Beyond Accreditation: Toasters, Junk Bonds, and Rotten Tomatoes

Just a few years ago, most consumers of higher education felt the need to be familiar with just a handful of colleges and universities - in most cases, those in their own geographic region.  The advent of national online educational institutions has changed that; students and employers must now evaluate the relative quality of dozens, perhaps even hundreds of schools.  Yet the marketplace provides little useful guidance.

Regional accreditation is a signal of quality, but it is essentially a binary system:  a college is either accredited or it isn't - and most are.  While this helps consumers of education weed out a handful of illegitimate schools, it does little to help them gauge the relative quality of the rest.  Consumers are hungry for more information—information not necessarily found in US News & World Report.

There are plenty of non-educational models for differentiation of products and services, from simple systems like toasters being listed by Underwriters Laboratory to the exhaustively complex information available via analyst reports for stocks and bonds.  The bond market, in particular, offers an intriguing model.  As with colleges, there are thousands of corporate bonds competing for investor dollars, and no consumer could possibly evaluate them all.  Enter bond rating agencies like Moody’s or Standard & Poor’s, which do the analysis for us and boil it down to a letter grade (A+, B-, etc.) that reflects each bond’s relative quality.

It’s also possible that none of this will matter soon.  Film, book, and restaurant critics are a dying breed as consumers prefer to listen to each other rather than some central authority. Perhaps the future of college rankings will be not a news magazine or accrediting body, but a website like Rotten Tomatoes, amazon, or TripAdvisor.