Higher Ed Watch

Make sure not to miss the Washington Monthly magazine’s annual College Guide and Rankings issue, which was guest-edited by Kevin Carey, director of the New America Foundation’s Education Policy Program. Called “more interesting than virtually any other ranking out there” by The New York Times, the guide ranks colleges based on their contributions to their students and society.

While U.S. News & World Report relies on measures of wealth, exclusivity, and prestige for its rankings, the Washington Monthly -- in collaboration with New America’s education policy team -- rated colleges based on what they are doing for their students and the country by improving social mobility, producing research, and promoting public service.

“There’s nothing wrong with rankings per se, but the rankings that push individual colleges to heedlessly raise prices help precipitate a collective crisis that threatens to undermine institutions that are vital to the nation’s future prosperity and civic life,” Carey says. “Our rankings pose a different question: What are colleges doing for the country?”

Conservatives have been gushing praise for Milton Friedman on what would have been his 100^th birthday last week. For some liberals, though, Friedman is a more controversial figure, especially in education policy – he proposed what we now know as school vouchers. Yet liberals do thank Milton Friedman for one thing: he proposed the idea of an income-contingent student loan program.

Yes, in case you haven’t heard, many sources cite Milton Friedman as the father of income-contingent loans, including a 2010 Inside Higher Ed op-ed. Income-contingent loans vary by program, but all involve the stipulation that a borrower repay at a rate based on a share of his income, and the newest federal programs involve loan forgiveness after twenty years. For years advocates for income-contingent loans have gleefully stated that Friedman proposed such a structure– a 1988 New York Times article notes that Michael Dukakis’s proposed income-contingent loan program was based on one “first proposed by Milton Friedman, guru to a generation of conservative economists.”

But it turns out that Milton Friedman didn’t advocate for income-contingent loans, nor was it the basis of his idea. In fact, Friedman probably would not like the three income-contingent repayment plans now available in the federal student loan program, nor would he sanction some broader version of those plans which tend to please student advocates and progressive pundits.

To read the full post, visit Ed Money Watch.

Higher Ed Watch's sister blog Ed Money Watch has run a number of posts over the past two years debunking the myth that the federal government profits when borrowers default on their student loans (see here and here). This well-worn myth holds that the penalties, fees, and interest the government charges defaulters, coupled with its extraordinary collection powers (tax refund offset, wage garnishment, etc.) means the government stands to collect more on a student loan when a borrower defaults than if he had paid it off in full and on time. This simply isn’t true – and new evidence that it is not was just released.

Back in February, the U.S. Department of Education buried a table in hundreds of pages of budget documents that illustrating that after netting out what the government spends to collect on a defaulted student loan, and adjusting for the risk-free time-value off money, the government ultimately collects 80 cents on the dollar on a loan that defaults. Now comes more evidence from the Congressional Budget Office that defaults are costly for taxpayers.

To read the full post, visit Ed Money Watch.

The U.S. Senate Committee on Health, Education, Labor and Pensions released a final report on Monday detailing its findings from a two-year investigation that its chairman, Sen. Tom Harkin (D-IA), has led of the for-profit higher education industry. The report is voluminous, and we are still digging through it. But for the moment, it’s important to acknowledge the report’s true significance: it puts thousands of pages of internal company documents into the permanent record, providing crucial evidence that fraud and abuse have run rampant throughout the sector, and especially at some of the country's largest for-profit college companies.

This is a major development, as it will make it extremely difficult for the industry and its Congressional champions to continue to deny that abuses have occurred at their schools that have caused – as Senator Harkin said at a press conference yesterday -- “lasting harm to the students they enroll.”

Over the last decade, both publicly-traded and private-equity owned for-profit higher education companies have come under scrutiny from federal and state regulators, and have faced numerous lawsuits by former employees, students, and shareholders over allegations that they engaged in misleading recruitment and admissions tactics to inflate their enrollment numbers. Many of these companies have been accused of routinely recruiting and enrolling unqualified student and sticking them with huge amounts of debt for training from which these individuals were unlikely to benefit.

Yet, time and again, these actions have ended in settlements, in which the companies agree to pay a fine but do not admit to any wrongdoing. What’s more, as part of the terms of these agreements, evidence of abuses that has been unearthed is put under seal, hidden permanently from public view. (For examples, see here, here, here, and here.)

As a result, the companies involved get off scot-free, no matter how airtight the cases are against them. Sure, they have to pay a fine, but this is a small price for these extremely lucrative corporations to pay to maintain their innocence.

The settlements have not only given cover to the individual companies but to the for-profit higher education sector as a whole. The fact that nobody has been found guilty of anything has allowed the industry, as well as its backers on Capitol Hill and Wall Street, to remain in denial about the extent of the abuses that have occurred and the damage that has been done. Instead, these settlements have, in recent years, made it many times easier for for-profit college leaders and lobbyists to portray themselves as innocent victims of a partisan witch hunt, as they have fought efforts by the Obama administration and Senate Democrats to rein in the industry’s very worst players and practices.

And that’s why the new Senate report is so important -- it puts into the official record mountains of evidence, drawn from internal company records, backing up its findings. Lawmakers can still willfully choose to ignore the evidence. But they can no longer say, with a straight face, that it doesn't exist.