Core-competence, Performance Based Funding and Loans Default Risk

Discussions continue on possible steps that the states, colleges and other entities could take to improve the broken US education system.  Previous post has discussed one of many possibilities.  How can policy makers implement such approaches?  The sub-optimal system can be amended faster through public policies if they have the enforcing power and corrective ability.  Voluntarily changes may not occur, and if they do, it may take forever to improve the system back to the right tract.

Not just federal and state funding can be based on core competence.  Other funding agencies, such as charities and foundations could use core-competence assessments and more stringent requirements in making their research award decision.  This policy will promote further professionalism and specialization toward new horizon of teaching, research and community outreach which never been explored before.  For example, if Emory Medical School and Hospital have done research and successfully producing the cure of Ebola virus then more funding should be awarded to Emory.  There is no doubt that other institutions will try to develop another version of ZMapp.  Rather than funding an institution to start from zero, as the front runner Emory should be given bigger portions or all Ebola research money.

Specialization will certainly eliminate redundancy and inefficiencies which have caused colleges’ annual budget to balloon in the past decades.  It is the right time for college administrators to redirect their strategic plan and for the federal and state agencies to see different angles before approving state colleges proposed budget or student loans applications.  The rubber-stamped era has passed and it may not be back, at least for awhile. The new dynamic and realities have to be dealt differently.  This may not be an easy task to do.  However, it will benefit the society and the country in the long-run.  Set aside the politics and use the common sense and integrity in making important decisions.

Under the new reality, federal student loans may not automatically be awarded to any applicants who cannot pass the minimum tests (AAEA calls it success & failure test [SFT]).  SFT helps the funding agencies to access loans applicants’ default risk (AAEA has developed such model) in addition to factors that have been asked in FAFSA.