The Future of Everything covers the innovation and technology transforming the way we live, work and play, with monthly issues on health, money, cities and more. This month is Education & Learning, online starting Aug. 6 and in the paper on Aug. 13.

How can you tell if a university graduate can think clearly, communicate precisely and solve problems effectively?

For years, confidence in higher education has been declining, along with total enrollments. Transcripts and diplomas don’t carry much weight for many employers, as grade inflation has reduced the worth of a cumulative grade point average. Employers can’t be sure that students have gained critical thinking skills over the course of a degree. At the same time, millions of jobs requiring a four-year degree can be done without that level of education, some corporate leaders say.

Ohio University economist and professor Richard K. Vedder has wrestled with this dilemma and believes the future of higher education will include a college exit examination that would shine a light onto what graduates know—and what they don’t.

“It would tell prospective employers a lot about what a student has really learned while they were in school,” he says.

Prof. Vedder, the founding director of the Center for College Affordability and Productivity in Washington, D.C., says he came up with the idea around 2004 as he was searching for a way to introduce more transparency and accountability into higher education. He likens the idea to licensing examinations in fields as far-flung as dentistry and plumbing.

The 3½-hour test would measure critical reasoning and writing skills by asking students to analyze information from a variety of sources and write a persuasive essay to build a case. That would be followed by a two-hour, 100-question multiple choice test which could assess a student’s grasp of math (10 questions), natural and biological science (10 questions), statistics and data analysis (five questions), literature (10 questions), history and government (10 questions), economics (10 questions), a foreign language of the student’s choice (10 questions), psychology (five questions), and geography (five questions). The last 25 questions could be from a subject of the students’ choice—presumably their majors.

The exam would be certified by a third party. Graduates could list scores on their résumés. Prof. Vedder has even picked out a name: The National Collegiate Exit Examination (NCEE).

The test would benefit high-school students who are trying to compare the quality of education at different schools as well as the schools themselves, which would be able to illustrate how they stack up against their peers, Prof. Vedder says.

Ohio University economist and professor Richard K. Vedder favors a college exit examination.

Photo: Matelli Graves for The Wall Street Journal

“Imagine if the kids at some small, out of the way school scored better than the students at Harvard or Yale,” he says.

Over the years, Mr. Vedder has spoken with lawmakers and business leaders about the idea while making the case that higher education needs to be more accountable and transparent. He says the time may finally be at hand for its adoption though he says he doesn’t believe most schools will embrace it unless a critical mass of employers demand it.

The exam could be particularly useful for employers hiring recent college graduates with little work history. Cheryl A. Oldham, vice president of education policy at the U.S. Chamber of Commerce, says employers rely on college degrees to sort applicants, in part because they are available. They are also a fairly blunt instrument, and hiring managers are anxious for any additional data that would shed light on what a student knows and is capable of doing.

After speaking with Prof. Vedder, the Chamber expanded the idea by putting together a proposal for an employer quality assurance system to be developed by industry so employers would have a better sense of what students knew when they graduated.

“Then you would have this sort of seal of approval that you’ve met with what the employer community needs,” she says. “I think that could be revolutionary in terms of just providing another way to look at education and training.”

The Chamber has not had the time or staff to pursue the ideas laid out in the proposal with employers or other stakeholders, Ms. Oldham says.

Since then, frustration with higher education has only grown as student debt accumulates, the skills gap widens and college tuition continues to rise.

“Consumer frustration could push us more and more toward” standards of some kind, says Ms. Oldham. “You’re going to have the more innovative institutions saying, ‘Yeah I care what the employer community thinks.’”

Much like a GED, the NCEE would also create an alternative pathway for students lacking either the time, money or temperament to attend classes and earn a degree at a university, says Prof. Vedder.

After decades of tuition hikes and uneven return on investments, universities are struggling to convince the next generation of Americans that what they are selling is worth buying.

A 2019 Gallup poll of 2,033 U.S. adults found that 51% believed a college education is “very important,” down from 70% in 2013. Just 41% of those ages 18 to 29 believed college is important. College enrollment plummeted during the pandemic.

“We need to be responsive to those concerns at a time when we are at risk of losing the next generation of college students,” says Lynn Pasquerella, president of the Association of American Colleges and Universities. She doesn’t think an exit exam would accurately measure what a student knows.

“We have to be able to train students to think integratively across disciplines and to apply knowledge in real-world settings that connect curriculum to career. That’s not going to come from any exit exam or standardized test,” Dr. Pasquerella says. It could come from electronic portfolios of students’ work over their college careers or an exam that includes several days of interviews, she says.

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Colleges have little incentive to submit to third-party scrutiny of graduation requirements. And established schools are insulated from new competitors by the high bar for accreditation, a condition for federal aid.

With the decline of the SAT and ACT there will be even fewer benchmarked standards by which schools can be compared.

Without that competition and transparency, the quality of education declines and, eventually, so does the value of a degree, says Prof. Vedder.

Most colleges and universities would reject a one-size-fits-all exam because schools emphasize different types of thinking, knowledge and learning, says Jorge Gonzalez, president of Kalamazoo College, a private nonprofit liberal arts school in Michigan.

“The decentralized nature of the system makes it so difficult to be able to conceive of a test that is going to be able to assess, fairly, the learning that takes place across different segments,” Dr. Gonzalez says.

Exit exams have been tried before. Wayne State University once mandated students pass both a math and English “competency exam” to graduate, says Laura Woodward, director of testing and assessment at the school.

The English exam was a five-paragraph persuasive essay, and the math exam consisted of a one-hour multiple choice test, she says. The exams were scrapped more than a decade ago after students, who had completed their coursework and were on track to earn their diplomas, failed the tests and couldn't graduate.

“It was causing a little bit of a graduation pileup,” says Dr. Woodward. “It was embarrassing for the university.”

The students complained it wasn’t fair, Dr. Woodward says. The school decided to ditch it.

Still, the idea of testing graduates’ skills hasn’t died—it has just been shouldered by employers. Seth Gershenson, who teaches economics and public policy at American University and has written widely about grade inflation, says he has noticed more prospective employers administering tests to his students when they apply for jobs. In a world where jobs change rapidly, the ability to think critically and learn new skills are fundamental attributes for employees—which universities are, in theory, set up to teach.

Testing for those abilities “has really become a part of the interview process,” he says. “That is proof of concept of this idea.”

Write to Douglas Belkin at doug.belkin@wsj.com