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The Ed Dept.'s New Proposed Language for Gainful Employment is Out. Here's What You Need to Know

August 30, 2013

With a little bit more than a week until the next round of negotiated rulemaking on gainful employment kicks off on Sept. 9, the U.S. Department of Education today released its initial proposal for the new rule along with reams of supporting data. Higher Ed Watch will be digging into this information over the coming days, but here's what you need to know right now.

Syllabus: Week of August 5, 2013

August 9, 2013
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Welcome to the Syllabus, a guide that provides insight into what’s happening in higher education.
 
Read:
 
Katherine Mangan, The Chronicle of Higher Education
 
On Tuesday the National Student Clearinghouse Research Center released the report, Baccalaureate Attainment: A National View of the Postsecondary Outcomes of Students Who Transfer From Two-Year to Four-Year Institutions. Their research shows that students who transfer from community colleges to four-year institutions after having already obtained a credential are obtaining a certificate or associate’s degree and transferring to a four-year institution. In addition, the report indicated that completion rates vary per college type. Those attending public institutions, for example, had a 65 percent completion rate, whereas non-profit institutions had 60 percent, and for-profit institutions had 30 percent of their students completing college. According to a study conducted in North Carolina the economic benefits of obtaining an associate’s degree before transferring to a four-year institution could be $50,000.
 
Doug Lederman, Inside Higher Ed
 
The House Education and Workforce Committee recently asked for ideas and advice as it moves to reauthorize the Higher Education Act (HEA). Many higher-education membership organizations reported with a wish list of proposals including more spending for key programs (Pell Grants, work study, funds for minority institutions, etc.). Although the number of groups who submitted reauthorization proposals is unclear; however, they did include the American Council on Education on behalf of 40 colleges and accrediting groups, and the Association of Private Sector Colleges and Universities (APSCU). According to APSCU’s comments “we all agree that higher education faces critical challenges. These range from cost, access, technology and the skills gap to quality, productivity, accountability, and globalization.” Even though the Education and Workforce committee appears to be gearing up for reauthorization, most experts agree that given Congressional gridlock, HEA probably won’t be reauthorized until the next president is in office.
 
Paul Fain, Inside Higher Ed
 
College graduates can now add various assessment results that indicate what they learned in college to their job applications. Three non-profit testing agents –Collegiate Learning Assessments, Educational Testing Service (ETS), and ACT Inc. –are using new assessments that were created to help students and institutions track learning outcomes. Not only can the assessments test basic competencies such as soft-skills mathematics, but the testing agencies claim they can also measure mastery of critical thinking, reading, and writing. Additionally, some testing firms provide students the ability to earn an, “Electronic certificate which can be shared with an unlimited number of recipients in academia and beyond,” to prove their various competencies. These certificates are affordable, costing only around $20 per certificate.

 

Twice the Price: Report Provides New Detail on Veterans in College

August 2, 2013
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More than 60 percent of higher education benefits provided to veterans under the Post-9/11 GI Bill went to just 5 percent of schools in 2011, many of which had decidedly mixed outcomes for students, according to a new report from the Government Accountability Office (GAO). The report also looked at student demographics and outcomes at the institutions that received the most funding from the Department of Veterans Affairs (VA).

But even with all the information included in the report, it is perhaps most notable for addressing just how little we know about the $12 billion a year spent on veterans benefits. Last month, New America’s Federal Education Budget Project produced a background and analysis page on military and veterans education spending. In trying to put together that information, we learned firsthand that with virtually no public information about even the enrollment of veterans or their outcomes at specific institutions, it is astoundingly difficult to piece together funding and other data around higher education for servicemembers and veterans.

The new GAO report goes a long way in providing new information that may be valuable to policymakers. (None of the information is provided by institution, so it’s not likely to be of much use for students.)

The number of veterans receiving education benefits has increased by nearly two-thirds in the past few years following the 2008 enactment of the Post-9/11 GI Bill. That law provided much more generous benefits to recipients who served on or after September 11, 2001, including full tuition and fees at public colleges and universities, or about $19,000 annually toward a private school.

With increased spending on veterans’ benefits has come greater Congressional inquiry into the use of these dollars and the outcomes of recipients, particularly at for-profit colleges. Sen. Tom Harkin (D-Iowa), the chairman of the Senate Health, Education, Labor, and Pensions (HELP) Committee has held several hearings on the use of veterans benefits at for-profit institutions as part of his larger multi-year investigation into the sector. The GAO report does provide some insight into many of the questions that Harkin and other members of Congress have been asking.

The report shows, for example, that for-profit institutions have been major beneficiaries of increased spending on veterans’ education benefits. For-profit schools received 34 percent of all federal education benefits for veterans and 37 percent of Post-9/11 GI Bill dollars in 2011, despite making up only about 13 percent of total enrollment across the country.

Veterans’ spending and outcomes at for-profit schools have been of particular interest because of a rule known as the “90/10 rule,” which says institutions cannot receive more than more than 90 percent of revenue from federal student aid. Though veterans benefits are a source of federal support, they do not count toward the 90 percent limit. Many argue that exclusion allows schools to game the rule and actually rake in more federal dollars, given that every $1 received in veterans benefits means the institution can take in up to $9 more in federal student aid. The GAO report bears that out – the schools that received the most VA funding were further from violating the 90 percent rule than schools that received less VA spending.

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But that’s not because more students went to those colleges – for those most part, it’s because students paid about double the tuition to attend for-profit schools. Public colleges received 45 percent of veterans education dollars to enroll more than half of all veterans in 2011.

Outcomes for veterans and servicemembers have been varied. At for-profit colleges, students had graduation rates about 6 percentage points higher than the rates at public schools – though not for 4-year degrees, just 2-year. (Private non-profit schools were similar to for-profit schools in graduation rates.)

Still, retention rates – which measures year-over-year re-enrollment of students – were about 6 points lower at for-profit schools than at public and private non-profit colleges. Students at for-profit schools (and the taxpayers who fund veterans education programs) paid double the price to attend those schools. And student loan borrowers (VA and non-VA) at for-profit colleges also had default rates that topped public schools.

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For more background information on servicemembers and veterans education programs, check out our Federal Education Budget Project page. FEBP also maintains the most comprehensive database publicly available on education funding, demographics, and outcomes for every state, school district, and institution of higher education in the country. Check it out for more information on college-level financial aid, graduation rates, student loan default rates, and more.

The Vibrant Diversity of America’s Career and Technical Education “System?”

July 10, 2013
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Today, the OECD released a comprehensive review of Vocational Education and Training (VET) in America, A Skills beyond School Review of the United States. While those immersed in the higher education landscape might find many of the recommendations familiar, echoing calls for reform advanced by a wide range of education stakeholders, the review provides a refreshing outside perspective on Career and Technical Education (CTE) and higher education more broadly.
 
The report is charitable in their praise of the ‘vibrant diversity’ brought forth by the United States’ decentralized postsecondary CTE system. The overarching recommendation put forth by the review is to balance this approach with a more strategic pursuit of quality, coherence, and transparency. In the context of what the review further refers to as ‘The US ‘system’ of CTE,” it becomes clear that the American system of postsecondary CTE is in urgent need of reform.
 
Authors Malgorzata Kuczera and Simon Field quickly address central issues facing postsecondary education in the United States, highlighting three broad recommendations – funding for quality, anchoring credentials in the needs of industry, and building transitions that work – which are bolstered by several more specific action items.
 
1.      Substantially strengthen quality assurance in postsecondary education and its links to title IV student aid.
 
The review outlines six considerations that provide urgency for the strengthening of quality assurance. Many of these recommendations, especially in regard to federal financial aid reform, coincide with the recommendations put forward by the New America Foundation in the report, “Rebalancing Resources and Incentives in Federal Student Aid.”
 
While many of the considerations put forth by the authors point toward new reforms, it is worth pointing out that the third points to current requirements of quality assurance that are not being enforced. Citing the 2010 U.S. Government Accountability Office (GAO) investigation of several (vibrant) private for-profit institutions, they point out the finding that four institutions clearly promoted fraudulent practices, and all made ‘deceptive or otherwise questionable statements’ in materials for students. While pursuing further reform is necessary, reviewing the implementation of prior efforts is equally important. 
 
2.      Establish a quality standard for certifications and obtain better data on both certifications and certificates.
 
In a section aptly entitled “Confusing choices and quality challenges” the authors begin with the following data from the U.S. Department of Labor: “Tour guides can choose from among nine credentials; chemical technicians decide between 22, while computer network support specialists can choose out of no less than 179 different credentials.” And it is incredibly difficult to determine whether those nine tour-guiding credentials lead to either higher wages or career advancement. The report points out that the American National Standards Institute (ANSI) estimates that less than a fourth of certifications currently offered would meet the standards that their organization has published. If the GAO conducted an investigation of American certification programs, they may find a great deal of ‘deceptive or otherwise questionable statements’ being made to students about the value of the credentials they are offering.
 
3.      Building transitions in CTE into postsecondary programs, within postsecondary education, and to the labor market.
 
The final recommendation distinguishes between the differentiated needs at each transition point within postsecondary CTE – not only entering from secondary school and exiting to the workplace, but also the unique challenges faced by students who seek to move between institutions. While funding for quality and establishing standards for certifications would go a long way in addressing some of these transition challenges, especially in regard to information asymmetry, the authors also point toward strengthening CTE in high schools as a method for building stronger transitions. It harkens back to a discussion in the first chapter pointing out America’s partiality for generalized high school education – or aversion to anything that could be perceived as “tracking.” The authors’ perspectives on building high school CTE transitions are a noteworthy addition to the review.
 
The diversity of CTE in the United States has by and large created a “system” that is not optimally serving students. While decentralization can promote rapid response and innovation, in absence of discerning funding, quality assurance, reliable information, and clear pathways forward, decision-making is a quagmire for students. In one way, the CTE system is quite vibrant – it is alive, constantly changing and evolving. As reforms move forward, it will be important to implement flexible approaches that will grow with the ever-changing landscape of labor and careers throughout the country.

Syllabus: Week of June 17, 2013

June 21, 2013
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Welcome to the Syllabus, a guide that provides insight into what’s happening in higher education.

Read:

Program Steers Struggling Students to Benefits That Help Them Stay in College, Casey McDermott
The Chronicle of Higher Education

A 2009 study showed that 71 percent of young adults who left college cited financial reasons for their departure. Students who struggled to complete their college education for financial reasons might be interested to learn that a new pilot program—The Benefits Access for College Completion—has been introduced to help those students attain their degree. This new program helps students obtain the public assistance and benefits necessary to overcome financial challenges including food stamps, fuel vouchers, and car repair funds.  This allows some students a much-needed second chance at an education and a better life for themselves and their families. The goal of the program is to provide short-term assistance to students in order to aid them in contributing positively to their communities in the long-term.

Nonprofit Colleges Compete on For-Profits' Turf, Goldie Blumenstyk
The Chronicle of Higher Education

Not only are for-profit universities facing challenges amid government scrutiny and falling enrollments, but they are also facing fierce competition from nonprofit and public colleges that are creating more flexible and convenient pathways for students. According to a Deutsche Bank Securities study, by the end of 2013, 87 percent of the United States population will have the option of taking online courses from an in-state public or nonprofit college.  The same study shows that progressive nonprofits, which are defined as having an active online education, have seen a growth of 15 percent in enrollment since 2006.  Conversely, for-profit online-only programs have experienced a steep decline in enrollments since 2009. This is due in large part because the nonprofit and public options are often far less expensive than their for-profit counterparts. However, despite the declining trend of enrollment in for-profit institutions, there is a need for technical programs, especially in fields like medical technology, culinary arts, and high-tech mechanics.  According to Jeffrey Silver, an analyst with BMO Capital Markets, “The [for-profit] sector really has to [go] back to its roots and focus on jobs. I don’t think the sector is disappearing but it’s never going to be what it was.”

Ed Schools Are Under Attack Again, Walt Gardner
Education Week

The National Council on Teacher Quality recently examined 1,200 education programs at 608 institutions and made the determination that they were all part of an “industry of mediocrity.” Of all the institutions studied, only four received a four-star rating.  One school in particular, UCLA, was labeled as “hardly worth attending.” A shocking label, given that its education school was ranked second in the country, by U.S. News and World Report.  Walt Gardner at Education Week takes issue with the report and points out that unlike Finland, a country much smaller than the U.S. where education schools are as prestigious as law and medical schools, you cannot have both quality and quantity. The United States has a huge demand for teachers annually. There are 98,000 public schools in the U.S. that employ approximately 3.2 million teachers. Every year, 200,000 new teachers enter the classroom. Within the first year, 20,000 quit. Within the first five years 90,000 of that initial cohort of 200,000 or 45 percent have quit. This turnover costs schools an estimated $7.2 billion annually.  While there is certainly room for the U.S. to improve, it is unrealistic to be highly selective in its teacher preparation programs given our current structure.

Listen:

Graduation Rates Hit New High: Good News For Everyone?
NPR

High School graduation rates are at a 40-year high. A recent study shows that 75 percent of students are earning a high school diploma and the graduation rates of Latinos and African American have increased to 5.4 percent and 3.3 percent respectively. This improvement in numbers is attributed to better data collection and research regarding drop-outs over the course of the last decade. Despite this improvement, the study showed that around a million students still drop out. Some experts state that if educators pay attention to student outcomes before they even reach high school, even more students can be helped across the finish line. Specifically, middle school interventions can help ensure a smooth path for students before they even get to high school. Those programs that have been effective in enticing students back to the classroom to finish their degrees have had great success creating a flexible schedule that resembles a college schedule in its structure.

Although there is still work to be done to increase high school graduation rates, what do the increases mean for higher education?

More Questions About EDMC's Job Placement Rates

June 19, 2013

Has the country’s second largest for-profit higher education company, Education Management Corporation (EDMC) deceived prospective students, employers, and investors by disclosing a significantly higher set of job placement rates to them than it reports to its regulators?

That is one of the key allegations made in a lawsuit brought by a former EDMC admissions director that a U.S. District Court judge has just allowed to proceed.

Jason Sobek, who served as a Project Associate Director of Admissions for EDMC Online Higher Education’s South University brand from June 2008 to November 2010, filed the lawsuit under the Federal False Claims Act. He is seeking the return to the government of millions of dollars in federal student aid funds that he says EDMC improperly obtained by falsely certifying that it was in compliance with U.S. Department of Education regulations.

The suit says that EDMC had “two sets of books regarding job placements” – one that it used to recruit students and impress investors and employers, and another one that it reported to accrediting agencies and state regulators. According to the lawsuit, EDMC “artificially inflated” the first rate by excluding a large number of graduates from its calculations – including “single, stay-at-home parents” and those who were working in fields unrelated from what they studied. The lawsuit cites an internal “Career Services Statistical Reporting Procedures” memo that acknowledges that certain categories of graduates are “counted differently” in the different disclosures the company makes.

This is not the first time that EDMC has been accused of misleading prospective students about its record of placing graduates into jobs. In September 2010, Kathleen Bittel, a then-career service advisor at EDMC’s Art Institute of Pittsburgh testified at a U.S. Senate hearing about tricks she said the company played to inflate its job placement rates. Among other things, she said EDMC put tremendous pressure on employees to persuade graduates to verify that they were working in the fields in which they trained even when it was abundantly clear that they weren’t. EDMC repeatedly denied Bittel’s allegations.

The company has not yet responded definitively to Sobek’s charges. However, in its motion to dismiss the case, EDMC argued that reporting different rates to prospective students and accrediting agencies is not unlawful. “Even if true,” the company wrote, the Department of Education “never required that marketing statistics be calculated one particular way.”

Education Department regulations do, however, prohibit colleges from deliberately misleading students to get them to enroll.

EDMC may soon have to address the allegations more directly. That’s because late last month Judge Terrence F. McVerry of the Federal District Court in the Western District of Pennsylvania rejected EDMC’s attempt to squash the lawsuit and ruled that the whistleblower in the case provided sufficient evidence of possible wrongdoing to allow the litigation to move forward.

No matter how it’s decided, this case shows once again why the federal government needs to develop a single, national standard that for-profit colleges would be required to use when calculating their job placement rates.

The methodologies that career colleges currently use to determine these rates vary state by state and accreditor by accreditor, making them impossible to compare. And without a single standard in place, the schools can easily game the system.

As my colleague Ben Miller reported last week, attorney generals in three states have asked the Education Department to clearly define how job placement rates should be calculated. Department officials will have that chance when they rewrite the Gainful Employment regulations. Let’s hope that they take the state attorney generals up on it.

Student Stories from Gainful Employment Programs UPDATED

June 17, 2013

Last week, Higher Ed Watch took a look at some of the gainful employment policy questions raised in the over 900 public comments submitted to the Department of Education. While policy discussions will ultimately be the most important considerations as the regulatory process moves forward, it's also important to remember that these issues do affect real people. So today we're looking at what some current and former students at these programs had to say in their comments.

Ambition and hope do not pan out in Wisconsin

For many low-income and non-traditional students, going to college can be a source of hope and a chance for a better life, even in spite of fears about not having succeeded academically in the past. That sense of opportunity is prevalent in a combined set of 13 comments from students who now appear to be enrolled in courses at Milwaukee Area Technical College. These comments almost all start on a hopeful note with a sense of excitement for a better life. Many detail previously unachieved academic successes in these programs--high grade point averages, scholarship-winning essays--the type of accomplishment that shows they are college-caliber material. But then the reversal--a degree with no return, a dispute over further debts, no change in status--that leaves them arguably worse off and in debt. (The original comments have been temporarily taken down from Regulations.gov with a request to remove personally identifiable information, so I created a redacted version here.) 

A story from one woman who enrolled at Sanford Brown to become a probation officer encapsulates this emotional roller coaster:

I was so excited about going to Sanford Brown College. I was sold because I was told I could get small class sizes and get extra help if I needed and graduate faster because the courses were 5 weeks long and you went to school year round until you graduated. 
...
I went ahead and took the admissions test and paid $50.00 for it. I was told by the financial aid personnel that I could also write a 500 word paper on why higher education was important and win a $1,500 scholarship. I won the scholarship because of the paper I wrote. I was so excited and proud of myself. I was looking forward to the wonderful future my 3 kids and I were going to have. I was going to finish college and finally have a career which I loved which was helping people. I was assured by all the admissions people at Sanford Brown College that I had made the right choice to attend that college. They all were so friendly and seemed to want this as much as I did.
 
But it was not to be. After attending from August 2006 to September 2008, the woman believed she had graduated but ended up not being able to do so after a dispute with the institution over whether she still had an outstanding balance on her account. She never ended up finding a job in the criminal justice field and owes $25,000 in student loans and cannot transfer her credits. Now the campus she attended, which had a 27.5 percent student loan default rate in the last year and charged the lowest income students a net price of nearly $18,000, is shutting down. 
 
Those who went from the highs of success to the disappointing workforce reality pulled no punches on their sentiments. For example, one student in the Milwaukee area who graduated from a dental assisting program at Everest College in 2011 wrote: "My intentions were to give my children a better future by bettering myself through education. Everest ripped that dream away from me and is the reason I am struggling today with a $12,000 loan." A student who finished at Everest with a 4.0 grade point average in the same program had the same reaction, calling her experience the "beginning of a long unfinished nightmare."
 
[UPDATE: On Twitter, Robert Kelchen notes that the Milwaukee branch of Everest College closed after placing only 95 out of its 1,585 students in jobs since opening in October 2010. An Inside Higher Ed article from February also notes that Milwaukee is increasing scrutiny of for-profit colleges.]

Confusion rules the day

Given all the work that's been done to raise questions about some gainful employment programs, it's fair to ask why students are still choosing to enroll in certain ones that already have bad outcomes (see 27 percent default rate at Sanford Brown). The answer, at least partially, appears to be confusion. Lack of clarity around costs, expected return, likelihood of finishing, transfer opportunities, and ability to pass licensing tests whether credits would transfer, and whether they will even be able to sit for the necessary licensing tests pop up again and again in a host of comments. (See for example, this comment about trying to get an animation degree or page 4 of the document labeled "student complaints.")

Confusion can be one way to shift personal responsibility away from the individual and to the program, but it also seems to be a symptom of our opaque higher education system and false quality assurance provided by accreditation. In a working transparent market, concerns about cost, transfer, etc. should not be happening. The fact that they are again reiterates the importance of efforts like the College Scorecard and Financial Aid Shopping Sheet, which try to standardize information to help with comparisons may be some assistance, but are struggling to get widespread adoption.

But better information is not enough unless either: 1) consumers change their behavior and take a more skeptical and less trusting approach to choosing colleges or 2) they have a better quality assurance that the institutions where they can take their aid have been sufficiently vetted to merit a more trusting relationship. Right now, students face the worst of both worlds thanks to accreditation. With the imprimatur of accrediting agencies (and thus by implication the Department of Education), accreditation provides a false sense of security for students that breeds an implicit level of trust toward the institution that may not be warranted. Unlike a mechanic you've never used before, a student trusts her accredited college will charge her a reasonable price and give her a service that works. And she does that because some other group of people have reviewed the college to check its quality. Experts in higher education have signed off on it, so why shouldn't she trust that seal? And so students trust that their accredited institution will offer accredited law degrees in their state--but that's not always true, as a student from Iowa found out when he tried to get a law degree from a program whose lack of recognition from the American Bar Association meant California was the only state in which he could become a lawyer. Or they might assume that their credits could be used at colleges beyond the one they are currently attending., which was not the case for many students who tried to take their coursework from proprietary institutions to Milwaukee Area Technical College.

Solving this issue of trust can be done one of two ways. First, Congress could change the requirements around accreditation to compel these agencies to actually set clear standards for outcomes and results--including things like having necessary programmatic accreditation--which would likely result in closing some institutions and accreditors for poor performance. Or, we could go the opposite way and acknowledge that accreditation is not a meaningful indicator of anything and students should not assume that just because a college gets federal student aid that means they should assume it's any good. The former is extremely difficult politically. The latter is not only hard to accomplish but would make the path into college even more confusing for low-income students that currently have to trust and rely on their financial aid office for help navigating Federal grants and loans. Either way this issue indicates more must be done to think about not just what information consumers use for their decisions, but also how they interact with the colleges they are considering attending.

Does this really require a college credential?

Also implicit in the trusting attitude of students is the assurance that program will be what it says it is--training that will provide them access to a job. Now in any system, some programs will be better than others and there will always be a few duds.  And commenters did identify some that appeared to be not very good--students discussed outdated or insufficient equipment (imagine learning how to work with braces on half a mouth) or instructors without sufficient content knowledge. But assumed in all of those comments is the idea that the program would have been better had those deficiencies just been corrected. Never would a student assume that the degree itself is fundamentally not reflective of how the fields they are preparing for actually operate. Yes one student who attended  Sanford Brown in the Milwaukee area found out that misalignment problem was exactly what her program suffered from:
 
The majority of companies hiring for Billing have on the job training for people who have been hired by the company including Aurora Healthcare. ... The HIPPAA, JCAHO and Medical Terminology courses are being given as on the job training as free computer based learning courses. Positions in Coding for hospitals are impossible to get into without years of experience. The Certificate I received has not been useful to me and is not worth the $17,000 I now owe. 
 
The commenter raises a point that goes beyond the idea of whether a program merits the price charged and debt incurred to instead ask is it even aligned with fields or occupations where postsecondary education really provides an advantage for entry and advancement? In the case of the coding program, she suggests that even an extremely good program would not have been worth it because that is not how the coding industry works. This isn't a derivative of the "bachelor's degree holders working in restaurants" argument, but rather the idea  that even someone who gets employment in the relevant field may not actually need that credential. It's a challenge to the idea that if a college or university offers a program it is by definition "postsecondary." 
 

Signs some schools are taking steps to improve--is it enough?

To be sure, there's a lot of comments that do no paint a flattering light of the programs and the institutions that offer them. But there are some rays of light suggested in the comments. Some institutions have shut down poor-performing programs, while others have closed entire branches that did not appear to be succeeding. Outside the comments, the University of Phoenix and Kaplan University have been among the large institutions to get noticed for offering trial periods and experimenting with new curricula to boost quality. In these cases, schools do appear to be responding to market forces in positive ways. The task ahead then is to figure out how to keep driving those kinds of changes so that stories of future students can focus only on the hope and not the disappointment and regret that followed. 

Asset Building News Week for June 10-14

June 14, 2013
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The Asset Building News Week is a weekly Friday feature on The Ladder, the Asset Building Program blog, designed to help readers keep up with news and developments in the asset building field. This week's topics include racial inequality, retirement, food security, and financial services.

What Reading 900+ Comments Tells Us About the Coming Gainful Employment Re-Regulation

June 13, 2013

Circle September 9 on your calendars. That's the date according to a Federal Register notice published yesterday that the Department of Education will bring together a committee to develop new regulations defining gainful employment. While it had been clear since a notice published in mid-May that the Department was going to be considering gainful employment in its next round of rulemaking, yesterday's announcement provides exact timing for negotiations, as well as the types of negotiators to be considered. 

With the first negotiating session still not for several months, it is going to be some time before the Department puts forth any public proposal, but with more than 900 public comments already submitted in response to initial thoughts on the regulatory agenda, there's already some clear indications of what we can expect to see from a policy standpoint. In a separate post I'll put up some of the more interesting comments received from students. (New America also submitted its own comments on the regulations, which can be found here.)

Arguments in favor--stronger, more comprehensive

By far the largest number of comments came similar short submissions calling for a stronger rule and protections for students and taxpayers (see here for an example). On the more substantive side, a few themes emerged:

The gainful employment rule should be stronger: Multiple comments cited the 2011 rule's "nine strikes and you're out" policy whereby a program had to fail each of three measures for three years straight as being overly generous. Several comments called for initiating penalties for programs that failed two out of the three measures. Others, such as those from The Institute for College Access and Success argued for a higher threshold on the repayment rate based upon prior studies of delinquency and default as well as how Congress set thresholds for cohort default rates. Not surprisingly, among the most thoughtful and creative comments were those from Robert Shireman, the former Department official who helped craft the initial set of regulation. Shireman's comments suggested a new structure that would draw distinctions between institutional and program eligibility depending on repayment rates, with debt to earnings tests used if repayment rates fell below a certain level.

Accountability in this space is about more than just gainful employment: Many comments touched on the idea that gainful employment is only one piece of an accountability framework that also includes cohort default rates and the 90/10 rule. Given that, many commenters stressed the need for the Department to address the use of deferments and forbearances by some institutions to keep their default rates low by limiting the number of students that could default during the measurement window. Similarly, commenters also stressed the need to consider tactics like delaying the disbursement of student aid funds so some dollars would not count as part of the 90/10 calculation for a given year.

Relief for borrowers at failing programs: The final gainful employment regulation never included any relief for borrowers that had debt from a program that eventually lost eligibility on the grounds that discharge requirements were statutory and could not be changed. This time, several comments, such as those from the National Consumer Law Center, stressed that borrowers in programs that lose eligibility should be given relief much the same way that those who attend institutions that shut down receive assistance.

Job placement matters: The comments also included several submissions from attorneys general from states such as Colorado, Illinois, and Kentucky. One issue these focused on is the importance of greater clarity in definitions of successful job placement. Inaccurate, misleading, and outright fraudulent have been an ongoing problem at some proprietary institutions for many years, but the lack of a clear definition can make enforcement of the issue more complicated (the Department's National Center for Education Statistics did hold a technical review panel on creating a definition a few years ago, but did not end up putting together a definition).

Arguments against--wait for reauthorization 

Not surprisingly, there was a pretty clear divide on whether the Department should approach the gainful employment rule again, and what to do so if it does. In general, proprietary colleges and their lobby groups argued that the Department should delay action on the grounds that Congress would be scheduled to reauthorize the Higher Education Act in short order (see page 2 of the comments from the industry's main lobby group, the Association of Private Sector Colleges and Universities for a typical form of this argument). Since reauthorizations these days have a cicada-like periodicity  that's effectively calling for a delay of many years.

In a similar vein, several institutions also brought forward the idea that the gainful employment rule should be applied to all types of institutions, not just a subset of programs at public and private nonprofit institutions and essentially all programs at proprietary colleges. DeVry and LIM College had the clearest forms of this argument, while Strayer University took a slightly different approach, arguing why it resembles other institutions that are not subject to the gainful employment requirement and should thus be excluded. (Whether including more programs is legally allowable, a good policy idea, or just something that would be designed to get other sectors of higher education opposed is debatable.) 

By far the two most thoughtful and interesting comments from those opposed to gainful employment came from Strayer University and Champion College Services, which provides default management and would have provided gainful employment support if the rule were still in effect. Strayer's comments suggests relying on the cohort default rate to set thresholds and penalties, while Champion put forth an argument for creating a repayment rate that is based on the number of borrowers, not dollars, and define "repayment" as not being in default or more than 120 days delinquent. Other ideas more commonly raised included allowing institutions to limit the amount of debt a student can take on and risk-adjusting the measures based upon the characteristics of students enrolled. 

Not surprisingly then, we're already clearly headed for a pretty significant divide on the policy questions in gainful employment. In a subsequent post I'll pull out some of the more interesting submissions from former students and faculty at proprietary institutions. 

Court Throws Huge Wrench in Higher Education Transparency Efforts

March 20, 2013

A federal district court judge dealt a huge blow yesterday to the U.S. Department of Education’s efforts to regulate the for-profit college sector. More broadly, the court’s decision in the case, which deals with the Department’s Gainful Employment regulations, could make it much more difficult to bring greater transparency and accountability to higher education as a whole.

The roots of this case go back to June when the federal district court vacated some of the Department of Education’s Gainful Employment (GE) regulations. While the judge affirmed the department’s authority to regulate on GE and held up requirements that GE programs disclose information like median debt to students, he found that one of the three measures used to determine whether a program prepared students for gainful employment -- the student loan repayment rate -- “lacked a reasoned basis.” And since the judge concluded that all the metrics were intertwined, he threw them all out. With no metrics to report, the disclosure requirements included in the regulations were also effectively eliminated.

The Department went back to the court and asked the judge to reinstate the reporting requirements so that it could implement the disclosure provisions of GE (without program-level information, disclosure would be impossible to achieve). In yesterday’s decision, the judge denied this request on the grounds that the reporting requirements would violate one of the worst laws in the history of higher education: the federal ban on a student unit record system.

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