April 18, 2011
By Harris N. Miller
Association of Private Sector
Colleges and Universities
For most Americans the message is simple: Go to college. Get a good job. Build a solid career. But the U.S. Department of Education, through its controversial “gainful employment” proposal, could make it much more difficult for those attempting to do so.
At a time of high unemployment, Washington is building barriers instead of bridges to better jobs and lives.
The gainful employment proposal, the government’s answer to excessive student debt, singles out career-oriented private sector colleges and universities (PCSUs) — in the department’s vernacular, “for-profit” schools. More than 100,000 New York students are currently enrolled in these institutions.
Excessive student debt is a problem in all of higher education, in part because borrowers can use federal student aid programs to borrow far more than they need to pay for education. Rather than tie lending amounts to tuition and reasonable fees, the gainful employment rule would create a debt-to-income ratio for determining program eligibility in student aid programs. The government would bar students using federal aid from entering programs that fail the pre-set ratio. The department is expected to issue its final rule on this matter shortly.
Here’s the problem. The payback of attending college takes place over a lifetime. The federal formula covers the first three years following graduation. If the gainful employment proposal is a good idea, it should apply to all college students, not just those in career-oriented programs.
Instead, the proposed regulation targets the nation’s non-traditional students. These are individuals who entered the work force after high school, enlisted in the military, started families or pursued other life interests. Most are returning to an academic setting, not entering directly from high school.
By closing this door, the proposed rule limits student choice and diminishes the value of private-sector education. The move also has the potential to push up to 2.3 million students out of higher education in the next decade. That will mean workers with fewer skills, fewer opportunities to deploy those skills, a less capable local work force to attract employers and investment, and a less vibrant economy overall.
Washington claims its gainful employment proposal is about reining in excessive student loan debt. Among baccalaureate degree programs, students at public and private nonprofit colleges and universities account for 90 percent of excessive debt ($45,000 or more) and, at the associate’s degree level, these students account for 62 percent ($25,000 or more). These disparities exist despite the large taxpayer subsidies supporting both public and private nonprofit postsecondary institutions.
So what’s the real issue here? Private sector colleges and universities account for 12 percent of higher education enrollments, growing from 1.7 million to 3.2 million in the last six academic years. That kind of growth attracts plenty of attention. Making the issue about private sector colleges and universities takes focus away from far more intractable problems, like spurring job growth, spreading equality of opportunity and shoring up the shrinking American middle class.
No sector of higher education is perfect. Private-sector colleges and universities make their share of mistakes — as do all types of postsecondary institutions. If the question is about education quality, frame the debate in that light and include all players, not just some players. If the question is about debt, look at ways of limiting borrowing so that student loans do not become personal loans.
The public understands the relationship between choice, education and jobs. Time for Washington to understand it, too, and to stop experimenting, especially when the livelihoods of hardworking New Yorkers hang in the balance.
Harris N. Miller
President and CEO
Association of Private Sector Colleges and Universities