How to Turn the Corner on Gainful Employment
Inside Higher Education published an interesting piece this week on the recent research and data made public by the Texas Public Policy Foundation regarding the potential impact of a gainful employment/debt-to-income regulation. As a higher education policy lawyer who has spent a significant part of my career involved in some capacity with the various iterations of gainful employment, this new data doesn’t surprise me. Indeed, it is confirming. As a participant at the U.S. Department of Education’s last negotiated rulemaking on gainful employment, I (and others) focused on a couple of important tenants.
First, any accountability metric should apply to all institutions, not applied primarily by tax-status. The U.S. is fortunate to have so much diversity and innovation in its institutions – we should be motivated to keep institution doors open when they do a good job increasing access and advancement. One fear I had from the gainful rule was that it could unintentionally expand the already wide socio-economic and elitist divide. Of course, bad actors’ doors need to be shut quickly – no question - but that determination should not be made using a single simplistic three-year debt-to-earnings metric, regardless of degree level or program type. Our higher education system is too complex for such simplicity and anything we do from a policy perspective should work to ensure access.
Second, if the purpose of creating an accountability metric is to protect ALL students, then it should be applied to ALL institutions and programs. And this is where the gainful metric really fell apart. How can a single three-year debt-to-income metric be applied across all programs - non-degree through graduate degree and HVAC technician through law or medical school? Likewise, as the article points out, students at public institutions have less debt solely because taxpayer dollars are subsidizing that education cost in a different manner. It certainly doesn’t mean that all public institutions are better than non-profit, private or for-profit ones.
At the negotiating table, therefore, we all struggled. Each of us was motivated by the same causes – protecting students and providing new useful data to inform them prior to enrollment.
I’ve had many years now in the trenches to think about gainful employment and higher education policy more broadly. Here’s what I think. These post-experience accountability metrics are like putting a band-aid on a gaping open, bloody and, possibly mortal wound that student debt has created. We need to turn our attention to the root causes of student debt (which can also cause bad behavior by schools). Informed by the data released today and also from the updated scorecard, I encourage federal policymakers, institutions and student groups to focus on the following concepts to help cure the actual disease that too much debt has created:
Encourage appropriate innovation in the higher education marketplace, which often results in lower cost and more access. Institutions need to be able to adjust and adapt to changing industry/employer and student needs. Regulators need to help them, not block them. For example, competency-based education is here and now and needs better understanding and embracement. When done well and with strong faculty engagement, the programs often take less time and cost less for students.
Take some federal responsibility for the student debt crisis – it’s not just the institutions or the students’ fault. Free college is NOT the answer, except for the lowest income students, because burdening the taxpayer and states to fully fund public institutions will dumb down the quality of those institutions and restrict their ability to innovate. At the same time, non-profit, private institutions might become even more elite, thereby increasing the great socio-economic divide. Instead, I offer the following. The federal government must limit borrowing amounts for living expenses. I worry about the percentage of student debt attributed to living expenses, as opposed to tuition and fees. Likewise, GradPLUS loans need reform – specifically, a potential aggregate limit and/or a need-based eligibility component. As was pointed in another article this week, the degree of graduate degree debt is skyrocketing and hurting students in disparate ways. In my view, this results in large part from the federal government’s currently open spigot.
Keep an open mind toward new private financing tools. Whereas I suggest limiting federal borrowing, there may be other, better means by which students can pay for college. Employers and capital investors have potentially new and innovative roles to play. For example, Income Share Agreements (ISA) deserve better understanding.
Finally, I close where I started – accountability. If we want to root out and bad actors and over-borrowing, examining both completion rates and student persistence is where to focus, not on post-schooling debt levels. Data shows completing a degree ultimately raises the likelihood of paying off debt.
To use an old expression, solving this crisis “takes a village”, without finger pointing or assignment of blame. Let’s get at it together.