the conclusion that there was very little accountability or measurement of outcomes. So we started developing an accountability system at the university.
The lack of outcomes measurement, the flawed financial system, the limitations on public funding, and the inability of institutions to control their costs—these four problems were all converging.
Callan: Turning to the commission report, one of the issues that didn’t seem to change through the several drafts of the report was the characterization of the finance system as “dysfunctional”—that I think was the terminology that you brought to the discussion.
Miller: I did. And there was support on the commission for that—from members like Rich Vedder in particular, as I recall. I knew it was a strong word but I believed that it described the situation as it was, even though some from the academy still avoided it and got defensive when I used it. But surprisingly, once we had discussed it seriously, it stuck.
I think people sense the dysfunction, even if they don’t understand it. Many people outside the academy don’t know about higher education’s third-party-payment problem, for example. But comparing higher-education’s problem to similar ones in the health-care system has helped some people understand the issue, and I believe that’s beginning to make a difference. It would be hard to be in the health-care system and not realize something is really wrong with its financing.
There’s a fundamental dilemma there. Some libertarians would say that we shouldn’t subsidize something like higher education—that it ought to be mostly market driven and that the government doesn’t have that big a role to play in it. I believe the opposite: There is a major role for government in funding higher education, with the federal government on the demand side and the states on the supply side. And if we were to decide not to do that, we’d be in trouble.
The public’s agreed on the need to fund higher education, but the question about what we’re getting for our money hasn’t been resolved. And finance really is a serious problem today, with all the competing interests for public funds. So we do need to know what the public is getting for its money, as well as how much it’s going to contribute to the total cost.
Callan: So “dysfunctional” doesn’t necessarily refer to just the amount of money that’s being provided?
Miller: I think that’s a very, very important point. I would argue that we could justify more money if we had a system that worked better for a lot of different people in a lot of different ways. It could be a substantially good investment—although the word “investment” is sometimes overused by people in the academy, who point to the things that come out favorably for people with a college degree and then take all the credit for them.
We’re in a precarious position now. If we don’t address escalating costs, the public is likely to get fed up with the increases and react in ways that wouldn’t be very friendly to our education system. Such reaction would, I think, be very dangerous for the country as well as for higher education.
Not enough influential people think of higher education from the perspective of the many families and students who can’t afford it; who may not have access to the institution they’d prefer; who are paying much more than they ever expected; who have to borrow to go to a second- or third-choice institution and then don’t get the quality they expect; or who, whatever the cost, may not be prepared for the labor market with the skills they need. This is a set of circumstances that’s pretty dangerous. And the discontent’s cumulative: It builds up as more and more people have those experiences and perceptions. Just as people are dissatisfied with the health-care system, they’ll not be happy with higher education, and they’ll not be friendly to it.
Callan: So are you saying that the commission’s intention was to raise fundamental issues about the financial system, with the idea of making it a better investment for the country and families?
Miller: Sure, and with the idea of making it more responsive to what people want and need, not what the producer wants and needs. We’ve become too cozy with the idea that the academy makes all the choices, gets to have autonomy, gets to pick the curriculum, and gets to have tenure. These are all good concepts. But if they’re jeopardizing good outcomes for students or the country, then there’s a serious problem. The system is in jeopardy if the pendulum has swung too far toward the producer and away from the people who need and use the system, because its fate will ultimately be decided by the public.
Callan: Would you like to elaborate on the characterization of American higher education as a system that is driven more by reputation than by performance?
Miller: I don’t think we measure outcomes very well in higher education. We don’t know what students really learn. The traditional view has been that if you went on to college after you came out of high school, you gained some knowledge and skills. But after a period of time, a college acquires a brand that’s based on a long-standing reputation for quality and not necessarily on the actual knowledge and skills of its most recent graduates. A person is often identified with the brand, and the quality of knowledge and skills is assumed. One can assume the quality of a candy bar by its brand but not that of a college graduate. That quality is very, very hard for anybody to really judge, for there isn’t any measurement of learning outcomes.
Callan: So it’s a lack of evidence you’re talking about?
Miller: Right. Lack of evidence other than the reputation of the brand. Branding is very powerful and so is reputation. But quality can decline, and so can brand and reputation. Let me give you an example: Fifty years ago the term “Made in Japan” was considered a sign of poor quality, right? That’s a reputation thing. Then things changed. Detroit’s automakers dominated the market and didn’t know how to respond to the improving quality of their competitors, so eventually those people on the other side of the ocean became the ones with the reputation for quality. I think we have a similar situation in higher education.
Callan: So is your point that we need better evidence of outcomes in order to monitor and improve quality?
Miller: That’s exactly right. You improve quality in small increments, and you do it at every stage in every way. But the attitudes of “We’re the best that there is” or “Who could possibly do it better than us?” are very hard for mature industries to overcome internally; it almost always takes external pressures. I’d rather see the pressures on higher education for external accountability come from its friends and public policymakers than from some other forces that may push us into reacting too late and perhaps overreacting.
Callan: Why did the commission assert that higher education is a mature industry?
Miller: I think that’s very, very clear. Like other mature industries, colleges and universities have difficulty in accepting criticism and are anti-competitive. There’s a monopoly among the top-tier institutions that’s very resistant to change. I think those are symptoms of a mature industry.
I mean, there’s currently very little new technological contribution to how we educate, and so there’s very little improvement in productivity. In contrast, over the last decade there have been major advances in productivity in some parts of the economy, sometimes to the detriment of its mature industries. In the financial sector, for example, we’ve had rapid and radical changes in how we deliver services. But higher education has hardly changed at all.
You know, I made a list not long ago of what were the major companies when I started my career in the investment business. I listed companies like Anaconda, Bethlehem Steel, Chrysler, Eastman-Kodak, General Foods, General Motors, International Harvester, International Nickel, RJ Reynolds, Sears, and Woolworth. These companies were the powerhouses just a few decades ago, but they became mature and inadequately competitive. Things change even in a generation. We face that possibility in higher education, and people are just ignoring it.
Callan: What accounts for the commission’s interest in learning outcomes from the onset of its deliberations?
Miller: Learning outcomes were there from Day One. The public is beginning to question what it’s buying. And as the price of college has risen, this has become a more urgent issue.
The major mission of higher education is teaching and learning, and it’s a big mistake to assume that people have learned something if they sit a certain amount of time and get certificates or degrees. There’s evidence in the adult literacy assessment, for example, that students aren’t getting the learning they need.
There might have been a time when it wasn’t thought to be necessary to measure learning, and we didn’t have ways to do so anyway, but I think that time is over. The public is beginning to demand that we assess learning at the state and local levels, good think tanks are seeing ways to do it, and so now higher education can and should address learning outcomes—it’s inevitable. Even in the year since the commission was formed, there’s been some progress. I think that the National Center has shown how learning can be measured, and states and some universities have begun to pay attention.
I can cite some people in the academy who make the same points, but I’ve found that it’s less acceptable for outsiders to raise these questions. I’m hoping that the academy decides how to assess learning outcomes well, as opposed to having less than the best imposed on it, which may occur if it doesn’t respond to the public’s demands.
Callan: Turning from learning to access, how does the recommendation for increasing need-based financial aid fit in?
Miller: There’s clearly been a shift in the last decade or so to financial aid that isn’t need-based, and I’m not making a value judgment on that. There are reasons why the American people like the idea of so-called “merit aid.” But a lot of aid has been put together without looking at the whole system, without understanding that there are places where need-based aid is required. The commission believed very strongly that the amount of need-based financial aid should be increased, but on the clear condition that higher-education system stop raising prices and costing more than it should. If higher education doesn’t become more efficient and productive, increased financial aid will not benefit anyone.
Callan: The title of the commission’s report is A Test of Leadership. Where do you see the leadership it has called for coming from?
Miller: We made recommendations for virtually all levels of leadership.We aimed some things at the states and some at the institutions, and we clearly spoke to the federal government, particularly about financial aid and less complex regulation. But one of our important messages was that there is also a need for leadership from outside the academy, and one of the key places we’re going to find it will be in the business community.
I believe that business leaders understand the purposes of higher education, know its value, and honor its accomplishments. And they understand our need for a workforce of the future better than anybody. They’re complaining about workforce competence, they pay a lot of taxes, and they face global competition. The country needs for them to be engaged in higher education policy, and I don’t think they have been engaged enough in the past. So I’m hopeful that the commission report will bring business leaders into the debate.
Callan: You were pretty well prepared to undertake this project by the time you had gone through your period at the Board of Regents in Texas and the series of preliminary activities with the Secretary, but were there any surprises?
Miller: Yes, a few. The criticism and resistance to change didn’t surprise me in some ways, because I’ve been in the stock market long enough to see what happens with mature, complacent industries and how defensive they can be—especially if they’re a protected and subsidized monopoly. However, what did surprise me was the effort to limit or restrict the conversation, particularly by those from the academy. The advice I got early on, from people both on the commission and outside it, was to keep the tone nice and comfortable—don’t say things too critically or too strongly, or else the academy won’t make the needed changes. And what that meant to me was something very close to censorship. When we were in the middle of the process, particularly when we started producing issue papers, I even heard that advice in public statements by some leaders of the academy. I didn’t take these attempts to limit discussion quite as seriously at the beginning as I did later.
Callan: Was this different than what you have seen in other areas? For example, you were very involved in public school reforms. Is there more defensiveness in higher education?
Miller: I think higher education has greater difficulty accepting criticism from the outside than the public-school people do. Many people within the academy are very harsh in their own analysis of higher education, but they don’t like it coming from anyone else. Some of it is the arrogance of producers who have had their way in the past and don’t always understand today’s issues and problems—a kind of “shoot-the-messenger” position. I think that’s a seriously dangerous position for them to take.
Callan: You’ve heard the commission and its report criticized, you’ve heard it praised, you’ve heard people say you went too far, and you’ve heard others say you haven’t gone far enough. Any regrets?
Miller: No regrets. I think we advanced the national dialogue and elevated higher education as a national issue. That’s what the Secretary primarily wanted. We raised really critical issues and points, and I think we did it relatively well.
Because of the toughness and complexity of the issues, the process wasn’t always easy or smooth, but it was a good sign that we were digging deep. We operated very transparently compared to most commissions. I think that was a lesson for the academy.
It’s now going to be a test of leadership to maintain the momentum for change. Some people seemed to anticipate that the commission and its one-year effort would produce a silver bullet, but I never thought that such an expectation was realistic.
The Secretary believes that our report was timely, and I agree. We found some momentum for change, and we may have created something of a tipping point. I’m hopeful that that’s what happened.
Callan: Thank you.
Charles Miller, former chairman of the University of Texas System's Board of Regents, chaired the recent Commission on the Future of Higher Education created by Secretary of Education Margaret Spellings. Here he is interviewed about the panel's widely discussed report, A Test of Leadership, by Pat Callan, president of the National Center for Public Policy and Higher Education, which publishes Measuring Up, a national report card on higher education.