July 12, 2015
By: Jodie Tillman/Staff Writer
This month, a regulation went into effect cutting federal money to
career-training programs whose graduates – like many of those from
shuttered Corinthian Colleges – can’t find decent jobs.
The Obama administration touted the new rule as its signature effort
to make the for-profit college industry more accountable. But to some,
the new “gainful employment” rule raises a question:
Why stop with career schools?
Law schools, graduate programs and undergraduate degrees in such
career-oriented majors as social work could use additional scrutiny of
their graduates’ abilities to pay off their debts, experts say.
But such programs tend to be located at public and private, nonprofit
colleges – like University of California schools or Chapman University –
whose degree programs aren’t affected by the new rule.
“There is broad movement toward accountability in higher education,
outside of the for-profit sector,” said Mamie Voight, director of policy
research at the Institute for Higher Education Policy.
The Obama administration, amid pressure from public and nonprofit
colleges, last month canned the closest proposal it had for measuring
performance at all schools.
The proposed broader ratings system would have tracked student debt,
among other metrics. Higher education institutions panned the tool as
impractical and unfair, saying data among schools aren’t uniform.
Unlike the new rule aimed at the for-profit schools, the broader
rating system did not tie outcomes to federal funds. But it might have
amounted to a public “shame list” for colleges that did not fare well,
said Rachel Fishman, a senior analyst with the New America public policy
Still, the new gainful employment rule that covers for-profit schools
marks the first major instance that the federal government will measure
the value of an academic program by linking student investment and
outcome. While the federal government has said it has no plans to extend
the rule for non-vocational programs, the momentum could be headed that
If that happens, expect the entire higher education field to put up a fight, Fishman said.
“The higher education lobby is very powerful,” she said. “They’re very good at preventing accountability.”
The new regulation requires that career education programs track
their graduates’ performance in the workforce. Now, the programs won’t
be able to accept federal student aid – long the lifeline of the
for-profit schools – if too many graduates are spending more than 20
percent of their discretionary income, or more than 8 percent of their
total income, paying off loans.
By federal estimates, at least 1,400 programs across the nation will
fail the test. Those programs could lose eligibility for federal funds
as early as 2018.
At for-profit colleges, the rule applies to all non-liberal arts
degrees. At public and private, nonprofit colleges, the rule applies
only to non-degree programs, such as a medical assistant certificate.
The upshot? A nursing degree program at, say, the University of
Phoenix now risks losing access to federal student aid money if too many
graduates leave with debt they can’t repay. A nursing program at UC
Irvine or Brandman University does not.
California’s community colleges have already started tracking that information for degrees and certificates.
Two years ago, the system began investing in data tools including
Salary Surfer, which tracks actual wages of graduates mapped against
their degrees and certificates.
“The new federal rules change only what the California Community
Colleges system has already begun to do,” said spokeswoman Paige Marlatt
The for-profit industry says it’s being singled out and has fought
the gainful employment rule in court. It also says the federal
government is wrong to use early-year earnings rather than track
salaries over time.
In its publicity materials, its industry group quotes leaders from
Harvard and UC Berkeley saying that the earnings in a first job are a
poor proxy for measuring the value of a degree.
Noah Black, spokesman for Association of Private Sector Colleges and
Universities, says there are public and nonprofit programs that wouldn’t
pass muster under the gainful employment rule.
Among them are George Washington University’s prestigious law school
and a social work program at University of Texas in Austin, according to
an analysis performed by the association.
“But we are education companies,” Black said, “and that seems to be the issue.”
‘No paying customers’
The for-profit industry has been caught in an implosion fueled
primarily by the downfall of Santa Ana-based Corinthian, which stood
accused of misrepresenting job placement rates and loading up students
with insurmountable amounts of debt.
Barmak Nassirian, director of federal policy at the American
Association of State Universities and Colleges, said the for-profit
industry’s heavy reliance on student aid is a key reason they deserve
Members of his group, all public universities, face demands by state governments, which hold their purse strings.
“How come these programs can find no paying customers but student aid?” he said.
Still, that’s not true only in the for-profit world. Brandman
University, a career-oriented college system affiliated with Chapman
University, derives around 80 percent of its tuition and fees from
federal loans and grants – a percentage similar to many in the
That amounted to about $71 million in the 2013 fiscal year, said
officials at the Irvine-based system. But Brandman cites its relatively
low loan-default rate – 3.5 percent – as evidence that it’s in a
different league than for-profit career schools.
“We’re really focused on our students’ success,” said Saskia Knight,
executive vice chancellor for enrollment and student affairs
Nassirian said the public and nonprofit universities welcome additional scrutiny.
He called Obama’s college ratings idea “a non-starter because the federal government can’t do it. It’s too complicated a task.”
UC President Janet Napolitano was one of the ratings plan’s early
critics. Last week, she said in a statement that officials need to
rethink the approach.
“While I had expressed skepticism about the feasibility of a single
ratings system for the wide variety of institutions across the United
States,” she said, “we at the University of California support the
administration’s goal of improving transparency.”
Direct link to article: http://www.ocregister.com/articles/federal-671435-programs-profit.html