“Of the for-profit gainful employment programs that our department could analyze, and which could be affected by our actions today, the majority — the significant majority, 72 percent — produce graduates who on average earned less than high school dropouts.” So said Education Secretary Arne Duncan at a White House news conference on March 14. That earned two “Pinocchios” for lying from the Washington Post’s fact-checker.
Essentially, Duncan compares apples to oranges — with a few lemons thrown in — to make for-profit colleges look bad.
The Education Department estimates that high school dropouts average $24,492 year. The Labor Department puts the median annual wage at $18,580 to $22,860. A Census estimate is $20,241.
Then, Duncan compares employed dropouts’ earnings to all recent for-profit graduates. Comparing all dropouts to all for-profit graduates — or employed dropouts to employed graduates — would show a very different picture.
Comparing dropouts of all ages, including many with job experience, to less-experienced for-profit graduates also skews the results.
Duncan’s number looks at the number of programs that produce low-earning graduates, not at the number of graduates. “The Education Department does not have individual student data, so it could well be that most graduates do fine, especially from the larger programs,” reports the Post.
A third of community college programs’ graduates earn less than high school dropouts, by the Department’s measure, observes the Post. ”Graduates of 57 percent of private institutions — a list that includes Harvard’s Dental School but also child-care training programs — earn less than high school dropouts.”
For-profit colleges enroll many low-income, minority and adult students, who are the least likely to succeed in college. Tuition is higher, since the for-profits aren’t subsidized by taxpayers. Students depend heavily on federal loans and default rates are high.
Community college students averaged $2,300 in tuition in 2009-10 compared to $15,000 for students at for-profit two-year colleges, according to one study. However, 62.4 percent of students at for-profit two-year colleges complete a credential in six years, compared to 39.9 percent of community college students, according to the National Student Clearinghouse.
The new “gainful employment” rules are “awful,” ”unfair and discriminatory,” writes Richard Vedder on Minding the Campus. An Ohio University economist, Vedder directs the Center for College Affordability and Productivity.
The gainful employment rules apply to vocational programs at career colleges (primarily for-profit) and community colleges. If the goal is to stop wasting government money,”why not scrutinize students majoring in, for example, sociology, from Wayne State University?” asks Vedder. “Only 10 percent of students graduate in four years at Wayne State, and over twice as many default on loans as graduate in that time span.”
Moreover, while dropouts and loan defaults are high at many for-profits, when one corrects for the socioeconomic and academic characteristics of the students, the findings are decidedly more mixed. For example, the for-profits have roughly double the proportion of African-American students as do other institutions, and black students disproportionately come from low-income homes with high incidence of college attrition.
. . . I happen to disagree fundamentally with the “college for all” approach of the Obama Administration, but if you are going to pursue it, why attack the very providers who most aggressively are trying to help meet your goals? The for-profits disproportionately enroll poor first-generation students, and who are members of minorities. Moreover, accounted for properly (including state subsidies for public schools, taxes paid by for-profits, etc.), the for-profits use fewer of society’s resources per student.
The six-year completion rate for students at two-year for-profit colleges is 62.4 percent, the National Student Clearinghouse reports. At community colleges, which also enroll many disadvantaged students, the completion rate is 39.9 percent.
Finally, the “gainful employment” regulations say a borrower shouldn’t have to spend more than 12 percent of total income (20 to 30 percent of so-called discretionary income) to repay student loans. A person earning $35,000 a year with $4,800 annual loan repayments would not be considered gainfully employed. “If the individual in question went from a $20,000 job before going to school to a $35,000 job with a $4,800 loan commitment, that person has advanced considerably,” Vedder argues.
Repeal the Higher Education Act and “radically rethink federal provision of aid to students,” he concludes.
Students at a community college in rural Texas may lose all access to federal aid, including Pell Grants, because of a new regulation on defaults, reports Inside Higher Ed.
Gainful employment regulations are baaaaaaaack. The Obama administration will try again to regulate career training programs — primarily at for-profit colleges — that leave students in debt they don’t earn enough to repay.
The draft “includes standards for debt-to-earnings rates and other language that could generate significant debate,” reports the Washington Post. The Education Department estimates that 9 percent of career training programs could fail to meet the new standards.
The White House push is too narrow, argues Reihan Salam on Reuters.
The Department of Education plans to identify vocational programs that leave their average graduate paying a high share of their earnings in loan payments (8 percent or more of total earnings, 20 percent or more of discretionary earnings) as well as those with a high average loan default rate (of 30 percent or more). Programs that cross these red lines in two out of three years will lose the right to offer their students federal financial aid.
Curbing the abuses of this sector could do some good. But career training programs represent a small subset of the higher education universe. If we take a somewhat wider view, it seems pretty puzzling that, say, business or engineering majors at four-year colleges and universities aren’t being treated as enrollees in vocational programs.
Many recent college graduates are underemployed and unable to pay back student loans, Salam argues. Most thought their degree would lead to a good job.
“If the regulation were applied to all of higher education, programs like a bachelor’s degree in journalism from Northwestern University, a law degree from George Washington University Law School and a bachelor’s degree in social work from Virginia Commonwealth University, would all be penalized,” complains Steve Gunderson, president of the Association of Private Sector Colleges and Universities, the for-profits’ trade association.
Why not “protect consumers from the least effective post-secondary programs” in all branches of higher education?, asks Salam. Whether it’s overpriced paralegal training at a career college or an overpriced bachelor’s in film studies from a private nonprofit college, the borrower is likely to default.
Gainful employment regulations should give a pass to low-cost programs with few borrowers, argues the Association of Community College Trustees (ACCT). Most community and technical college programs are in the “low cost, low risk” category. Only 9 percent of students seeking a vocational certificate go into debt, according to the ACCT statement.
ACCT strongly encourages the Administration to reconsider the “low-cost, low-risk” proposal that was offered by the community college negotiators during the 2013 negotiated rulemaking sessions.
The Administration’s utilization of the program-level cohort default rate (CDR) is problematic for community colleges. We have always believed that metrics focusing solely on borrowers alone are improper measures of institutional or program quality. The “pCDR” judges whether a significant number of students who borrow are defaulting on their federal loans even if a very small number of overall participants borrowed any such loans. Under the pCDR, a handful of borrowers could negatively impact the ability of a much larger group of students to benefit from federal aid.
Since for-profit colleges aren’t subsidized by state and local taxpayers, students pay much higher tuition, often funded by federal grants and loans. Those who don’t find good jobs are at high risk of defaulting on their loans.
The rise of MOOCS lead Ed Central’s Top Ten Higher Ed Stories of 2013. “The massive open online courses have huge potential to bring learning to more people, and to do it cheaper.”
Also on the list is U.S. Department of Education approval for Southern New Hampshire University’s College for America, “the first school to award federal aid based on direct assessment of students’ learning.”
President Obama sent higher education stakeholders into a tizzy with his August announcement that the administration would implement a wide-ranging plan to get college costs under control. The centerpiece of the plan would rate colleges on a variety of metrics, and with Congressional approval, tie the ratings to financial aid eligibility.
Congress lowered interest rates on federal student loans and tied the rates to the market.
“Merit aid madness” benefits the wealthiest students.
(Colleges) “increasingly using their institutional financial aid as a competitive tool to reel in the top students, as well as the most affluent, to help them climb up the U.S. News & World Report rankings and maximize their revenue.
Other top stories are questions about the fairness of income-baseded repayment, policy changes for Parent PLUS loans, the rewrite of gainful employment regulations, data transparency and a OECD report “identifying one in six Americans as lacking basic skills necessary for the workforce.”
Ed Central proposes a college scoreboard design.
The federal income-based repayment needs to change, write Jason Delisle and Alex Holt on EdCentral.
Under IBR (in its current form), the government will provide more in loan forgiveness to someone with a high income and a master’s degree than it will provide in Pell Grants to a student from a low-income family attending a four-year college. . . . those who borrow and spend more get larger government benefits than those who make more prudent choices or use their own money to finance a graduate degree.
Those large subsidies for graduate students should be redirected to struggling undergrads, they write. Once that’s done, IBR should be the universal repayment plan, not just an option for the savvy borrower.
Borrowers who take “public service” jobs receive loan forgiveness after 10 years instead of 20, no matter how much they earn, Delisle and Holt write. One out of four jobs count as “public service.”
A public service job is one with a federal, state, or local government agency, entity, or a non-profit organization with a 501(c)(3) designation, or a non-profit that provides: emergency management, military service, public safety, or law enforcement services; health services; education or library services; school-based services; public interest law services; early childhood education; public service for individuals with disabilities and the elderly. . . . PSLF applies to almost any job so long as it is not at a for-profit business.
Income-based repayment plans won’t ruin repayment rates for career programs, writes Ben Miller, who’s been tracking gainful employment negotiations.
Keep the “public service loophole” out of gainful employment regulations, Delisle advises.
The Education Department doesn’t want the public to know how much it pays its debt collectors, adds Persis Yu.
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.