Allen Mendenhall writes for the Martin Center about the categorization of colleges and universities.

Indiana University, which now runs the Carnegie Classifications, recently began reclassifying schools every three rather than every five years. The next round will appear later this year. University leaders have been silent about this development, but according to Doug Lederman, “the foundation’s sorting…sends some institutions into fits of anger or excitement over perceived insult or approval for how they are classified compared to their peers.”

As anxious university administrators await this release, it is worth asking what these classifications mean and why is the R-1 designation so coveted?

Carnegie classifies institutions by type: doctoral universities, master’s colleges and universities, baccalaureate colleges, baccalaureate/associate colleges, associate’s colleges, special focus institutions, and tribal colleges. The research designations everyone talks about (R-1, R-2, R-3) apply only to universities classified as doctoral universities. R-1 indicates “highest research activity,” R-2 “higher research activity,” and R-3 “moderate research activity.” …

… The reason they are valued is because the Department of Education and U.S. News and World Report, among others, rely on them. (U.S. News explains its methodological reliance on the Carnegie Classifications here). Indirectly, then, the Carnegie classifications are used for rankings and grant eligibility.

Rather than coming up with its own categories, U.S. News relies on Carnegie classifications for its list of national universities, national liberal arts colleges, or regional universities. If, say, Furman University wanted to be ranked alongside Princeton, Harvard, Yale, and MIT, it must increase the number of research doctoral-degree programs it offers to account for Carnegie’s metrics.

The main problem with the Carnegie classifications is that they create the incentive for educational malinvestment on a grand scale. When a university’s administration seeks to move from R-3 to R-2 or R-2 to R-1, they churn out more doctorates and hire more faculty than the market demands.