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By Christine Benz and Adam Zoll | 09-30-2013 12:00 PM

A New Scorecard to Grade Colleges

We size up a White House proposal seeking to tie college performance to financial aid allocations. Plus, where college savers are falling short.

Christine Benz: Hi, I'm Christine Benz for Morningstar.com and welcome to College Radar.

A new proposal would tie federal financial aid to college performance. Joining me to discuss this and other news in the realm of college funding is Adam Zoll. He's assistant side editor for Morningstar.com.

Adam, thank you so much for being here.

Adam Zoll: Thanks for having me.

Benz: So what's in this proposal? What criteria would they look at to rate schools and how would that tie into financial aid?

Zoll: So this would, for the first time, tie financial aid allocations from the federal government to the schools that are seen as performing best. And the criteria that would be used are things like student earnings once they graduate, graduation rates themselves, debt loads that students leave school with. You can look at it as the federal government trying to get more bang for its buck in terms of its allocation of financial aid dollars.

Benz: If you as a student were going to one of these schools that performed better on these metrics, in fact you may qualify for more financial aid--is that the idea?

Zoll: That's right. The school itself will have more financial aid to award. … Right now the way the system works is that financial aid is allocated based on the amount of need-based aid that schools have. So if you have a certain number of lower-income students, you are going to get a proportionate amount of financial aid. This is designed to sort of turn that on its head and really make the schools earn the financial aid that they have available at their disposal.

Benz: Some of this information about college performance is already out there, right?

Zoll: That's right. Some of this information that's going to be used for this criteria is already available on this College Scorecard that the White House rolled out on whitehouse.gov a few months ago. And you can already find some of these numbers for specific schools. But there's not a rating score associated with them, so that's yet to come.

Benz: There have been critics of this proposal. What's the main objection at this point?

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