Some Thoughts on the Latest Round of Gainful Employment Negotiatied Rulemaking Part 2

Posted: 22 Nov 2013 07:00 AM PST CONTRIBUTED BY: Dennis Cariello Something that seems clear after two rounds of negotiated rulemaking is the lack of trust those aligned with consumer advocates have for proprietary schools.  As I recall, one negotiator suggested they needed to think “deviously” when considering how a proprietary school would game the rules.  I understand these folks hear some very sad and angering stories from students that have been legitimately harmed – and we need to protect those students that are treated unfairly at any institution.  But, as one negotiator said, “the plural of anecdote is not data.”  The vast majority of schools are attempting, in good faith, to help their students improve their lives through education and, in fact, are doing a pretty good job providing students with the skills and education sought.  Even the NY Federal Reserve – in a report I will discuss in another post – noted that proprietary schools offering two-year degrees and certificates have completion rates that are “reasonably good” (57% graduate in 150% of normal time for two-year degrees, 66% graduate in 150% of normal time for degrees under two years).  Indeed, the proprietary school negotiators selected by the Department are sterling examples of my point. The issue came to a head, I think, as related to Marc Jerome’s proposal to, in essence, be able to supplant student borrowing with institutional aid if that program has failed for one year to meet the debt-to-income or debt-to-discretionary income test.  As I see it, this is a very pro student proposal; in essence, he wants the ability to give away money to students to keep them from borrowing.  It would be done with the knowing consent of the students (they’d have to sign a document, presumably showing how much they could have borrowed and that they are not going to take out a loan for that amount and will instead get funds from the school).  The questioning however, was as intense as it’s been about anything else.  Concerns were expressed about letting a failing program have a “second bite at the apple,” and how schools would use this to game the rules – including finding ways to raise tuition and use this to reset the bar at the upper limit of the metric set by the Department.  It seemed, amidst these attempts to figure out how some school could leverage this proposal to ”gamin” the rule, that the proposal at issue was one in which an institution could request the ability to provide free money to students to lower student debt.  To the Department’s credit, it embraced this idea (John Kolotos called it the “most proactive” idea negotiators put forth related to student debt). It seems, however, everyone should rally around such a pro-student measure, notwithstanding their opposition to each other on other issues.