Last week the U.S. Department of Education released the final version of its highly controversial, long-anticipated “gainful employment” regulations, which are designed to crack down on abuses in the for-profit higher-education industry. While the Department kept the basic structure and theory of the regulatory structure first announced last year, many of the specific parameters were loosened in ways that make the regulations less onerous. The minimum loan repayment rate is lower, the allowable debt-to-income ratio is higher, there’s a phase-in period, a “three strikes” procedure, a longer assumed loan amortization time frame, and so forth.
This has caused a fair amount of consternation among critics of the for-profit industry. ThinkProgress said that “Lobbyists Successfully Compel Education Dept. to Significantly Water Down Regulations for Subprime Schools.” The Education Trust indignantly declared that “The Obama administration’s new ‘gainful employment’ regulation is a disappointing stumble on America’s path toward regaining the global lead in college attainment.” HigherEdWatch voiced concern that the phase-in period may be a “fatal flaw.”
Taken individually, many of these critiques are accurate. There’s no doubt that the massive, multi-million dollar lobbying campaign waged by the for-profit industry had an effect on the final regulations. That’s politics for you. Stephen Burd is right to be concerned that the phase-in period increases the risk of opponents killing the regulations before they take hold.
But there’s also a real lack of perspective among the more outraged anti-for-profit critics. For half a century, the federal government has been handing out untold billions of dollars to colleges with no real quality-control mechanism other than “if you’re accredited by someone, somehow, we trust you.” Now, for the first time, it has decided to judge colleges not by their inputs and processes but by what actually happens to their students after graduation. And if student outcomes aren’t good enough—if they can’t pay back their loans on time or can’t get a good job that provides a decent salary—then colleges won’t have access to massive amounts of taxpayer support.
This is a historic change. One can fairly argue that some specific parameter is too weak. But the most important thing is to establish the principle and build the underlying structure of regulation and data collection on which the parameters are based. Once the Department of Education settles into this new role and establishes procedures for collecting data about employment outcomes, it will be hard to un-settle. Parameters can be adjusted and new methods of asking important questions about student outcomes can be developed. That’s why the for-profit industry has waged a scorched-earth lobbying campaign against the regulations. This is a major step, not a stumble, one that will have important benefits for students attending colleges of all kinds.
