Many for-profit businesses would fail if paid employment rule changes
According to a new study released Wednesday by the Institute for College Access and Success, under the paid employment rule proposed by the Biden administration, 40% of programs at for-profit colleges would fail, potentially risking their ability to qualify. for federal student aid.
Under the proposed change, the study found nearly double the number of for-profit colleges would not meet paid employment standards compared to the original 2014 rule.
“The basic economics of a college education, even if a student does not complete it, is believed to be associated with higher earnings than if that student had not attended college at all,” Marshall Anthony said. , research director at TICAS. “Failing GE programs, especially the disproportionately large share of failing GE programs at for-profit institutions, actually don’t guarantee students an adequate return on their education.”
Proposed Changes to Gainful Employment
Gainful employment is a metric used by the Department of Education to measure whether college graduate student debt leaves college with is proportional to their relative earnings. This measure is used to ensure that college graduates do not take on unaffordable levels of student debt and also to determine which programs lead to high-paying jobs.
For a program to meet the gainful employment rule, it had to prove that graduate student loan repayments were less than 8% of their total income. If a program’s average graduate debt-to-income ratio was above 12%, the program would fail to gain gainful employment, and if it continued to fail for two years, it risked losing eligibility. with federal aid.
The first paid employment rule was revoked under the Trump administration in 2019, removing that control over educational program outcomes. Proponents of gainful employment argued that without the metric, colleges – especially for-profit colleges – could not be assessed to ensure graduates were placed in jobs with the earnings necessary to cover their student debt.
“I think there’s a lot of concern, obviously, that some programs consistently lead to poor outcomes for their students and that there shouldn’t be programs that lead to poor outcomes for their students,” said Jon Fansmith, Assistant Vice President. in government relations at the American Council on Education. “So in terms of paid employment as a tool to prevent that from happening, I think colleges and universities are supportive of that.”
In January, the Department of Education proposed reinstating the paid employment measure. As part of this proposal, the department recommended comparing the earnings of graduates to those of high school graduates in their states. Under this system, the income of a general education graduate would be compared to that of a 25-year-old with a high school diploma, as opposed to the debt-to-income ratio formerly used. (The research is done on graduates as a whole, not individually.)
The Department of Education has been negotiating with stakeholders to reach consensus on the final wording of the new paid employment rule through the Negotiated Rulemaking process, which is expected to be completed by the end of the summer. The ministry is not expected to reach agreement with higher education officials on this issue.
Some have argued that the proposed change does not provide equal accountability across all sectors of higher education.
“It’s not an apples-to-apples comparison and the [Education] The department knows that,” said Jason Altmire, president of Career Education Colleges and Universities, which represents for-profit colleges. “We absolutely support accountability that applies to all levels, all schools and all sectors, but we oppose paid employment as it is currently conceived.”
Other main findings
- Under the proposed new rule, half of general education programs leading to a certificate or diploma would fail under the old parameters.
- In for-profit companies, almost 70% of undergraduate general education programs leading to a certificate or diploma would fail.
One concern about the study’s findings is its impact on black and Latino students, who attend for-profit institutions in greater numbers and have higher debt burdens.
“The extremely concerning success and failure rates of the 2014 GE Rule, particularly in for-profit businesses, highlight an aspect of systematic inequality,” Anthony said. “Students of color are disproportionately burdened with debt incurred for attending programs that do not meet the GE rule.”
During the pandemic, enrollment in general education programs at for-profit institutions in the 2019-2020 academic year was 90% black and Latino students. General education programs have typically been offered by institutions that disproportionately enroll more low-income students, such as for-profit and community colleges.
Proponents of general education argue that re-enforcing this rule will help resurface this data on accountability to the Department of Education so that there can be a greater focus on equity with curriculum outcomes. .