December 17, 2013
By Julian Hattem
Democrats in the House can’t reach agreement about upcoming regulations designed to cut off federal funds to poorly performing college programs.
Lawmakers are lining up on opposite sides of the effort, with some encouraging the Department of Education to finalize the contentious regulations and others hoping for a rewrite of the draft rules.
Separate letters in recent days have highlighted the split, with contrasting messages for the Obama administration as it tries to write rules holding for-profit schools and career training programs accountable for the education they offer. The regulations would outline what type of “gainful employment” graduates of those programs will need to have for their schools to continue receiving federal money.
“I think it’s refreshing,” Rep. Robert Andrews (D-N.J.) told The Hill on Tuesday about the lack of a single party position. “I think if people are actually looking at this on the merits and not taking a knee-jerk party position, I think that’s a good thing.”
On Friday, he and 29 other Democrats wrote a letter to Education Secretary Arne Duncan worrying that the administration’s effort could “negatively impact millions of students nationwide.”
Meanwhile, 31 other House Democrats wrote a separate note arguing that the rule “will help protect student and taxpayer investments in career education programs and enforce current law.”
Supporters say that the rule is necessary to prevent some schools from ripping students off and leaving them saddled with debt but unable to get a good job. But Democrats pushing for revisions worry that the rule, while well intended, would use imperfect metrics and could rely too heavily on the administration's upcoming college rating system.
Many Republicans, meanwhile, have told the administration to entirely abandon its effort, arguing that the rules could end up hurting students.
The Education Department is expected to release a draft regulation early in the new year.
It would be the administration’s second try at a “gainful employment” rule. A federal judge struck down the administration’s previous attempt last year.
That “wasted a lot of time and money and effort,” Andrews said.
He said that Congress would ultimately be responsible for defining "gainful employment" when it reauthorizes the Higher Education Act, the nearly 50-year-old law that governs federal student aid, which is up for renewal in 2014.
“I’d rather us try to compromise and write a statutory definition that serves the purpose of the system,” he said.
Tags: Robert Andrews, Gainful employment, United States Department of Education
APSCU Press Release: The U.S. Department of Education’s “F” in Negotiated Rulemaking
Bad Public Policy Will Displace Millions of Students Over the Next Decade; Inhibit Employer Needs for Job Ready Workforce
Washington, D.C., December 13, 2013
Today, the U.S. Department of Education failed to achieve consensus on its misguided regulatory effort aimed at measuring quality through a graduate's near-term earnings.
The lack of consensus is not surprising considering the Department's failures during the regulatory process:
1. Failed to evaluate the impact on students
While claiming to be focused on student outcomes, the Department has made it impossible to discuss the proposed regulation’s impact on students. Based on analysis of earlier versions of the regulation, hundreds of thousands of students in thousands of programs will lose access in the early years of the regulation, and by the end of the decade millions of students will be denied access to career programs of their choice.
2. Failed to analyze the actual impact of the regulation
The Department’s current regulation uses two metrics to evaluate programs. Both metrics require multiple years of data, yet the Department provided only a one year snapshot of data. By not fully analyzing the regulation, the Department has made it impossible to accurately analyze or discuss the regulation.
3. Failed to explain their arbitrary nature
With no explanation, the Department has gone from a single metric, to three metrics, to two metrics, thus proving that they are blindly groping for something to publish in the Federal Register without clear direction or purpose. This supports the view of many in the higher education community that this matter should be left to Congress.
4. Failed to apply the regulation evenly and fairly across all of higher education
At a time when we should be discussing improving outcomes across all of higher education, the Department proposed a regulation that arbitrarily uses two metrics to determine program quality at a subset of institutions. If applied to all of postsecondary education, many institutions would be unable to meet the arbitrary debt-to-earnings ratio of 8 percent.
For example, programs offering a bachelor’s degree in education from the University of Michigan, a law degree from George Washington University Law School, or a bachelor’s degree in social work from Virginia Commonwealth University would all fail the Department’s debt-to-earnings metric.
5. Failed to heed the advice of others
Multiple leaders in postsecondary education have said that using earnings to determine program value is misguided. Comments include:
Nicholas Dirks, chancellor, University of California, Berkeley said schools should not be rated based on the earnings of their graduates.
Catharine B. Hill, president, Vassar College noted that a ratings system based on earnings ignores the fact that earnings often increase over time.
Drew Faust, president, Harvard University said looking at the salary a college graduate earns in his or her first job as a proxy for the value of a college education is a huge mistake.
During the negotiated rulemaking sessions, a number of negotiators expressed the view that colleges and universities cannot control the economy, the availability of jobs, where students choose to live and work or individual choices about borrowing.
6. Failed to follow their own research
An October 2013 National Center for Education Statistics (NCES) report found that 26 percent of bachelor’s degree recipients at public four-year institutions, who were repaying their loans, faced monthly loan payments greater than 12 percent of their monthly income. At private non-profit institutions, 39 percent exceeded the 12 percent debt-to-earnings threshold and 35 percent at private sector institutions exceeded the threshold. Yet the Department has proposed an 8 percent debt-to-earnings metrics threshold as the government standard for affordable debt.
7. Failed to have a representative negotiating committee of the very students and institutions impacted
Of the 28 representatives the Department selected for the negotiating committee, only four represented private sector colleges and universities. Several of the committee members were on-the-record opponents of the existence of private sector institutions.
Steve Gunderson, president and CEO of the Association of Private Sector Colleges and Universities released the following statement on the negotiated rulemaking session, “the cumulative actions of the Department will result in denying access to hundreds of thousands of students immediately and millions of students by the end of the decade. We hope that Secretary Duncan will see the error of the Department’s ways and stop this process before it becomes an economic nightmare for students and employers seeking skilled workers.”
Washington, D.C., December 13, 2013
Today, the U.S. Department of Education failed to achieve consensus on its misguided regulatory effort aimed at measuring quality through a graduate's near-term earnings.
The lack of consensus is not surprising considering the Department's failures during the regulatory process:
1. Failed to evaluate the impact on students
While claiming to be focused on student outcomes, the Department has made it impossible to discuss the proposed regulation’s impact on students. Based on analysis of earlier versions of the regulation, hundreds of thousands of students in thousands of programs will lose access in the early years of the regulation, and by the end of the decade millions of students will be denied access to career programs of their choice.
2. Failed to analyze the actual impact of the regulation
The Department’s current regulation uses two metrics to evaluate programs. Both metrics require multiple years of data, yet the Department provided only a one year snapshot of data. By not fully analyzing the regulation, the Department has made it impossible to accurately analyze or discuss the regulation.
3. Failed to explain their arbitrary nature
With no explanation, the Department has gone from a single metric, to three metrics, to two metrics, thus proving that they are blindly groping for something to publish in the Federal Register without clear direction or purpose. This supports the view of many in the higher education community that this matter should be left to Congress.
4. Failed to apply the regulation evenly and fairly across all of higher education
At a time when we should be discussing improving outcomes across all of higher education, the Department proposed a regulation that arbitrarily uses two metrics to determine program quality at a subset of institutions. If applied to all of postsecondary education, many institutions would be unable to meet the arbitrary debt-to-earnings ratio of 8 percent.
For example, programs offering a bachelor’s degree in education from the University of Michigan, a law degree from George Washington University Law School, or a bachelor’s degree in social work from Virginia Commonwealth University would all fail the Department’s debt-to-earnings metric.
5. Failed to heed the advice of others
Multiple leaders in postsecondary education have said that using earnings to determine program value is misguided. Comments include:
Nicholas Dirks, chancellor, University of California, Berkeley said schools should not be rated based on the earnings of their graduates.
Catharine B. Hill, president, Vassar College noted that a ratings system based on earnings ignores the fact that earnings often increase over time.
Drew Faust, president, Harvard University said looking at the salary a college graduate earns in his or her first job as a proxy for the value of a college education is a huge mistake.
During the negotiated rulemaking sessions, a number of negotiators expressed the view that colleges and universities cannot control the economy, the availability of jobs, where students choose to live and work or individual choices about borrowing.
6. Failed to follow their own research
An October 2013 National Center for Education Statistics (NCES) report found that 26 percent of bachelor’s degree recipients at public four-year institutions, who were repaying their loans, faced monthly loan payments greater than 12 percent of their monthly income. At private non-profit institutions, 39 percent exceeded the 12 percent debt-to-earnings threshold and 35 percent at private sector institutions exceeded the threshold. Yet the Department has proposed an 8 percent debt-to-earnings metrics threshold as the government standard for affordable debt.
7. Failed to have a representative negotiating committee of the very students and institutions impacted
Of the 28 representatives the Department selected for the negotiating committee, only four represented private sector colleges and universities. Several of the committee members were on-the-record opponents of the existence of private sector institutions.
Steve Gunderson, president and CEO of the Association of Private Sector Colleges and Universities released the following statement on the negotiated rulemaking session, “the cumulative actions of the Department will result in denying access to hundreds of thousands of students immediately and millions of students by the end of the decade. We hope that Secretary Duncan will see the error of the Department’s ways and stop this process before it becomes an economic nightmare for students and employers seeking skilled workers.”
The Wall Street Journal: Education Department Targets For-Profit Colleges
By Josh Mitchell
Dec. 12, 2013
WASHINGTON—As many as 20% of programs at for-profit colleges would lose revenue from student aid under a draft proposal the Obama administration is developing to rein in tuitions.
The plan, which the Education Department has spent months drafting, targets for-profit schools whose students end up deep in debt or default on their student loans at exceptionally high rates. The rules would also apply to community colleges that offer career training, and technical schools. Public and nonprofit four-year colleges and universities wouldn't be affected.
The department is set to meet with representatives of schools and student advocates Friday in hopes of winning broad support for the proposal, which could still be modified in the coming months.
For-profit schools have already voiced alarm about the emerging plan. The proposal would threaten revenues at major education companies such as DeVry Education Group Inc., DV +0.31% Corinthian Colleges Inc., COCO -0.62% Education Management Corp. EDMC +0.83% , which runs the Art Institutes; and Apollo Education Group Inc., APOL +0.97% which owns the University of Phoenix. At most for-profit schools, so-called Title IV funds—generally Pell grants and federal student loans—are the biggest source of revenue. The funds are awarded to students who use them to cover tuitions at the schools.
The administration is expected to formally propose a "gainful employment" plan early next year and have the rules in place by 2015. Under a version released this week, programs would lose Title IV funds if they failed one of several standards. The student-debt payments of their former graduates, on average, couldn't exceed 12% of their annual income or 30% of their discretionary income several years after they leave school. Also, the share of students defaulting on federal loans within three years of leaving a program couldn't reach 30%.
The administration estimates that under its latest draft proposal, roughly 13% of programs at for-profit schools and community colleges would fail. An analysis by BMO Capital Markets said that at for-profits alone, 1,400 programs, or roughly 20%, would fail.
An Education Department spokesman said the agency couldn't comment because it was still in talks with schools on the plan. Student advocates have long called for more-stringent rules at for-profit schools, whose students generally have higher levels of debt and default at higher rates than those at public or nonprofit schools. The administration has been working since 2009 to put in place "gainful employment" rules, but an initial version of the rule was struck down by a federal judge who deemed they were designed in an arbitrary way.
For-profit schools say they are being unfairly targeted, given that some of the highest student-debt burdens fall on those who attend public and nonprofit graduate schools, such as law and medical school. They say they serve many students—such as single mothers and many low-income students who don't live near a community college—who otherwise would have few, if any, options for attending postsecondary school. The administration has said the rules are being written under a law that applies only to for-profit schools and community colleges and institutions that offer career training programs.
Sally Stroup, executive vice president of government affairs at the Association of Private Sector Colleges and Universities, the sector's main lobbying arm, called the proposal "sweeping" and indicated the industry would oppose the new plan. She said many schools would be forced to close programs if they lost federal funding, which she said in turn would deny many students educational opportunities.
"This is just bad policy, and it's just something that's not workable," Ms. Stroup said.
Ben Miller, a senior policy analyst at think tank New America Foundation and a former senior policy adviser for the Obama Education Department, said the latest plan is needed to ensure students aren't taking on huge debt with no returns in the form of higher wages.
"The problem you have is there is some subset of programs in the career space that are leaving students with too much debt compared to their economic return," Mr. Miller said. "This is an area where students are much more likely to borrow, they are much more likely to take on larger amounts of debt and they're much more likely to not repay that debt."
Write to Josh Mitchell at joshua.mitchell@wsj.com
Dec. 12, 2013
WASHINGTON—As many as 20% of programs at for-profit colleges would lose revenue from student aid under a draft proposal the Obama administration is developing to rein in tuitions.
The plan, which the Education Department has spent months drafting, targets for-profit schools whose students end up deep in debt or default on their student loans at exceptionally high rates. The rules would also apply to community colleges that offer career training, and technical schools. Public and nonprofit four-year colleges and universities wouldn't be affected.
The department is set to meet with representatives of schools and student advocates Friday in hopes of winning broad support for the proposal, which could still be modified in the coming months.
For-profit schools have already voiced alarm about the emerging plan. The proposal would threaten revenues at major education companies such as DeVry Education Group Inc., DV +0.31% Corinthian Colleges Inc., COCO -0.62% Education Management Corp. EDMC +0.83% , which runs the Art Institutes; and Apollo Education Group Inc., APOL +0.97% which owns the University of Phoenix. At most for-profit schools, so-called Title IV funds—generally Pell grants and federal student loans—are the biggest source of revenue. The funds are awarded to students who use them to cover tuitions at the schools.
The administration is expected to formally propose a "gainful employment" plan early next year and have the rules in place by 2015. Under a version released this week, programs would lose Title IV funds if they failed one of several standards. The student-debt payments of their former graduates, on average, couldn't exceed 12% of their annual income or 30% of their discretionary income several years after they leave school. Also, the share of students defaulting on federal loans within three years of leaving a program couldn't reach 30%.
The administration estimates that under its latest draft proposal, roughly 13% of programs at for-profit schools and community colleges would fail. An analysis by BMO Capital Markets said that at for-profits alone, 1,400 programs, or roughly 20%, would fail.
An Education Department spokesman said the agency couldn't comment because it was still in talks with schools on the plan. Student advocates have long called for more-stringent rules at for-profit schools, whose students generally have higher levels of debt and default at higher rates than those at public or nonprofit schools. The administration has been working since 2009 to put in place "gainful employment" rules, but an initial version of the rule was struck down by a federal judge who deemed they were designed in an arbitrary way.
For-profit schools say they are being unfairly targeted, given that some of the highest student-debt burdens fall on those who attend public and nonprofit graduate schools, such as law and medical school. They say they serve many students—such as single mothers and many low-income students who don't live near a community college—who otherwise would have few, if any, options for attending postsecondary school. The administration has said the rules are being written under a law that applies only to for-profit schools and community colleges and institutions that offer career training programs.
Sally Stroup, executive vice president of government affairs at the Association of Private Sector Colleges and Universities, the sector's main lobbying arm, called the proposal "sweeping" and indicated the industry would oppose the new plan. She said many schools would be forced to close programs if they lost federal funding, which she said in turn would deny many students educational opportunities.
"This is just bad policy, and it's just something that's not workable," Ms. Stroup said.
Ben Miller, a senior policy analyst at think tank New America Foundation and a former senior policy adviser for the Obama Education Department, said the latest plan is needed to ensure students aren't taking on huge debt with no returns in the form of higher wages.
"The problem you have is there is some subset of programs in the career space that are leaving students with too much debt compared to their economic return," Mr. Miller said. "This is an area where students are much more likely to borrow, they are much more likely to take on larger amounts of debt and they're much more likely to not repay that debt."
Write to Josh Mitchell at joshua.mitchell@wsj.com
Politico: Latest gainful employment proposal
December 12, 2013
The Education Department sent a new proposal for the gainful employment rule and long-promised estimates of how many programs would be affected Wednesday evening. The 10-second version: It no longer uses the repayment rate and evaluates programs based on debt-to-income ratios and cohort default rates. It cut a provision that immediately ended federal financial aid eligibility for a program with a cohort default rate of more than 40 percent. And it would affect even more programs than the department’s initial proposal.
The Education Department sent a new proposal for the gainful employment rule and long-promised estimates of how many programs would be affected Wednesday evening. The 10-second version: It no longer uses the repayment rate and evaluates programs based on debt-to-income ratios and cohort default rates. It cut a provision that immediately ended federal financial aid eligibility for a program with a cohort default rate of more than 40 percent. And it would affect even more programs than the department’s initial proposal.
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