New America Foundation’s Ben Miller is liveblogging the gainful employment negotiations at the U.S. Education Department. Sessions are expected to run through Wednesday.
Miller has more reporting on the proposed regulations, which will affect career programs at for-profit and community colleges.
Gainful employment regulations aim to ensure that career programs don’t leave students jobless and in debt, writes the New America Foundation’s Ben Miller in Improving Gainful Employment. The Obama administration’s new proposal is simpler and stronger than the one invalidated by a judge in 2012, he writes. But it still has loopholes.
In addition to measuring students’ debt-to-earnings ratio, Miller suggests three performance tests. Students would have to pay down their loans, no more than a third of students could withdraw in a year and the average graduate would have to earn at least as much as a full-time minimum-wage worker.
Career programs that can’t meet these standards — or have graduates with too much debt compared to their incomes — would risk losing eligibility for federal student aid.
Career programs need to focus on all their students — dropouts as well as graduates — Miller argues.
Furthermore, it’s not enough for programs to show low student debt if students also have low earnings, he writes: “Students are also spending billions in federal grant aid and arguably an even more precious resource, their time. They should expect better than living in or near poverty after completing a postsecondary program.”
Community college students typically don’t borrow — or don’t borrow very much — to pursue a vocational credential. But some don’t earn much either. Community colleges also have high dropout rates.
Gainful employment rules will hit high-cost for-profit colleges the hardest, but they also apply to nonprofit colleges that provide job training.
Ohio’s community college students are “second-class citizens” when it comes to Ohio College Opportunity Grants, editorializes the Toledo Blade.
Community college tuitions average $3,800 a year — about one-third that of those at four-year schools — in Ohio.
In 2009, the General Assembly cut the OCOG budget from roughly $395 million to $171 million. Making matters worse, it also forced low-income students to use federal Pell grants to cover tuition expenses at community colleges before tapping state grants. Those changes made nearly all community college students ineligible for OCOG.
Unlike Pell grants, state grants cover tuition only. And because tuition is low at community colleges, Pell grants typically cover students’ tuition.
Before the changes, 20,000 community college students in Ohio received state grants.
Ohio needs legislation that would permit community college students to, first, use OCOG to cover tuition costs, thereby enabling them to tap federal Pell grants for other college-related expenses. That change also would call for setting aside another $20 million a year to cover the more than 20,000 newly eligible community college students.
Last year, as Ohio began to refund OCOG, money was set aside to fund for-profit college students but not community college students, reports Inside Higher Ed.
President Obama’s plan to control college costs is heading in the wrong direction, writes Sara Goldrick-Rab on the Education Optimists. Education Secretary Arne Duncan has taken the lead on the planning, which means “yet another quasi-market solution that fails to grapple with the real problems.”
The current financial system hinges on the actions of students, prioritizing their consumer choice in the hopes that those choices will be well made. It assumes that any problems with schools will be resolved by students turning away from them. But this assumption is deeply flawed, not only because students do not (and cannot, and will not) make informed choices, but also because a segment of selective schools (and states) have manipulated aid policy for so long that the incentives are now distorted and they can do whatever they wish. And what they want is to maximize their own interests, which are rarely aligned with those of their students. So the problem, in other words, is really the behavior of schools and states. Yes, students and families are an issue too, but their lack of information is just a fraction of the overall college cost problem.
Creating a ratings system for colleges and universities won’t help, Goldrick-Rab writes. Student choice is limited by “finances, family and geography.” If a local community college is “bad,” most students have no choice but to attend anyhow. If it closes, they may be forced to try a high-price for-profit institution.
A college ratings system is a waste of money, she writes. The Scorecard and Navigator sites “aren’t used or demonstrably effective,” and this will be no better. (Both Scorecard and Navigator were shut down when federal government furloughed “nonessential” staff. You’d think they could run automatically.)
Tying Title IV financial aid to institutional performance makes sense, writes Goldrick-Rab. Instead of turning to Duncan, Obama should rely on “experts who’ve crafted nuanced accountability systems with anti-creaming provisions.”
We can’t afford to make every institution Title IV eligible, she argues. Private colleges should have to re-compete for eligibility:
(a) the selective, elite private non-profits whose admissions criteria mean they do not serve any kind of public good while they establish “standards” for college quality that are conflated with great expense, and
(b) the for-profit institutions that set their tuition according the availability of federal aid.
President Obama should put public funds into public institutions of higher education, Goldrick-Rab argues. Funding them well will decrease students’ time to degree and raise the quality of instruction.
Next, create accountability metrics intended to lower costs and open access at the private non-profits (else cut them out of Title IV), and to lower costs and increase completion rates at the for-profits (again, or else they’re out).
The community colleges will “do their jobs better by having a decent amount of money to spend,” Goldrick-Rab concludes.
Student loan default rates continue to rise, reports the U.S. Department of Education. After two years, 10 percent of former students are in default; that rises to 14.7 percent after three years.
“The growing number of students who have defaulted on their federal student loans is troubling,” U.S. Secretary of Education Arne Duncan said. The department will expand outreach to explain loan repayment options.
Community colleges have the highest two-year default rate — 15 percent — of any higher education sector. After three years, the community college default rate tops 20 percent, nearly as high as the rate for two-year for-profit programs.
The official default rate understates borrowers’ pain, says Rory O’Sullivan,policy and research director at Young Invincibles, a Washington nonprofit group. The rate, which includes graduates and dropouts, shows the share of borrowers who haven’t made required payments for at least 270 days. It doesn’t include borrowers who are putting off payments through “forbearance” and those on federal income-based repayment programs. “It’s financial disaster for borrowers,” said O’Sullivan. “Defaults can dramatically affect their credit rating and make it harder to borrow in the future.”
Nearly a half-million student borrowers are in default within two years and 600,000 within three years, notes the National Association of Student Financial Aid Administrators.
Eight institutions with high default rates could lose eligibility in federal student aid programs.
Gainful employment regulation is back, reports the Washington Post. Once again, the Obama administration has a new proposal to regulate career-training programs — primarily at for-profit colleges — to see whether graduates earn enough to pay off their loans.
From 2009 to 2011, the administration engaged in a sharp debate with the for-profit education sector and its allies over proposals to crack down on programs that leave graduates with heavy debts that they are unable to repay.
The Education Department issued a rule in 2011 that defined standards for loan repayment rates and the ratio of a graduate’s debt to income. Programs that failed the standards were in jeopardy of being disqualified from participation in the federal student aid, which would essentially shut them down.
A federal judge in 2012 blocked major provisions of that rule. The department will begin negotiating the new proposal next with representatives of for-profit colleges and others.
The new version of gainful employment “undoes many of the concessions” made to for-profit colleges in the first round, writes Ben Miller on Higher Ed Watch. The standards are higher and more colleges are likely to fail.
The biggest change in the proposed regulatory language from the 2011 final rule is that it would only rely on two measures: annual and discretionary debt-to-earnings ratios. Missing from this setup is the repayment rate, the metric that proved to be the weak link the last go around, as the judge ruled that the Department had not engaged in reasoned decisionmaking for the 35 percent repayment rate threshold.
Stronger disclosure requirements will break out information for completers and dropouts. “Repayment rates would be based on borrowers, not loan dollars, which makes them much more intuitive for a consumer,” writes Miller, who has much more on the details of the new proposal.
For the first time, a majority of undergraduates — 57 percent — are receiving Pell Grants and other federal student aid, reports Libby A. Nelson on Politico. In addition, 41 percent are taking out student loans, up from 35 percent four years ago.
“Federal grants and loans help students realize the American dream,” said U.S. Education Secretary Arne Duncan, who noted that Pell Grants are going to twice as many college students.
But “increasing federal student aid alone will not control the cost of college,” he added, calling on state policymakers and colleges and universities to hold the line on rising college tuition. “Together we can take collective action to help make college more accessible, affordable, and attainable for middle class Americans across the country.”
Increasing student aid enables colleges to increase tuition, economists argue. “Colleges often deliberately raise their prices when aid is available, in essence ‘capturing’ the aid,” wrote Robert Martin and Andrew Gillen in 2011.
Pell Grant spending has skyrocketed, notes Politico.
About 41 percent of all students received the grant in 2011-12, a 14 percentage point increase. Congress expanded the grant program several times between 2007 and 2009. As the economy faltered and incomes fell, spending on Pell grew from $12.8 billion in 2007 to $35.6 billion in 2011 before falling slightly last year.
For-profit colleges enroll many low-income, minority and adult students who are reliant on federal aid.
More than three-quarters of students at for-profit colleges granting associate or bachelor’s degrees received federal student aid. And an additional 10 percent of students at for-profit colleges granting bachelor’s degrees received veterans’ benefits — a higher proportion than at public or private nonprofit colleges.
Including state aid and college scholarships, 71 percent of students receive help paying for college. Colleges use some scholarship money to help needy students, but just as much goes to academically strong students from affluent families, the report found.
Under pressure from historically black colleges, the Obama administration made it easier for parents with shaky credit histories to take out Parent PLUS loans, notes EduBubble.
Kelly Field at the Chronicle of Higher Education calls this a “victory.” And it is, for the colleges. But what about the students sucking down the outrageous amounts of debt? What about their parents?
These high-interest loans are not a good deal — especially for parents who’ve had financial problems in the past and have kids going to colleges with low graduation rates.
Accreditors appear to be the most lenient on two-year colleges in the North Central and Middle States, according to Education Sector. The analysis looked at two-year colleges with “a much higher default rate than we would expect based on their graduation rate,” suggesting low graduation standards and unprepared students.
Accreditation was toughest in the Western region.
Public community colleges “dominate the list of schools that are possibly too lenient in their graduation requirements,” writes Andrew Gillen, though “a disproportionate share of for-profits did not have enough data to be included.”
Legislators are pressuring state colleges and universities to raise graduation rates, but “the easiest way for colleges to improve their graduation rates is to serve fewer disadvantaged students,” according to two new studies, reports Inside Higher Ed.
“The more a four-year college serves Pell recipients, the lower its six-year graduate rate and the more difficult it is to improve that rate,” concludes a policy bulletin by the Advisory Committee on Student Financial Assistance. The average ACT scores of new students and the college’s endowment also are correlated to graduation rates.
For incoming students at for-profit institutions, grade-point average, full-time enrollment status, race, number of transfer credits and expected family contribution predict graduation rates, concludes a research paper by Tim Gramling, president of Colorado Technical University’s Colorado Springs campus.
“Graduation from college can be predicted with high accuracy based solely on student characteristics known before they begin their studies,” Gramling wrote. “Student graduation may have little to do with institutional factors.”
Both studies warned against basing federal financial aid on completion data. “Using raw output measures, such as rates of graduation or student academic progress, in the award or allocation of Title IV student aid will harm low-income students and the colleges which serve them,” the advisory committee concluded.
There’s a growing wave of enthusiasm for degrees based on competency rather than credit hours. Echoing Sherman Dorn, Matt Reed asks whether high ed should just drop the “hours” from “credit hours.” His answer: Because then “credits” could mean anything or nothing.
For-profit providers have an incentive to inflate credits, writes Reed, who’s worked in the for-profit sector.
In my DeVry days, we were careful with the weekend program — which was specifically geared at working adults — to keep the number of classroom hours congruent with the requirements for the number of credits given, even when it became inconvenient. The idea was to avoid the suspicion that fell upon certain competitors, who made a habit of awarding outsize numbers of credits for various courses to both make it easier for students to complete programs and to keep their own labor costs down.
. . . If we just declare that credits mean whatever a given provider says they mean, then there’s no basis for denying federal funding or regional accreditation to a college that awards twelve credits for a three-hour class and a paper. And now that many of those classes are online — in which the entire conceit of “seat time” becomes vaporous — there would be nothing at all to put the brakes on a given college twisting “credits” to mean whatever is convenient at the time.
The “credit hour” was at least based on something, even though it was the wrong thing, he writes.
Competencies require a reliable way to document that students have acquired the skills they claim. That’s not simple. Southern New Hampshire University’s competency-based College for America — the first to receive approval for federal financial aid — doesn’t accept transfer credits. That doesn’t answer the question: How will a student transfer from a competency-based college to a credit-based one?