Higher Ed’s Credit Transfer System Is Broken. Here’s a Better Way.

Apr 20, 2020

When Kevin enrolled in college after high school, he chose the cheapest and closest four-year public college. But after a semester, he didn’t like the experience and transferred to a local technical college, wanting to earn a credential faster so that he could enter the workforce.

As he enrolled in his new school, he started from scratch. What limited credits he accumulated before did not transfer and help him on his path toward finding a job.

Three semesters in, he once again grew disillusioned and dropped out. After some time in the workforce, he re-enrolled in the first school he attended—and began his journey as a freshman yet again.

Such experiences are all too common for transfer students like Kevin, and many others, who we interviewed as we conducted research for our book “Choosing College.”

Thirty-eight percent of first-time students transfer schools within their first six years, according to the National Center for Education Statistics. But as they move, their credits don’t always follow. From 2004 to 2009, transfer students on average lost 43 percent of their credits—basically a semester’s worth. Students transferring between two public institutions fared better, losing “only” 37 percent of their credits. Those transferring from private for-profit schools to public ones, on the other hand, lost 94 percent. In California, transfer students pay an extra $36,000 for their bachelor degrees, if they get them at all.

The numbers are painful. No wonder, then, all the articles that have detailed students’ wasted time, wasted money and wasted hopes over the past two decades. The metaphors tell the story, comparing the issue to a maze, a gauntlet, a brick wall, a nightmare, and even the Bermuda Triangle.

Amid the current pandemic, credit transfer has a new diabolical wrinkle. As a flurry of schools have shifted to a pass-fail grading system for the current semester, some institutions have balked at the prospect of accepting these non-letter grades.

Dude, Where’s My Credit?

Although the credit transfer problem is painful for students, and perhaps illogical to others, it actually makes business sense for institutions which are not motivated or designed to work with each other.

To help see why, consider that traditional colleges and universities are locked into a system that pays them by the credit hour. When they accept students who transfer from other institutions, by not accepting certain credits—or not allowing them to count toward a major—the receiving institutions increase the number of credits for which students will have to pay them in order to graduate.

In other words, accepting credits from others could mean a loss of revenue for oneself.

Institutions have sometimes justified this practice by arguing that their credit—and, by extension, their education—is superior or at least materially different from that received at other institutions. They worry about “lowering their standards” if they award credit for work done elsewhere.

It’s the classic case of “not invented here” syndrome. Because schools stitch their majors and requirements together in proprietary, sometimes idiosyncratic ways, Econ 101 at one institution may in fact be quite different from the same course taught at another institution. In an education world driven more by inputs than learning outcomes, it’s hard to prove the case one way or the other.

States like Florida have created common course-numbering systems that offer some clarity for students as they plan their course of study. But these systems do not guarantee that institutions will count the same courses toward fulfilling general education or major requirements. Knowing that courses will count relies on transfer agreements between institutions. For the academic and economic reasons highlighted, these agreements are often onerous to create and are hammered out on an institution-by-institution basis.

Creating Seamless Credit Transfer

Solving this challenge at scale won’t happen within today’s traditional models of higher education. As we chronicled in a new report, and as previous efforts to fix similar problems among healthcare institutions has demonstrated, the economic incentives in the current system make wholesale change nearly impossible.

Credit transfer is not a new problem. But the current pandemic has given the search for solutions a new urgency.

In order to tackle higher education’s credit-transfer challenge, the U.S. Department of Education, along with state departments of higher education, will need to foster a parallel higher education system in which they not only pay higher education providers, but also third-party credentialing entities to assess and validate students’ mastery of industry-valued skills.

To do this, the federal government should leverage an expansion of Pell grants designed to help Americans upskill and get back to work during this pandemic-induced recession. In lock step, employers will need to adopt and advocate for skills-based standards with aligned mastery-based assessments as part of their hiring and promotion.

For example, this would mean that a student majoring in finance with Econ 101 and other such courses on her transcript, can use federal dollars to take assessments delivered by organizations like the Chartered Financial Analyst Institute and demonstrate mastery of the subject.

This move away from an institution-centered posture to one in which third-party bodies are the assessors of quality and gatekeepers of credentials would skirt the debates about whether learning at one institution is equivalent to that of another. In this system, learners would own their records and bring independent proof of their learning. Institutions that wanted to receive funds from government entities would need to accept that track record of learning.

Such an approach, focused on the accumulation of knowledge and skills, would facilitate seamless transfer without credit loss, shift significant portions of higher education from seat-time to competency-based learning, allow the federal government to pay providers for outcomes based on objectively demonstrated mastery of learning, and help learners transition expeditiously back into the workforce.

For it to work, the third-party organizations that certify learning would need to offer industry standards that establish specifications for learning—much like the bodies that determine standards for USB ports. That kind of interoperability requires having all stakeholders on the same page about what learners must master, and how they must demonstrate that mastery.

Serving Learners Now

Amid the current pandemic, helping Americans earn credentials that allow them to upskill and move back into the parts of the workforce ready to hire is critical. Wasting learners’ time with retaking courses already mastered or needless requirements won’t serve society well.

The American Council on Education has already brought a coalition together to encourage institutions to be more flexible and compassionate as they consider whether to accept credits earned elsewhere that may have been impacted by this crisis. Although this is an important step amidst the current challenges, we need a bigger systemic fix.

With a parallel higher education ecosystem leveraging new gatekeepers of credentials and outcomes-focused education providers, we can finally stop trying to solve, conquer, break through, or navigate the mazes and gauntlets and brick walls and Bermuda Triangles. We were running out of metaphors anyway.


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