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.
Negotiations are underway on “gainful employment” regulations proposed by the U.S. Education Department, reports Community College Times.
While the regulations are expected to hit hardest at for-profit career colleges, vocational programs at community colleges also will be affected. Colleges must gain federal approval for some new programs or students won’t be able to get federal aid.
“Whatever the regs are, you’ve got to keep them simple, you’ve got to keep them affordable,” said negotiator Richard Heath, financial aid director at Anne Arundel Community College (Maryland).
“Any time I add a new program, it is vetted to death,” Heath said.
Unnecessary layers drag out the time to create new programs that local businesses need, and they are expensive, Heath said. They can add months to the approval process and tens of thousands of dollars in costs.
Negotiators will meet again Oct. 21 to 23. If they don’t reach a unanimous consensus on the rules, the department can propose its own final version.
Kevin Jensen, financial aid director at the College of Western Idaho, also was one of the 14 negotiators. Three alternates from community colleges are: Rhonda Mohr, student financial aid specialist at the California Community Colleges Chancellor’s Office; Glen Gabert, president of Hudson County Community College (New Jersey); and Sandra Kinney, vice president of institutional research and planning at the Louisiana Community and Technical College System.
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.
Federal aid is subsidizing colleges with low graduation, loan repayment and employment rates, writes Judah Bellon on Minding the Campus. Instead of singling out for-profit higher education, regulators should scrutinize the outcomes of all colleges and universities that rely on federal loans and grants.
For-profit colleges enroll more black, Hispanic, low-income and older students than public and nonprofit institutions. Their no-frills programs attract working students who need a flexible schedule, writes Bellon. Technical training is the strong suit of for-profit colleges, which adjust quickly to employer demand. For-profit students are more likely to complete certificates and associate degrees than community college students.
However, for-profit students are much less likely to complete four-year degrees and much more likely to default on student loans. That inspired the U.S. Department of Education’s attempt to enforce “gainful employment” rules limiting aid to programs whose graduates don’t earn enough to pay back their loans.
Regulate the bad applies, writes Bellon. But don’t single out for-profit higher education. If students are failing to graduate for jobs or unable to pay back their loans, it doesn’t matter if they attended a for-profit, private nonprofit or public institution.
The U.S. Education Department will rewrite “gainful employment” regulations fought bitterly by for-profit colleges, according to a notice published in the Federal Register. The department plans to use “negotiated rule-making” to move forward its agenda on college aid and affordability, substituting regulation for legislation, notes Inside Higher Ed.
The traditional venue for enacting long-term changes to help students afford, attend and graduate from college would be the Higher Education Act, the massive law governing federal financial aid programs that is periodically rewritten to account for changing times or to pursue new policy goals.
Usually, negotiated rule-making comes after the revised act is signed into law, to wrangle with details and write more precise regulations to put a legislative vision into practice. The Education Department convenes a panel of stakeholders — representing different sectors of higher education as well as some advocacy groups — to hammer out new regulations for colleges to follow.
The Obama administration has proposed expanding Perkins Loans and federal work-study to reward colleges that offer “good value” by keeping cost-per-degree numbers down. However, spending more will require legislation.
The department used “negotiated rule-making” to write the “gainful employment” rule, which was partially overturned in court last year.
Congress members are pushing back. House Committee on Education and the Workforce Chairman John Kline, R-Minn., Rep. Virginia Fox, R-N.C., and several Democratic representatives sent a letter urging Secretary of Education Arne Duncan to “abandon these harmful regulations and instead work with Congress to strengthen the nation’s higher education system through reauthorization of the Higher Education Act.“
Parts of the Education Department’s “gainful employment” rule are invalid, a federal judge ruled Saturday. The for-profit colleges’ trade association had challenged the rule, which could cut off student loan eligibility to vocational programs whose graduates don’t earn enough to pay off their loans. The department has authority to regulate career programs based on graduates’ earnings and debt levels, ruled Judge Rudolph Contreras of the U.S. District Court for the District of Columbia. However, the rule requiring at least 35 percent of graduates to be repaying their student loans was “arbitrary and capricious.”
. . . Judge Contreras says the department failed to provide a factual basis for why a repayment rate of 35-percent would be a “meaningful performance standard.” Instead, he wrote, it has said it chose that figure “because approximately one quarter of gainful employment programs would fail a test set at that level.” But the department could have chosen a percentage under which only one-tenth of the programs would have failed and justified it by the same rationale, he said.
The rule’s other provisions, which compare graduates’ debt to earnings, “were based upon expert studies and industry practice—objective criteria,” the judge ruled.
But because the debt-to-income measures were intertwined with the debt-repayment measure, he said, he had to vacate them too.
By the same reasoning, he also vacated two other provisions that rely in part on the debt-repayment measure: one that requires institutions seeking to offer a new vocational program to get prior approval from the Education Department, and one that requires institutions to provide data to the department for calculating the debt measures.
The Education Department also ordered institutions to disclose a vocational program’s costs, on-time graduation rate, job placement rate and median loan debt to potential students. That part of the rule will stand.
A 35 percent repayment rate is embarassingly low, writes Ed Sector’s Kevin Carey. Can the industry really make an argument for a lower rate?
The for-profit industry’s trade group is standing up in front of the world and saying it can’t live with a rule that excludes programs from federal financial aid only if two-thirds of students are failing to pay loans back and–emphasis, and–the program also fails both debt-to-income measures, for three out of four years.
The Education Department is likely to appeal the ruling. The judge wants more justification for the repayment rate. That ought to be doable.
Five percent of college career programs — all at for-profit colleges — have failed all three “gainful employment” rules, the U.S. Education Department announced Tuesday. The rule covers non-degree programs. Here’s a chart showing the programs.
The Education Department’s data is inaccurate, some for-profit colleges charged. “The Department of Education’s so-called ‘gainful employment’ regulation has always been and remains today a faulty metric,” said Steve Gunderson, president of the Association of Private Sector Colleges and Universities. The APSCU is challenging the regulations in court.
Some career fields showed more problems, notes Inside Higher Ed.
More than half of all programs in criminal justice, as well as those that prepare secretaries, medical assistants, and pharmacy and medical records technicians, failed to meet any of the department’s standards. Other programs — including photography, interior design and certificate programs for licensed professional nurses — fared relatively better, with more than 70 percent meeting at least minimum standards.
. . . About one in 10 programs at the for-profit Art Institutes, owned by the Education Management Corporation, also fell short.
Several community college programs failed two of the three tests, including programs at McLennan Community College and Trinity Valley Community College, in Texas.
For all the failings of four-year for-profit colleges, the two-year for-profits do a good job graduating students, writes Jordan Weissmann in The Atlantic. Nearly 60 percent of students at for-profit schools earn an associate’s degree or professional certificate within three years, compared to 22 percent of community college students.
Including community college students who transfer to a four-year institution before earning an associate degree might boost completion stats to as much as 40 percent, according to the American Association Community Colleges. In addition, for-profit colleges award a greater percentage of certificates, which are faster and easier to complete. But there’s still a lot to learn from the for-profit colleges’ success with hard-to educate students, Weissmann concludes.
For-profit colleges have been singled out for “gainful employment” regulation that should apply to all colleges, editorializes the Wall Street Journal.
The Obama Administration argues that for-profits present a bigger risk. While they educate 12% of students, they receive a quarter of federal student aid and account for nearly half of loan defaults. However, career and technical schools also enroll a larger share of “high risk” students who are more likely to be poor, racial minorities, single parents and first-generation students. Studies that control for such factors find similar default rates among students at for-profits, community colleges and historically black colleges.
If gainful employment rules were applied to all colleges, “many historically black colleges and community colleges in the inner cities where wages are lower would also be barred from taking federal student aid,” the Journal argues.
College affordability was the theme of President Obama’s speech at the University of Michigan yesterday. He called for spending more on Perkins loans and work-study programs — going from $3 billion now to $10 billion – but only at colleges and universities that provide “value.” Students at colleges that raise tuition could lose access to loans and work-study jobs.
In addition, the president’s plan (pdf) includes a $1 billion “Race to the Top for college affordability” and a $55 million “First in the World” competition to encourage productivity innovations, reports the Washington Post.
Higher education — including community colleges and lifelong learning for workers — is “an economic imperative,” Obama said. While he proposed increasing tuition tax credits and keeping interest rates low on student loans, he said that’s not enough. “Look, we can’t just keep on subsidizing skyrocketing tuition.”
So from now on, I’m telling Congress we should steer federal campus-based aid to those colleges that keep tuition affordable, provide good value, serve their students well. (Applause.) . . . If you can’t stop tuition from going up, then the funding you get from taxpayers each year will go down.
If “provide good value” and “serve their students well” means anything, it means the federal government will monitor graduation rates and employment outcomes, as well as tuition, for the entire higher education sector. Currently, “gainful employment” rules, which monitor former students’ earnings and ability to pay back loans, cover only for-profit colleges and community college vocational programs.
Following the speech, Molly Corbett Broad, president of the American Council on Education, issued a statement saying there’s concern that the proposal would “move decision-making in higher education from college campuses to Washington, D.C.”
Sen. Lamar Alexander, R-Tenn., a former education secretary, said the autonomy of U.S. higher education is what makes it the best in the world, and he’s questioned whether Obama can enforce any plan that shifts federal aid away from colleges and universities without hurting students.
“It’s hard to do without hurting students, and it’s not appropriate to do,” Alexander said. “The federal government has no business doing this.”
President Obama also touted college “report cards” showing college costs and how well graduates do in the job market.
The U.S. Education Department and the Consumer Financial Protection Bureau are working on Know Before You Owe, a financial aid shopping sheet that will let future students estimate their debt, monthly payment and likely ability to repay loans. Parents and students also have requested a breakdown of college costs and information on repayment rates for graduates at each college.