Are You Gainfully Employed? In a very useful Education Sector report, Ben Miller explains how proposed for-profit regulations will work. Only 4 percent of programs — 8 percent of bachelor’s degree programs, 6 percent of associate degrees and 1 percent of certificates — will lose eligibility for student loans, he projects. Another 15 percent will face restrictions.
High-tech fields, such as e-commerce or graphic design, and jobs with low starting pay, such as medical assistant or chef, are the most likely to be affected.
About 65 percent of programs will fall in a middle category which requires colleges to post “debt warnings alerting potential students to the likelihood that enrolling could be hazardous to their financial health.”
For associate degree programs, Miller estimated 6 percent will be ineligible for loans, 19 percent restricted, 68 percent eligible with a debt warning and only 7 percent fully eligible.
Bachelor’s programs in accounting, business management, legal assistant/paralegal, and nursing have little trouble meeting the requirements, Miller found.
By contrast, most ineligible programs are in “dream job” areas: they provide training in cutting-edge fields like online businesses and graphic design, or in luxury occupations like interior design or fashion merchandising. These areas are associated with relatively high borrowing levels, but do not offer large numbers of jobs.
Consumers can learn more from repayment rates, debt ratios and cost warnings than they will from graduation rates or job placement data, Miller writes. Providing information on a program-by-program basis, instead of looking at the provider as a whole, is even more helpful.
For-profit colleges offer a wide variety of training programs in completely unrelated fields, so breaking apart the information by program ensures that a nursing student, for example, can see how his or her program actually performed without getting results conflated with business programs that serve students seeking very different careers.
The rule applies to all for-profit programs, except those in the liberal arts, but only to certificate programs at nonprofit public or private colleges. What’s good for the taxed is good for the untaxed, Miller argues. Students shopping for an associate degree in a career field should be able to compare the gainful employment record of the local community college to the for-profit alternative.
Miller also questions the proposed rule’s focus on graduates, ignoring the many borrowers who never complete a program.
One 2005 study found that students who borrowed and did not complete their program were “twice as likely to be unemployed as borrowers who received a degree, and more than 10 times as likely to default on their loan.” A program that fails to graduate large numbers of its students should also be seen as not providing gainful employment.
The rule will not shut down the for-profit sector, Miller writes. Colleges will have several years to adapt to the new rules. They can cut costs to reduce borrowing, or work harder to help students find higher-paying jobs.
Or they can try to sell high-cost training for low-pay jobs without the lure of federal loans.
Update: Miller’s “guesstimates” on the rules’ impact are way too low, argues the Career College Association, which represents the for-profit sector.
Give me better data and I’ll use it, Miller responds. “If the CCA would like to provide more specific data on exact levels of private and federal student loan borrowing or earnings information for each of its 1,400 member institutions by program, then I would gladly accept that data and run the analysis.”