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R.I.P., gainful employment rule

It’s a sad day for educators who want to hold for-profit colleges accountable for program quality, student debt repayment, and student employment outcomes.

This week, Betsy DeVos, U.S. Secretary of Education, officially repealed the Obama administration’s 2014 gainful employment rule. The rule has required providers of career and certificate programs (many operated by for-profit institutions) to prove their graduates could find gainful employment. If graduates’ employment rates fell below certain standards, the institutions risked losing access to federal student loan funding, the lifeblood of the for-profit sector. For the past two years, the Trump administration has refused to carry out the rule, even though it has the force of law (Kvaal & Duncan, 2019). Now the rule is repealed, effective immediately.

DeVos and others have offered several arguments for the repeal of the rule, including freedom of choice, lack of fairness, and higher education purposes and outcomes. I offer some thoughts based on responses of educators, economists, and my own experience as a former teacher at a for-profit career college and a graduate of a for-profit university.

“Students should be free to choose”

DeVos and others have claimed that students should be “free to choose” their higher education institutions (Kvaal & Duncan, 2019). DeVos has used this argument when discussing schoolchildren and school choice. “Our country needs students to be freed to pursue the education that will unlock their potential and unleash their creativity” (DeVos, Cruz, & Byrne, 2019, para. 21). However, the gainful employment rule applies to higher education institutions, specifically those that offer vocational programs.

Students who are contemplating enrolling in a college or university are presumably adults with autonomy to choose. Maybe they don’t receive or can’t find accurate guidance on differences between for-profit and nonprofit institutions, but the information is available. Nobody held a gun to my head when I enrolled in a for-profit university. I didn’t do my homework.

Thus, this argument is specious.

“For-profits face an unfair playing field”

DeVos and others have claimed the gainful employment rule “discriminates against the for-profit colleges that offer many career programs because it does not apply to all colleges” (Kvaal & Duncan, 2019, para. 3). Some have said the rule unfairly targets the for-profits, thereby creating an “uneven playing field” (Vedder, 2019, para. 4).

Critics have pointed out the absurdity of this argument. “It’s a bizarre complaint, like saying that it is unfair that there are different traffic laws for trucks than for cars. For-profit schools are structured differently, in ways that make them more hazardous” (Cao & Shireman, 2019, para. 2). Having taught at a for-profit college and earned an advanced degree at a for-profit university, I have firsthand knowledge that for-profit education is different from nonprofit education in some fundamental and disappointing ways.

In place of the gainful employment rule, the Department of Education has created the “College Scorecard” to give students information on each program’s debt and earning prospects (Green, 2019). However, wading through reams of data on program outcomes is not easy. The gainful employment rule required all providers of career education (for-profit and nonprofit) to disclose program outcomes on their websites. Had that data been available to me in 2005, I might have made a different choice about applying to a for-profit university. Students need guidance. Unfortunately, nontraditional students often rely on the advice of someone they perceive as an expert, “frequently the school recruiter” (Cao & Shireman, 2019, para 40).

Some proponents of eliminating the gainful employment rule have claimed that nonprofits have their share of bad apples too (Vedder, 2019, para. 5). Further, the gainful employment rule did not account for other programs with poor employment rates and high debt, such as “some liberal arts degrees” (Green, 2019, para. 15).

However, comparing for-profits to nonprofits without drilling down to compare institutions at the program level is not helpful. In other words, comparing bad employment outcomes at “public universities” to bad employment outcomes at career colleges perpetuates misinformation.

It’s laughable to imagine comparing my for-profit career college employer to the for-profit university I attended for my doctorate. It’s equally ridiculous to compare either one to the public universities I attended for my undergraduate degrees. We may have complaints about any institution, but when comparing institutions, we should try to compare apples to apples. It’s not about “fairness”; it’s about accuracy.

This argument is based on a faulty comparison.

“There’s more to higher education than just employment”

Some supporters of rescinding the gainful employment rule have claimed higher education is about more than getting job skills; good schools teach “virtue, civic responsibility, and other things” (Vedder, 2019, para. 3). The argument is that the gainful employment rule failed to account for “factors other than the quality of an education that could affect students’ earning potential” (Green, 2019, para. 15). Therefore, trying to regulate employment outcomes with the gainful employment rule misses the ostensible point and purpose of higher education, which is more than just students getting jobs and paying back their loans. Moreover, critics claim, the higher earnings of college graduates are not entirely attributable to college education; some students would have earned more, even without a college degree (Vedder, 2019, para. 2).

I agree, higher education is about more than just employment and loan payback outcomes. I also agree that some students will succeed and thrive no matter what type of institution they attend. However, again, comparing career and technical colleges that provide job skills (whether they are for-profits and nonprofits) with, say, research universities (whether they are for-profits and nonprofits) is a faulty basis for deciding for-profit institutions don’t require scrutiny.

The evidence seems clear. Of all the colleges that have closed since 2013, 95.5% of them were for-profit institutions (Newton, 2018, para. 9). Further, the majority of students who defaulted on their student loans three to five years after graduation went to for-profit colleges (Newton, 2018, para. 9).

In fact, students entering associates degree programs derived large, statistically significant benefits from obtaining certificates or degrees from public and nonprofit institutions but did not gain such benefits from for-profit institutions (Lang & Weinstein, 2012).

“The federal government should have no role”

DeVos and others have claimed the federal government should not be regulating universities at all (Vedder, 2019). The job of regulating higher education should be left to the states. However, federal government funding drives the for-profit sector in the form of student loans, and these loans come from taxpayers. The purpose of the gainful employment rule was to hold accountable the institutions that receive 90 percent of their funding from taxpayer dollars. It’s good governance to ensure taxpayer funds are spent wisely and that bad actors are invited to improve their programs.

Just because the current administration has decided to rescind the gainful employment rule does not absolve schools of their legal obligation to provide students a worthwhile education that leads to gainful employment (Scott, 2019). However, without this rule, for-profit colleges with questionable program quality are free to charge high tuition for “worthless credentials that leave students with insurmountable debt” (Scott, 2019, para. 3).

By repealing the rule, the U.S. Department of Education can no longer use its most potent accountability measure — the loss of federal aid (Green, 2019). The collapses of ITT Tech and Corinthian Colleges left thousands of students unable to pay back their loans, leaving taxpayers on the hook (NPR, 2018).

One part of the gainful employment rule already implemented has identified hundreds of failing programs, many of which closed after they failed to meet the new standards (Green, 2019). In the Education Department’s first assessment of debt-to-earnings ratios for college graduates, “about 98 percent of programs that failed to meet standards for earning power were for-profits” (Green, 2019, para. 15).

To say the federal government should have no role seems lacking in basic stewardship.

“The gainful employment rule was intended to put for-profits out of business”

Finally, some have claimed the aim of the gainful employment rule was to put the for-profits out of business because of a misguided belief that “people should not profit off of learning” (Vedder, 2019, para. 4). Whether you believe education management companies are capable of providing academic quality — or not — this claim is easily debunked with a quick review of the gainful employment rule itself. The purpose of the rule was not to put for-profit institutions out of business; it was to protect students from predatory recruiting practices and poor employment outcomes and guard taxpayers from the loss of taxpayer dollars.

Critics of the rule have suggested that all higher education institutions be held accountable for their academic and employment outcomes. In fact, the gainful employment rule was aimed at institutions with the worst outcomes: colleges that offered vocational programs. The rule applied to both for-profit and nonprofit providers.

I would call this argument one of those red herrings that we resort to occasionally in discussions about things we find uncomfortable.

Closing thought

If we could be sure that academic and employment outcomes were similar across all vocational programs, then we would have the luxury of comparing institutions by results instead of by profit-making status. However, as long as the worst outcomes can be attributed to the for-profits, rules are needed to protect students and taxpayers. Unfortunately, that rule was just repealed, and with it all the protections it offered.

R.I.P., gainful employment rule.

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Sources

Cao, Y., & Shireman, R. (2019, July 1). Betsy DeVos’s shameful repeal of the gainful employment rule. The Century Foundation. Retrieved from https://tcf.org/content/commentary/betsy-devoss-shameful-repeal-gainful-employment-rule/?agreed=1

DeVos, B., Cruz, T., & Byrne, B. (2019, February 28). America’s students deserve freedom to choose their education options: DeVos, Cruz, Byrne (Opinion piece). USA Today. Retrieved from https://www.usatoday.com/story/opinion/2019/02/28/trump-school-choice-students-education-options-scholarships-tax-credits-column/3002868002/

Green, E. (2019, June 28). DeVos repeals Obama-era rule cracking down on for-profit colleges. New York Times. https://www.nytimes.com/2019/06/28/us/politics/betsy-devos-for-profit-colleges.html

Lang, K., & Weinstein, R. (2012, June). Evaluating student outcomes at for-profit colleges (NBER Working Paper №18201). Retrieved from https://www.nber.org/papers/w18201

Newton, D. (2018, December 9). 20,000 more reasons to never go to a for-profit school. Forbes. https://www.forbes.com/sites/dereknewton/2018/12/09/20000-more-reasons-to-never-go-to-a-for-profit-school/#390daff230e5

NPR. (2018, December 14). Defeated in court, Education Dept. to cancel $150 million of student loan debt. Retrieved from https://www.npr.org/2018/12/14/676755770/the-education-department-is-canceling-150-million-of-student-loan-debt

Scott, B. (2019, July 2). Scott statement on final gainful employment rule (Press release). Retrieved from https://bobbyscott.house.gov/media-center/press-releases

Vedder, R. (2019, July 1). Betsy DeVos is right about gainful employment. Forbes. Retrieved from https://www.forbes.com/sites/richardvedder/2019/07/01/betsy-devos-is-right-about-gainful-employment/#2420a6d27315

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