By Henry Kronk August 11, 2018
On Friday, Secretary of Education Betsy DeVos announced plans to all but do away with Obama era regulations imposed on for-profit colleges to faithfully report on and help secure gainful employment for their graduates.
Under current policy, the DoE measures gainful employment by looking at a college’s graduates’ debt-to-earnings. Regulators look at two metrics: annual earnings rate and discretionary income rate. The first calculates the percent of a graduate’s annual salary that goes to loan repayment. The second calculates the annual loan repayment as a ratio to a graduates’ average earnings “minus 150% of the poverty guideline.”
For both figures, a rate or percentage of 8% is considered passing. Rates in excess of 12% are considered failing. In other words, if a graduated class pays on average more than 12% of their annual earnings in student loans every year, the DoE will remove access to Title IV Federal Aid—the means by which many for-profits take in 90%+ of their total income.
But all this will change. “Students deserve useful and relevant data when making important decisions about their education post-high school,” said U.S. Secretary of Education Betsy DeVos in a statement. “That’s why instead of targeting schools simply by their tax status, this administration is working to ensure students have transparent, meaningful information about all colleges and all programs. Our new approach will aid students across all sectors of higher education and improve accountability.”
DeVos’ proposed rule will now require non-profits as well as for-profits to report debt to earnings statistics, among other metrics. But it will no longer determine eligibility for Title IV funds.
DeVos has allowed for a 30-day period of public comment during which individuals can weigh in either for or against the measure. If nothing changes, the rescission of gainful employment regulations will go into effect July 1, 2019.
In the corners of the internet where liberals, educators, and regulators frequent, there was an outpouring of anger and resistance to the rescission.
“Profits before people—@BetsyDeVosEd is back at it,” tweeted Army veteran and Virginia House Democratic Candidate Dan Helmer. “This move will hurt tens of thousands of Americans each year, including many of our troops.”
Many other reactions fell into the ‘this is bad’ category. But amongst think tanks, for-profit industry insiders, and conservative media outlets, there was a more nuanced picture to be painted.
— Dan Helmer (@HelmerVA) August 11, 2018
That’s according to Robert Shireman, a former Obama DoE employee who worked to bring the gainful employment regulations into effect. “Absent the gainful employment rules, even the worst-performing for-profit colleges will be held to lower standards than public and nonprofit schools, which have strict financial controls to prevent the misuse of federal funds,” stated Shireman, who now is a senior fellow at The Century Foundation. “We have reams of evidence documenting predatory recruiting and abuse in the for-profit sector, including 130,000 borrowers who have filed fraud complaints—more than 98 percent about for-profit colleges. But rather than hold those schools accountable, Betsy DeVos is choosing to transfer billions of dollars into the coffers of their investors.”
.@Bob_Shireman: "Absent the gainful employment rules, even the worst-performing for-profit colleges will be held to lower standards than public and nonprofit schools, which have strict financial controls to prevent the misuse of federal funds." pic.twitter.com/nNS7fSFZaX
— The Century Foundation (@TCFdotorg) August 10, 2018
That’s what Steve Gunderson, president of Career Education Colleges and Universities (a for-profit education trade association), told the New York Times. “The other side should declare victory and go home,” he said. “The reality is every school that has a program that was failing gainful employment metrics — and they knew it couldn’t be fixed — they’ve already closed. The sector today is so much better.”
He also pointed out that, since the regulations went into effect in 2010, nearly half of all for-profit schools have closed and enrollment has plummeted.
Perhaps strangest of all, this reaction comes from conservative media outlets. While the issue received massive coverage and interest throughout the liberal media, no mention was made of it on Fox News, The Wall Street Journal, Townhall, Breitbart, The National Review or the Daily Caller.
Some insight could be gleaned from the comment section on a Daily Signal editorial that ran mid-July which argued for removing regulations on for-profit education. “Mrs DeVos needs to notify the President and Congress that the Dept of Education is a waste of taxpayer money and all of its responsibility and authority and money needs to be returned to the states where the rightly belong. I.e, close that sucker down,” writes Rvsforever. The vast majority of the 50 other comments reflected similar opinions.
Cover Image: Wikimedia Commons.