Gainful-Employment Regulations: Coming Soon to a Campus Near You

New regulations from the Department of Education, including the Program Integrity and proposed Gainful Employment regulations, essentially reduce the value of higher education to a single metric—the starting salary graduates earns in their first jobs.  Never mind the fact that, for most of us, our first job was neither indicative nor predictive of our lifetime earning potential, or that we wouldn’t have even gotten that entry level job if we didn’t have the credential that distinguished us from the other applicants. No—if a graduate’s first job doesn’t pay a salary that justifies the cost of the degree, then the program fails the test and students who depend on federal financial aid can’t enroll in it.

Sure, this time around the regulations are aimed at career and vocational programs, which serve as the primary point of entry into higher education for low-income students.  These programs and the students who benefit from them are a particularly easy target since study after study shows that students from low socioeconomic backgrounds struggle more than others, regardless of which institution they attend or what program of study they pursue. Policy makers know that low-income students have lower than average retention and graduation rates, because life sometimes gets in the way of school. Policy makers also know that low-income and non-traditional students borrow more than dependent, traditional students (even when they attend the same schools) because the parents of the former save, contribute or borrow less on behalf of those students than do parents of the latter.  It is not by accident that the metrics selected for the current regulatory effort are biased against a particular group of students.  But anyone who thinks this is where the regulations will end hasn’t spent very much time studying the Washington policy-making process.

You see, with a Pell grant shortfall approaching $6-billion, policy makers must find ways to reduce spending in this program, especially since they know that when stimulus funds run out, the Pell program will be reduced by nearly 50 percent back to its baseline size.   The only way to reduce spending is to either push students out of the program, or reduce the amount awarded to each eligible participant.  In other words, there are no good options.

This is a tough place to be for an administration that has told every American to complete at least one year of college.  It is much easier to say that institutions are failing students, and therefore they and the students they serve are being eliminated from the Title IV program, than it is to admit that the government is failing its citizens by providing them less support to earn the very credential that our leaders assert they will need to succeed in the future.

There is a reason that students are turning to private career colleges in record numbers, and it might just be that not only are these institutions happy to serve them (elite schools certainly don’t want to serve them and community colleges can’t always accommodate them), but also that these institutions work hard to provide the classes students want, at the times and through the modalities they need, with the support services they require, and in facilities that are attractive, clean, contemporary, well-equipped,  and conveniently located near public transportation or in areas where parking is both plentiful and convenient. The taxpayer has a right to know what they are getting for their investment, but to answer that question, I’d recommend visiting a private-sector campus near you, or exploring the elaborate and user-friendly online portals these schools have developed.

Rest assured that it won’t be long before policy makers and taxpayers also want to know what the precise return is on their investment in, for example, students who major in anthropology, psychology, gender studies, sociology, theater, music and just about any program that doesn’t guarantee a high-paying entry level job.  After all, the taxpayer spends far more on students in these programs than they do on students who enroll in career colleges.

While it might be fun to beat up on career schools—and the elite seem to be having a field day doing this based on a few sensationalized stories (that are frequently missing important details) and carefully selected (and, in some cases, manufactured) pieces of anecdotal evidence—soon this new level of scrutiny will be applied to every academic program and campus in our country.  Perhaps those who sought practical degrees in nursing or computer science or business will soon have just as much fun beating up on all of those programs that end with the word studies.

Of course, none of this helps students or solves the enormous challenges that we know low-income students face when they seek to improve their lives through higher education, nor does it help our economy recover or our young people prepare for the jobs that will someday be available to them.  If we are to begin enrolling students based solely on current or predicted workforce demands, then we had better be willing to close our colleges during economic recessions or learn how to accurately predict future needs and surpluses, because, to date, almost all of our predictions have been dead wrong.

Eventually low-income students will realize what these new regulations mean to them, and they will recognize the disconnect that exists between the message they keep hearing (that they must go to college if they want to succeed) and the reality they face (that the government no longer finds them, or the colleges that serve them, worthy of the investment).

I wonder how an elected official will tell a single mother that the government isn’t willing to invest in her so that she can get the credential she needs to secure stable employment in a well-established field where jobs actually exist, while at the same time she is expected to pay taxes that will enable a more-advantaged student to earn a bachelor’s degree in French literature, or theater or philosophy or history.  What is good for the goose will certainly soon be good for the gander, and the outcome could be catastrophic to our entire system of higher education.

One can only imagine the results when the gainful employment standard is applied to all academic programs.  We already know that Harvard and Johns Hopkins medical schools would fail the test if it were applied to them, and I suspect that all of those $200,000 (sticker price—$400,000 actual price) degrees in philosophy and anthropology will yield results that are even worse.  Let me be clear, I understand that these programs have real value and help build good citizens that can adapt to a changing job market.  But when starting salaries are used as the single proxy for institutional quality, many academic programs will fail the test.

Given the budget outlook and the troubled future predicted for the Pell grant program, I would encourage everyone in higher education to read the proposed gainful-employment regulation carefully and figure out whether your program could meet the standard, because surely this camel’s nose is more than a little bit under the higher education tent.

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