Comments to U.S. Department of Education on Gainful Employment Regulations

Ashley Higgins
US Department of Education
400 Maryland Ave, SW
Mail Stop 294-20
Washington, DC 20202

Re: Docket ID ED-2018-OPE-0042

Dear Ms. Higgins:

We write to oppose the US Department of Education’s (Department’s) proposal to eliminate the existing Gainful Employment regulations. It is the best safeguard we have in our current system to ensure consumers aren’t paying for programs that provide them little to no value. Rolling back these protections sends a clear message that the federal government does not care about students or taxpayers and the investment they make in our higher education system.

Higher education is one of the biggest investments someone can make in their lifetime. And the Gainful Employment regulations were designed to protect students and taxpayers from high-cost, low-quality programs doing little to improve access to economic opportunity. That’s why we emphatically support strengthening—not eliminating—the existing Gainful Employment regulations to ensure that we’re holding programs accountable for equipping students with skills worthy of their investment.

The recent decision by the Department to rescind the existing Gainful Employment rule in favor of simply adding program-level earnings data to the College Scorecard represents a huge step backward in the federal government’s ability to provide proper oversight of programs that provide little to no value for students. While students deserve useful and relevant data when making important decisions about their postsecondary plans, the Department’s current plan to enhance the College Scorecard with program-level data at the expense of the greater Gainful Employment rule is insufficient, illogical, and dangerous.

Eliminating important student and taxpayer protections for the sake of regulatory relief will do nothing to ensure that institutions only offer programs that are proven to equip students with high-quality credentials and real-world skills. Transparency alone is not an effective substitute for the existing Gainful Employment regulation, which protects millions of prospective students from becoming paralyzed by the financial burden of having unmanageable debt after graduating from a low-quality higher education program.

In particular, we believe the actions to roll back the Gainful Employment regulations are misguided for the following reasons:

The Gainful Employment Rule currently protects students from the worst of the worst institutions. The number one reason why students go to college is so that they can get a job that will allow them to live a secure and stable life.¹ Yet this past year, 803 programs failed the Gainful Employment metric due to their former students not earning a sufficient salary to pay down their educational debt. Out of the programs that failed nationwide, 114 of these programs actually had the majority of their graduates earning below the federal poverty line ($11,880 annually).² It is illogical for the Department to allow the continued flow of federal dollars to college programs that leave students with such low salaries and insurmountable debt loads, especially when analyses have shown that similar programs are able to provide students with wildly different outcomes.³

The Gainful Employment rule is currently one of the only accountability measures we have in place at the federal level to protect students from low-quality programs. Gainful Employment was put in place to ensure that students entering a career education program are provided with the necessary skills to find employment and pay down their federal loans after graduation. And other than the Cohort Default Rate (which sanctioned only ten institutions last year) and the accreditation process (which does little to ensure good student outcomes), Gainful Employment has served as the only other mechanism the federal government has at its disposal to hold low-performing institutions accountable for poor student outcomes.⁴ That’s why removal of this regulation would allow even the worst-performing programs to continue accessing taxpayer funds in the form of federal student aid, thereby jeopardizing the welfare of students, taxpayers, and the federal budget. Simply replacing Gainful Employment with a transparency measure alone will let low-performing programs off the hook and continue to allow students to take on debt for programs that are not worthy of their investment.

The Gainful Employment rule currently safeguards taxpayer dollars. Each year, the federal government disburses $120 billion in federal student aid to colleges and universities—including $30 billion in Pell Grants alone for low- and moderate-income students.⁵ This investment is intended to enable hard-working Americans to acquire the skills they need to succeed in the new economy. If career education programs do not increase opportunities for their students, we should not use taxpayer dollars to fund them. Having key regulations in place like the Gainful Employment rule ensures that only higher education programs with proven track records of improving students’ lives will receive this collective investment. The decision to eliminate Gainful Employment is equivalent to handing a blank check of taxpayer dollars to programs that bring no benefit to students, to the tune of $5.3 billion over the next decade in the form of grants and loans to failing programs.

Transparency alone is not enough to protect students and taxpayers. It is critical to give students the best information on institutions and programs, but better data alone is insufficient to prevent students from attending programs that fail to equip them with the skills they need to earn a decent living and pay down their loans. In fact, even with the current disclosures provided to students in Gainful Employment programs, 111,886 students still enrolled and graduated from programs that left them earning below the federal poverty line within two to four years after completing their studies.⁶ And while providing program-level data is a step in the right direction, information on college outcomes may be the least likely to reach those who enroll in career education programs. A 2017 College Board study indicates that the students who were most likely to use federal data within their decision-making process were upper-income students from well-resourced schools.⁷ However, those who attend career education programs covered by the Gainful Employment rule are often adult learners, first-generation, and/or lower-income students.

Being that the Department has also eliminated the requirement for institutions to provide information on program-level outcomes directly to prospective students, it seems even more unlikely that providing data alone through the College Scorecard would create an effective market-based accountability system, as the Department has suggested it will. That’s why transparency works best when it is paired with accountability that can improve outcomes for students. Prior research shows that when low-performing schools lost access to federal aid and closed due to federal sanctions under the Cohort Default Rate rule, students shifted their enrollment patterns to better-performing community colleges.⁸ Therefore, if the accountability measures in Gainful Employment were kept in place, it’s likely that students within failing programs would ultimately seek out programs that displayed a higher likelihood of success, benefiting them and the taxpayer, writ large.

The Department wrongly interpreted its main justification for rescinding the Gainful Employment rule. Within its Notice of Proposed Rulemaking, the Department states that their proposal to rescind the Gainful Employment regulation is based on “research results that undermine the validity of using the regulations’ debt-to-earnings rates to determine eligibility for Title IV participation.” The main research that the Department referenced was a 2006 study by Baum and Schwartz, which was used to establish the debt-to-earning metrics within the 2014 regulation.⁹ Specifically, the Department questioned the reasonableness of using the eight percent threshold as a critical test of purported program performance. However, the main author of the study, Sandy Baum, Ph.D., has said publicly that the Department has misrepresented her research within its Federal Register notice. In fact, Dr. Baum states that the paper cited by the Department presents evidence that would support making the Gainful Employment rule stronger. ¹⁰ Being that the Department misinterpreted its main justification for rescinding the rule, it’s prudent that it keep the debt-to-earnings measure in place as a way to determine program participation in the Department’s title IV programs. We encourage the Department to properly analyze the rigorous research that exists to better ensure students are protected using evidence-based policy.

In closing, as millions of new and returning students head off to college this month, they are hopeful that their investment in higher education will result in a better life for them and their families. But for far too many of them, this bet on making it through the postsecondary pipeline never pans out. It is critical we have strong minimum federal accountability standards in place to make sure our institutions of higher education provide the value students need to graduate, get good jobs, and repay their loans. Gainful Employment is one of the only key consumer protections we have, and eliminating it would move us further away from this promise—directly harming more students and taxpayers in the process.

If you have any questions regarding my comments or would like to discuss further, please don’t hesitate to reach out to me at [email protected].

Sincerely,
Lanae Erickson
Vice President, Third Way