U.S. Chamber of Commerce: Gainful Employment Rule Strips Students of Opportunity

The Washington Post:Tightening rules on for-profit colleges

A proposal unveiled last month by the Education Department would cut off financial aid to career-oriented programs whose graduates have high student-loan debt relative to their incomes. This is the administration’s second attempt to impose the so-called gainful-employment rule. This measure was bitterly opposed by the for-

profit education sector, which successfully sued to block the first version in 2012. The regulations, also criticized by both Democrats and Republicans in Congress, are now open for public comment.
Administration officials deny they are singling out for-profit institutions, arguing that the measures tying student debt and loan default to financial aid would apply to all career-training programs.

Blurred in that claim is that degree programs in the for-profit sector would have to meet the stringent new standards but degree programs offered by public and private nonprofit institutions would not.
Steve Gunderson, who heads the Association of Private Sector Colleges and Universities, noted in a March 13 letter to Education Secretary Arne Duncan that if the proposed debt-to-earning standards were applied across higher education, programs failing the metric would include the journalism program at Northwestern University, the law program at George Washington University and the social work program at Virginia Commonwealth University.

The for-profit education industry has come under scrutiny because of unscrupulous recruitment practices and shoddy programs at some schools. It is hard, though, to see the logic of requiring schools that serve a challenging population of poor and working-class students to meet 845 pages of cumbersome standards that even many traditional schools would be hard-pressed to meet, particularly since the wrongdoers are in the minority and new protections have already been put in place.

There are fairer and less punitive approaches to making schools accountable. Robert Silberman heads Strayer Education, which has a stellar reputation and would be able to meet the proposed standards, but, as he once told the New York Times, it would make more sense to require schools to share in the losses when students default or to establish a national eligibility test to screen out students who lack the skills to attend college. Harvard University researchers who examined for-profit programs recommended strengthening disclosure requirements or requiring counseling by an independent third party to make sure prospective students understand financial aid packages and student loan obligations.

Public comment on the draft ends May 27. Administration officials told us that they are open to all ideas and that nothing is set in stone. We hope that’s so, because the likely outcome of implementing the draft as written is that schools will admit only students who pose the least risk. That will make it harder for minorities, poor people and nontraditional students to get the kind of post-secondary education that might help them improve their lives.

Direct link to article: http://www.washingtonpost.com/opinions/tightening-rules-on-for-profit-colleges/2014/04/27/2b80630e-cca4-11e3-95f7-7ecdde72d2ea_story.html

Higher Education For All Blog: The Facts Related to Student Financial Aid & Student Defaults

April 22, 2014  
By APSCU Communications 
In a debate about numbers, we must remember that there are real students behind each statistic. While the following three statements seem obvious, they are often forgotten during conversations concerning student access and borrowing for postsecondary education.
  • A student with little or no savings will need to borrow more money to pay for postsecondary education.
  • If a parent cannot afford to help a student pay for postsecondary education, then the student will have to borrow more to afford tuition.
  • If a student has a family of their own, then they will need to borrow money to pay for education.
New traditional students face these and other challenges as they pursue postsecondary education. Private sector colleges and universities (PSCUs) and community colleges serve more new traditional students than others in higher education. The new traditional student stands to benefit the most from postsecondary education and career training.
U.S. Department of Education, National Center for Education Statistics, 2011-12 National Postsecondary Student Aid Study (NPSAS:12)
There has been a lot of discussion, without a lot of supporting facts, about enrollment at private sector colleges and universities, the amount of federal financial aid used by these students, as well as how and when they repay student loans.
Instead of continuing to make false comparisons, higher education stakeholders should confront the reality that while there may be issues with certain cohorts of students completing their education and repaying their loans, the vast majority of graduates and programs perform very well when compared to similar institutions serving the same type of student.
Source: U.S. Department of Education 3-Year FY 2010 Official Cohort Default Rates
Serving students with both limited resources and specific challenges
In higher education, PSCUs and community colleges are comparable to each other. They both serve students with similar backgrounds, similar life challenges and opportunities. As you see above, the three year cohort default rate for those two sectors are almost identical.
The reason more students who borrow to attend a community college or PSCU default, is that these students do not have the same level of academic preparation or access to financial support as a student attending George Washington University, Northwestern, or University of Virginia. The question is really how programs help students succeed compared to where they come from. At 2-year programs, 63 percent of PSCU students graduate within three years compared to just 22 percent for community college students.
So how do we get to the truth behind the Department’s talking points?  A more realistic version would be this:
  • PSCU students make up a smaller share of students overall.  True, 13 percent of students are enrolled in PSCUs.
  • More PSCU students use loans to finance their education.  True, because they don’t have the financial resources of other students.
  • PSCU and community college student borrowers default at the same levels.  True, 22 percent and 21 percent, respectively.
  • Students attending PSCUs graduate at higher rates than their community college peers.  True, 63 percent for PSCUs and 22 percent for community colleges.

Higher Education for All Blog: Open Letter to Secretary Duncan

April 18, 2014
By APSCU Communications
APSCU president and CEO Steve Gunderson sent a letter to Education Secretary Arne Duncan today on the Department’s use of discredited facts, including one deemed “bogus” by The Washington Post Fact Checker. Gunderson also addressed the Department’s flawed approach to the proposed gainful employment regulation and contradicting statements on what the Department is trying to measure with the regulation.
Gunderson wrote, “The underlying problem is that the Department is not measuring earnings gains; instead you are using an arbitrary debt-to-earnings metric that according to NCES data many private nonprofit and public bachelor’s degree programs would fail. This logic is flawed, as it creates a regulation that would eliminate programs that produce a net earnings increase for students.”
View the full letter in PDF or below.

Dear Mr. Secretary:
The purpose of my letter is to call attention to the flawed methodology your Department has been using to make the case for the proposed gainful employment regulation. The day the Department released the regulation publicly, you spoke from the White House press briefing room and made a statement that was later discredited by The Washington Post “Fact Checker” and the methodology called into question.

The analytical problems within the Department go much deeper than this one statistic. Your fundamental approach to the gainful employment regulation is flawed. I want to draw your attention to one statement from your Department’s response to The Washington Post that I find indicative of the problem:

“There likely is an earnings gain in the vast majority of the programs that we evaluated. It just may be the case that a student may be making something less than a high school dropout before they enroll in a program, and three years after they graduated they are still making something less than a high school dropout.”

Such language points to the problem with your approach on the gainful employment regulation. If the vast majority of programs give graduates an earnings gain, then shutting down those programs will deprive those students of that earnings gain.

The underlying problem is that the Department is not measuring earnings gains; instead you are using an arbitrary debt-to-earnings metric that according to NCES data many private nonprofit and public bachelor’s degree programs would fail. This logic is flawed, as it creates a regulation that would eliminate programs that produce a net earnings increase for students. Consider the following hypothetical:

As a high school graduate “Jane” is making $18,000 per year before completing a private sector program. After completing her program, she begins earning $24,000 per year.
Now, let’s assume Jane had to take out a loan to get this education and the payment for this loan is $300 a month. Before her investment in her own education, she was making $1,500 a month. Now, she is making $2,000 a month, an increase of $500 a month. Even when you subtract her student loan payment, she is still making $200 more on a monthly basis. That is $2,400 more a year in her pocket that she would not have had otherwise.

Based on your Department’s proposed regulation, a program’s cohort could fail the debt-to-earnings metric, and be shutdown, even if nearly all the graduates are like Jane. This would deprive millions of students of the opportunity to better their financial position and livelihood.

Obviously, a regulation that makes students worse off is not the outcome you are seeking, but that is what can happen with this misguided approach. For the benefit of all students, we should be comparing the lifetime earnings gain that results from education to its costs. Exclusively looking at arbitrary point-in-time earnings as proposed in the gainful employment regulation misses the real value of postsecondary education. Furthermore, this measure is agnostic to what students were earning prior to enrollment. You have established a bias against students with low incomes from the beginning and often those students are enrolled by private sector and community colleges across the country.

I disagree with that approach, and the goal of our institutions is the opposite. Our students are those who are underserved by traditional higher education and we are meeting their needs today in a way that heavily subsidized state universities and private nonprofits are not. Our students are not the highest earners among recipients of credentials, but they are better off than they were prior to pursuing an education. Stripping these students of that opportunity is the wrong thing to do and is, in fact, contrary to the stated goals of this Administration.

Thank you for your time and consideration on this matter. Private sector colleges and universities broadly support accountability that applies to everyone, while recognizing the diversity of students and institutions. President Obama has made recognizing this diversity a key element in the creation of his new rating system. We stand ready to work with you to improve access, opportunity and outcomes across all of higher education. Unfortunately, the gainful employment regulation, and the faulty data points created to support the regulation, are not the correct way to conduct public policy.

Steve Gunderson
President and CEO
Association of Private Sector Colleges and Universities