The current college accreditation system is broken – and it’s driving up college costs. Senator Mike Lee’s (R – UT)’s new legislation to reform the outdated and bureaucratic system of college accreditation is a welcome step.

The Higher Education Reform and Opportunity (HERO) Act would allow states the opportunity to establish their own accreditation systems, in lieu of the existing de facto system of accreditation overseen in large part by the U.S. Department of Education. The proposal empowers states to develop their own accreditation systems to accredit colleges, individual courses within colleges, apprenticeship programs, and curricula. And any state-accredited educational institution, program, or course would then be eligible for federal funding such as student loans.

“Our current higher education system is controlled by the iron triangle of regional accreditation organizations, the schools and federal bureaucrats,” Lee stated.

Lee’s right: The current accreditation system narrows the number of available options for students by requiring students to attend an accredited institution in order to be eligible for a federal student loan. The existing accreditation system also prevents individual courses from being accredited. But this accreditation “seal of approval” is riddled with problems, as Heritage has outlined over the years:

Instead of being able to shop around for individual classes that might meet their professional or academic needs, under the existing accreditation regime in the U.S., students are largely consigned to an off-the-shelf college experience at a government-accredited institution. This “one-size-fits-all” college experience pigeonholes the typical student as someone who will require four years of undergraduate work to complete training in a given field, no matter what area of study the student has chosen to pursue. The current regime also disregards the flexibility and access to content that online learning has produced over the past several decades.

Accreditation thus has become a poor gauge of college quality. Colleges rarely lose accreditation once it is granted, despite widespread recognition that the quality of higher education has been on the decline for decades. At the same time, colleges slog through the bureaucratic and time-consuming accreditation process in order to access federal subsidies, which constitute an increasingly large share of college budgets. This accreditation system hinders innovation, creates an inflexible college experience for students, and results in accredited courses that are of questionable academic value.

Decoupling federal financing (student aid) from accreditation, as the HERO Act does, is the type of policy reform that will enable the U.S. higher education system to keep pace with the demands of future economies. Allowing any entity a state designates the ability to accredit courses and educational options will infuse a level of competition in higher education that has been missing for decades.

Credentialing courses and acquired skills, not institutions, will be a far better reflection of the competencies valued by employers, will help bring down college costs, create a more flexible higher-ed experience for students, and bring down the barriers to entry for innovative start-ups. As PayPal co-founder Peter Thiel illustrated in his choice for graph of the year, creating a more nimble, cost-effective higher education system is a long-overdue reform.