Lies, Damned Lies and Statistics: A Breakdown of the Federal Strategy to Close HBCUs

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For-profit colleges, in the next few years, will be no more; not because they preyed upon unprepared poor and minority students who wanted degrees, and not because employers refused to hire those with credentials from schools like ITT Tech and Corinthians.

It is because these things were happening under the endorsement of the U.S. Department of Education, by way of its federal student aid program. And because the federal government can’t punish people for being poor, or for making bad decisions with money, the DOE decided it would be far easier to shutdown the sector of schools with the highest rates of loan defaults and underemployment.

And a lot of people would be okay with that; except that it is unlawful to make a rule and selectively enforce it. Now, other institutions with poor graduation rates, low retention rates and bad outcomes in the job market will soon be in the crosshairs.

It started with for-profit schools, but will soon extend to community colleges and historically black colleges and universities.

Dozens of small, private HBCUs and struggling publics are likely to close as a result of policies which will ramp up in the waning months of the Obama Administration, and will likely continue under a Donald Trump or Hillary Clinton presidency.

Maybe that’s why Trump can offer no plan for higher education, and Clinton can promise HBCUs billions in support. Both, but Clinton especially, know Congress would never pass such a measure attached to a free college plan, and that even if it did receive legislative push, it would only be for 80 percent of the HBCUs that exist today.

The language from the federal government is clear, but its message is carefully crafted behind rhetoric and lies about federal, institutional, and personal responsibility in college choice and financing.

Department of Education Lies

College Scorecard

Let’s look at the lower level lies first, beginning with the federal college scorecard. We’re told that it is designed to give families a comparative view of which colleges and universities provide the best outcomes for tuition costs.

But what is not shared is that the scorecard acts as an unofficial ranking system by which the DOE measures how successfully schools attract and graduate students, and send them on to jobs. From the DOE press release on the latest scorecard data:

The higher education landscape is changing, and this tool will itself change over time. We’re working to integrate the College Scorecard into the FAFSA; considering other cautionary indicators that students should be aware of before enrolling in an institution, and continuously improving the quality of our data, particularly around completion rates.

What do graduation rates, employment and other non-financial factors have to do with where people want to spend their money going to college? Why does this need to be connected to the FAFSA? If the government doesn’t adjust income taxes based upon where citizens live, and doesn’t adjust healthcare benefits based upon the hospital where care is administered, why would it matter which colleges receive federal aid?

Because the easiest way to decide who gets money for college is to dictate where money is allowed to be spent, and if the DOE decides that elite private, large public and community colleges are the best places for federal aid to be spent, then the people who can and want to get into these specific institutions will have the public benefit.

DOE Data

The generally accepted resource for data on colleges and universities is the Integrated Postsecondary Education Data System. But depending upon which day and which way the data is accessed, one data set can yield several different numbers, particularly for HBCUs.

Metrics listed on the College Scorecard, can be different in the College Navigator, or the White House Initiative on HBCUs annual reports. And with three different ways yielding three different numbers, there’s no fair way for the government to hold institutions accountable for metrics they cannot prove to be conclusive beyond an average of their compiled data, which in some cases, can vary by hundreds of students, or millions of dollars.

Department of Education Damned Lies

Default Rates

When families hear about former students defaulting on federal loans, they are commonly led to believe that the numbers represent the profile of an entire institution. But frequently, consumers aren’t directed to the fine print on the federal websites which catalog the data. If they were, they would discover language about what the statistics really depict. Like this from the Federal Aid website:

For schools interested in taking actions to manage defaults, and for schools required to submit a default prevention plan based on at least one year of a 3-year cohort default rate equal to or greater than 30 percent, please refer to the federal regulations at 34 CFR 668.217 and Appendix A within that section.
Important Note: Some schools have a small number of borrowers entering repayment. At other schools only a small portion of the student body takes out student loans. In such cases, the cohort default rate should be interpreted with caution as these rates may not be reflective of the entire school population.

Spelman College, perhaps the nation’s best HBCU and among its most selective in admissions, posts this for its three-year default rate.

But then you get this view from the College Scorecard.

Courtesy: Federal College Scorecard

A big difference? There is no notation on the scorecard of the data reflecting the years 2010, 2011, and 2012. This is important considering that in 2011, most HBCUs experienced sudden enrollment decreases following changes in federal student aid lending, which decreased enrollment, increased the opportunities for loan defaults, and changed the picture on default rates.

Even for a school like Spelman, which is off the charts in most categories the scorecard ranks favorably for post-graduate outcomes, the narrative is incomplete in regards to the school being “about average” for former students repaying debt.

Whose (De)fault is it Anyway?

A simple question that rarely has been asked of the Department of Education: why are schools being held responsible for the financial struggles of former students? The logic is that colleges and universities are allowing students to earn degrees that do not help them to get jobs, or allowing unprepared students to ring up astronomical debt before dropping out of school altogether.

It would seem to be a fair approach to protecting taxpayers, until you consider the way most basic federal lending works.

The Department of Agriculture doesn’t deny loans to farmers in specific regions because weather patterns can change. FEMA doesn’t deny relief to Baton Rouge or New Orleans because the region is at annual risk for hurricane and flooding damage.

And the government doesn’t avoid loans to banks because corruption caused the near collapse of the nation’s economy.

But on the subject of poor and middle class people borrowing to increase wealth and economic stability, its time for regulation that starts with institutions giving them the opportunity to do so? It doesn’t add up.

But more importantly, colleges aren’t lending federal money. They don’t accept applications for aid, they don’t make judgements on how much each student receives, they don’t make decisions on refunds. They award funding that is granted to students by the Department of Education, with the school acting as the disbursement center. The money follows the students and their annual applications for aid.

The federal government looks at taxes, credit and academic performance to determine which students are worthy of taxpayer investment, but when students fail to yield a return on investment, it’s the school’s fault?

Department of Education Statistics

The Los Angeles Times today profiles the preliminary stages of the California State University System to improve graduation rates and time to degree completion. A key statistic from the story:

Plus, getting students out in four years rather than six is more affordable for students, shaving costs for tuition and other expenses. It is a particular challenge for Cal State, though, because many of its 474,000 students skew older, attend part time, have jobs and families and take longer to earn their degrees.

This is the typical HBCU student, with the omission of low-income and first-generation from the description. Research suggests that most college students are taking longer to finish degrees for a variety of reasons, and spending more every year to reach the finish line.

But the Department of Education’s approach is not how investment works. To put it into perspective, consider that two of the biggest music streaming services in the world, Spotify and Pandora, are not yet profitable companies years after their launch. Yet they still receive venture funding, and command millions of paying users for their services. And in 2017, the two companies will just be approaching the verge of finally reaping profit for their years of work, marketplace assessment and execution.

The federal government suggests that finishing college and finding a job should be a five years-or-less process, with no regard for where graduates live, in which industries they choose to work, the kind of entry-level salaries they command, or their family circumstances.

Sure, the government makes these considerations on loan repayment, but on the subject of gauging institutional merit, colleges and universities are penalized for the challenges graduates face after successfully completing school in 4–6 years.

So for HBCUs, the majority of which are in the south where jobs are scarce, discrimination is rampant and education is being privatized, these realities paired with the federal government’s assault on college access, makes for a bad scenario for progress.

And what’s worse — most HBCUs will never see it coming. After all, Paine College just lost its accreditation for years of financial mismanagement, yet isn’t on the Department of Education’s most current watchlist for heightened cash monitoring.

The Moral of the Story

As is the case with HBCU boards, there is no hope to stop widespread corruption, only the prayer that enough students will make it through enough colleges to keep 20–40 campuses alive for generations of black students to come. We don’t know how many HBCU campuses will survive, but we can be certain that with the DOE’s aggressive tactics, many will fall.

But we can’t say we weren’t warned.