Why the Next Secretary of Education Should Come from Higher Ed

Elizabeth Warren is one of several Democratic presidential candidates who is highlighting education as a key policy issue in their campaigns. A few weeks after announcing an ambitious proposal to forgive nearly half of all outstanding student debt and strip for-profit colleges’ access to federal financial aid (among other issues), she returned to the topic in advance of a town hall event with the American Federation of Teachers in Philadelphia. In a tweet, Warren promised that her Secretary of Education would be a public school teacher.

This would be far from unprecedented: both Rod Paige (under George W. Bush) and John King (under Barack Obama) were public school teachers. But if Warren or any other Democrat wants to influence American education to the greatest extent possible, the candidate should appoint someone from higher education instead of K-12 education. (The same also applies to Donald Trump, who apparently will need a new Secretary of Education if he wins a second term.) Below, I discuss a few reasons why ED’s next leader should come from higher ed.

First, the Every Student Succeeds Act, signed into law in 2015, shifted a significant amount of power from ED to the states. This means that the federal government’s power in K-12 education has shifted more toward the appropriations process, which is controlled by Congress. Putting a teacher in charge of ED may result in better K-12 policy, but the change is likely to be small due to the reduced amount of discretion.

Meanwhile, on the higher education side of the ranch, I still see a comprehensive Higher Education Act reauthorization as being unlikely before 2021—even though Lamar Alexander is promising a bill soon. I could see a narrowly-targeted bill on FAFSA simplification getting through Congress, but HEA reauthorization is going to be tough in three main areas: for-profit college accountability, income-driven student loan repayment plans, and social issues (Title IX, campus safety, and free speech). Warren’s proposal last month probably makes HEA reauthorization tougher as it will pull many Senate Democrats farther to the left.

This means that ED will continue to have a great amount of power to make policy through the negotiated rulemaking process under the current HEA. Both the Obama and Trump administrations used neg reg to shape policies without going through Congress, and a Democratic president is likely to rely on ED to undo Trump-era policies. Meanwhile, a second-term Trump administration will still have a number of loose ends to tie up given the difficulty of getting the sheer number of regulatory changes through the process by November 1 of this year (the deadline to have rules take effect before the 2020 election).

I fully realize that promising a public school teacher as Secretary of Education is a great political statement to win over teachers’ unions—a key ally for Democrats. But in terms of changing educational policies, candidates should be looking toward higher education veterans who can help them reshape a landscape in which there is more room to maneuver.

Why Negotiated Rulemaking Committees Should Include a Researcher

The U.S. Department of Education officially unveiled on Monday the membership committees for its spring 2019 negotiated rulemaking sessions on accreditation and innovation. This incredibly ambitious rulemaking effort includes subcommittees on the TEACH Grant, distance education, and faith-based institutions and has wide-ranging implications for nearly all of American higher education. If all negotiators do not reach consensus on a given topic (the most likely outcome), ED can write regulations as it sees fit. (For more on the process, I highly recommend Rebecca Natow’s great book on negotiated rulemaking.)

The Department of Education is tasked with selecting the membership of negotiated rulemaking committees and subcommittees by choosing from among people who are nominated to participate by various stakeholders. Traditionally, ED has limited the positions to those who are representing broad sectors of institutions (such as community colleges) or affected organizations (like accrediting agencies). But given the breadth of the negotiations, I felt that it was crucial for at least one researcher to be a negotiator.

I heard from dozens of people both online and offline in support of my quixotic effort. But ED declined to include any researchers in this negotiated rulemaking session, which I find to be a major concern.

Why is the lack of an academic researcher such a big deal? First of all, it is important to have an understanding of how colleges may respond to major changes in federal policies. Institutional stakeholders may have a good idea of what their college might do, but may be hard to honestly explain unintended consequences when all negotiations are being livestreamed to the public. Including a researcher who is not representing a particular sector or perspective provides the opportunity for someone to speak more candidly without the potential fear of reprisal.

Additionally, the Department of Education’s white papers on reform and innovation (see here and here) did not demonstrate full knowledge of the research on the areas to be negotiated. As I told The Chronicle of Higher Education:

“In general, ED didn’t do an awful job describing the few high-quality studies that they chose to include, but they only included a few quality studies alongside some seemingly random websites. If one of my students turned in this paper as an assignment, I would send it back with guidance to include more rigorous research and fewer opinion pieces.”

Including a researcher who knows the body of literature can help ensure that the resulting regulations have a sound backing in research. This is an important consideration given that the regulations can be challenged for either omitting or misusing prior research, as is the case with Sandy Baum’s research and the gainful employment regulations. Including a researcher can help ED get things right the first time.

In the future, I urge the Department of Education to include a spot in negotiated rulemaking committees for a researcher. This could be done in conjunction with professional associations such as the American Educational Research Association or the Association for Education Finance and Policy. This change has the potential to improve the quality of regulations and reduce the potential that regulations must be revised after public comment periods.

The only alternative right now is for someone to show up in Washington on Monday morning—the start of the semester for many academics—and petition to get on the committee in person. While I would love to see that happen, it is not feasible for most researchers to do. So I wish negotiators the best in the upcoming sessions, while reminding the Department of Education that researchers will continue to weigh in during public comment periods.

Which Strings Will States Attach to Free College Programs?

There is plenty of uncertainty about exactly how the upcoming midterm elections (enough nasty campaign ads already, everyone!) will shake out at the state and federal levels. Regardless of the outcomes, the idea of tuition-free college will continue to be discussed across both conservative and liberal states. But one thing is becoming clear: states are exploring a range of restrictions as they begin to adopt programs. In this post, I discuss some of the restrictions in today’s programs (see this Education Trust report for a more thorough treatment from an advocacy perspective) and some of the restrictions that I would not be surprised to see going forward.

Currently, there are four types of restrictions that exist across many current and proposed programs. The first one is the type of institution that students can attend. Most tuition-free college programs cover community colleges only due to the higher price tag of covering four-year colleges. (New York’s Excelsior program skirts this somewhat by not covering fees, which are substantial in the state.)

The second restriction is based on family income, since the last-dollar nature of tuition-free college programs means that programs become much more expensive up the income distribution. New Jersey’s new program, which covers tuition and fees at 13 of the state’s 19 community colleges, set an income cutoff of $45,000 per year to stretch limited state funds. But the state set up an income cap that low to allow for two other common restrictions (the age of the student and enrollment intensity) not to apply there. Other states, however, limit their programs to full-time students straight out of high school (and this is also common for standard grant aid programs).

Two other restrictions have popped up in a small number of states, and I would not be surprised to see them expand to other states that are considering tuition-free college programs. The programs in New York and Rhode Island require students to stay in state after college for a number of years or the grant converts into a loan (the dreaded “groan” in financial aid lingo). A few other states, such as Kentucky, have discussed limiting tuition-free programs to certain high-demand majors to better meet state workforce needs. This is similar to how some states provide additional money in their performance-based funding systems for each STEM major who graduates.

The intersection of the power of the phrase “free college” and concerns about the state’s return on investment is likely to result in even more restrictions appearing in states’ new programs. West Virginia saw a proposed program pass the state Senate (but see no action in the House) in 2018 that would have included both a residency requirement and a drug test requirement—something that does not apply to other types of financial aid the state gives. Students would have had to pay for the drug test, which would have kept down the price tag.

While I was on a panel on free college at the Brookings Institution earlier this fall, one idea came to my mind during the discussion. I said that I would not be surprised to see legislators propose that free college come with a clawback provision that pulls the money back if a student does not graduate within a certain number of years. This would be an incredibly painful provision for students who do not finish college for a variety of reasons, but it would be popular among budget hawks. States are also likely to set high initial academic requirements in the future (such as high school grades and ACT/SAT scores), essentially turning existing merit aid programs into new “free college” programs.

The 2019 legislative season is likely to bring dozens of free college proposals of various types across states, even as higher education policy gridlock remains likely in Washington. My request for states is that they be open to having their programs, particularly those with new restrictions, be evaluated by researchers so they can be improved going forward as needed.

Will The K-12 Teacher Walkouts Affect Public Higher Education?

Perhaps the most interesting education policy development to this point in 2018 has been the walkouts by public school teachers in three states (Kentucky, Oklahoma, and West Virginia) that have resulted in thousands of schools being closed as teachers descended on statehouses to demand better pay. These job actions (which are technically not strikes in some states due to labor laws, but operate in the same way) have been fairly successful for teachers to this point. West Virginia teachers received a five percent pay increase to end their walkout, while Oklahoma teachers received a pay increase of about $6,000. Kentucky teachers had rather limited success, while Arizona is on the verge of a teacher walkout later this week.

Given the success of these walkouts in politically conservative states, it is reasonable to expect K-12 public school teachers in other states to adopt the same tactics to increase their salaries or education funding in general. But what might these walkouts mean for public higher education? I present four possible scenarios below.

Scenario 1: Future K-12 teacher walkouts are ineffective. It’s probably safe to say that legislators in other states are strategizing about how to respond to a potential walkout in their state. If legislators do not want to increase K-12 education spending and can maintain a unified front, it’s possible that protests die out amid concerns that closing schools for days at a time hurts students. In that case, expect no implications for public higher education.

Scenario 2: Public college employees join the walkout movement. Seeing the victories that K-12 teachers have scored, faculty and staff walk out at public colleges in an effort to secure more higher education funding. While this could theoretically work, public support is likely to be much weaker for colleges and universities than K-12 teachers. Republicans in particular now view college professors far more skeptically than Democrats, while the two parties view K-12 public schools similarly. So this probably won’t work too well in conservative states.

Scenario 3: Future K-12 teacher walkouts are effective—and paid for by tax increases. Oklahoma paid for its increase in teacher salaries by increasing taxes in a number of different areas, although teachers wanted a capital gains tax exemption to be eliminated. This probably reduces states’ ability to raise additional revenue in the future—which could affect public colleges—but the immediate effects on public colleges should be pretty modest.

Scenario 4: Future K-12 teacher walkouts are effective—and paid for by reducing state spending in other areas. This is the nightmare scenario for public higher education. Higher education has traditionally been used as the balancing wheel in state budgets, with the sector being the first to experience budget cuts due to the presence of tuition-paying students. Therefore, in a zero-sum budget game without tax increases, more K-12 spending may come at the expense of higher education spending. West Virginia paid for its teacher pay increase this year in part by cutting Medicaid spending, but don’t expect most states to take that path in the longer term.

To sum up, the higher education community should be watching the K-12 walkouts very closely, as they could affect postsecondary students and faculty. And there may end up being some difficult battles in tax-averse states between K-12 and higher education advocates about how to divide a fixed amount of funds among themselves.

Why Accountability Efforts in Higher Education Often Fail

This article was originally published at The Conversation.

As the price tag of a college education continues to rise along with questions about academic quality, skepticism about the value of a four-year college degree has grown among the American public.

This has led both the federal government and many state governments to propose new accountability measures that seek to spur colleges to improve their performance.

This is one of the key goals of the PROSPER Act, a House bill to reauthorize the federal Higher Education Act, which is the most important law affecting American colleges and universities. For example, one provision in the act would end access to federal student loans for students who major in subjects with low loan repayment rates.

Accountability is also one of the key goals of efforts in many state legislatures to tie funding for colleges and universities to their performance.

As a researcher who studies higher education accountability – and also just wrote a book on the topic – I have examined why policies that have the best of intentions often fail to produce their desired results. Two examples in particular stand out.

Federal and state failures

The first is a federal policy that is designed to end colleges’ access to federal grants and loans if too many students default on their loans. Only 11 colleges have lost federal funding since 1999, even though nearly 600 colleges have fewer than 25 percent of their students paying down any principal on their loans five years after leaving college, according to my analysis of data available on the federal College Scorecard. This shows that although students may be avoiding defaulting on their loans, they will be struggling to repay their loans for years to come.

The second is state performance funding policies, which have encouraged colleges to make much-needed improvements to academic advising but have not resulted in meaningful increases in the number of graduates.

Based on my research, here are four of the main reasons why many accountability efforts fall short.

1. Competing initiatives

Colleges face many pressures that provide conflicting incentives, which in turn makes any individual accountability policy less effective. In addition to the federal government and state governments, colleges face strong pressures from other stakeholders. Accrediting agencies require colleges to meet certain standards. Faculty and student governments have their own visions for the future of their college. And private sector organizations, such as college rankings providers, have their own visions for what colleges should prioritize. (In the interest of full disclosure, I am the methodologist for Washington Monthly magazine’s college rankings, which ranks colleges on social mobility, research and service.)

As one example of these conflicting pressures, consider a public research university in a state with a performance funding policy that ties money to the number of students who graduate. One way to meet this goal is to admit more students, including some who have modest ACT or SAT scores but are otherwise well-prepared to succeed in college. This strategy would hurt the university in the U.S. News & World Report college rankings, which judge colleges in part based on ACT/SAT scores, selectivity and academic reputation.

Research shows that students considering selective colleges are influenced by rankings, so a university may choose to focus on improving their rankings instead of broadening access in an effort to get more state funds.

2. Policies can be gamed

Colleges can satisfy some performance metrics by gaming the system, instead of actually improving their performance. The theory behind many accountability policies is that colleges are not operating in an efficient manner and that they must be given incentives in order to improve their performance. But if colleges are already operating efficiently – or if they do not want to change their practices in response to an external mandate – the only option to meet the performance goal may be to try to game the system.

An example of this practice is with the federal government’s student loan default rate measure, which tracks the percentage of borrowers who default on their loans within three years of when they are supposed to start repaying their loans. Colleges that are concerned about their default rates can encourage students to enroll in temporary deferment or forbearance plans. These plans result in students owing more money in the long run, but also they push the risk of default outside the three-year period that the federal government tracks, which essentially lets colleges off the hook.

3. Unclear connections

It’s hard to tie individual faculty members to student outcomes. The idea of evaluating teachers based on their students’ outcomes is nothing new; 38 states require student test scores to be used in K-12 teacher evaluations, and most colleges include student evaluations as a criterion of the faculty review process. Tying an individual teacher to a student’s achievement test scores has been controversial in K-12 education, but it is far easier than identifying how much an individual faculty member contributes to a student’s likelihood of graduating from college or repaying their loans.

For example, a student pursuing a bachelor’s degree will take roughly 40 courses during their course of study. That student may have 30 different professors over four or five years. And some of them may no longer be employed when the student graduates. Colleges can try to encourage all faculty to teach better, but it’s difficult to identify and motivate the worst teachers because of the elapsed time between when a student takes a class and when he or she graduates or enters the workforce.

4. Politics as usual

Even when a college should be held accountable, politics often get in the way. Politicians may be skeptical of the value of higher education, but they will work to protect their local colleges, which are often one of the largest employers in their home states. This means that politicians often act to stop a college from losing money under an accountability system.

The ConversationTake for example Senate Majority Leader Mitch McConnell, R-Ky., who was sympathetic to the plight of a Kentucky community college with a student loan default rate that should have resulted in a loss of federal financial aid. He got a provision added to the recent federal budget agreement that allowed only that college to appeal the sanction.

A Poor Way to Tie the Pell Grant to Performance

“Groan” is a word that is typically used to describe something that is unpleasant or bad. But in the language of student financial aid, “groan” has a second meaning—a grant that converts to a loan if students fail to meet certain criteria. The federal TEACH Grant to prospective teachers and New York’s Excelsior Scholarship program both have these clawback requirements, and a 2015 GAO report estimated that one-third of TEACH Grants had already converted into loans for students who did not teach in high-need subjects in low-income schools for four years.

Republican Reps. Francis Rooney (FL) and Ralph Norman (SC) propose turning the Pell Grant into a groan program through their Pell for Performance Act, which would turn Pell Grants into unsubsidized loans if students fail to graduate within six years. While I understand the representatives’ concerns about students not graduating (and thus reducing—but not eliminating—the return on investment to taxpayers), I see this bill as a negative for students and taxpayers alike.

Setting aside the merits of the idea for a minute, I’m deeply skeptical that the Department of Education and student loan servicers can accurately manage such a program. With a fair amount of difficulty managing TEACH Grants and income-driven repayment plans, I would expect a sizable number of students to incorrectly have Pell Grants convert to loans (and vice versa). I appreciate these two representatives’ faith in Federal Student Aid and servicers to get everything right, but that is a difficult ask.

Moving on to the merits of the idea, I am concerned about the implications of converting Pell Grants to a loan for students who left college because they got a job. Think about this for a minute—a community college student who has completed nearly all of her coursework gets a job offer with family-sustaining wages. She now faces a tough choice: forgo a good, solid job until she completes (and hope she can get another one) or take the job and owe an additional $10,000 to the federal government? If one of the purposes of higher education is to help students move up the economic ladder, this is a bad idea.

This could also have additional negative ramifications for students who stop out of college due to family issues, the need to support a family, or simply realizing that they weren’t college ready at the time. Asking a 30-year-old adult to repay additional student loans (when he may have left in good standing) under this groan program would probably reduce the number of working adults who go back and finish their education.

If the representatives’ concern is that students make very slow progress through college and waste taxpayer funds, a better option would be to gradually ramp up the current performance requirements for satisfactory academic progress. These requirements, which are typically defined as a 2.0 GPA and completing two-thirds of attempted credits, already trip up a significant share of students. But on the other hand, research by Doug Webber of Temple University and his colleagues finds significant economic benefits to students who barely keep a 2.0 GPA and are thus able to stay in college.

Finally, although I think this proposal is shortsighted, I have to chuckle at a take going around on social media noting that one of the representatives owns a construction company that helped build residence halls. Wouldn’t that induce a member of Congress to support policies that get more students into college (and create demand for his company’s services)? It seems like he is going against his best interest if this legislation scares students away from attending college.

What New Gainful Employment and Borrower Defense Rules May Look Like

President Trump is fond of negotiating, as can be evidenced through his long business career and many promises to renegotiate a whole host of international agreements. Federal higher education policy is also fond of negotiation, thanks to a process called negotiated rulemaking that brings a range of stakeholders together for an arduous series of negotiations regarding key changes to federal policies. Notably, if stakeholders do not come to an agreement, the Department of Education can write its own rules—something that the Obama administration did on multiple occasions. (For more on the nitty-gritty of negotiated rulemaking, I highly recommend Rebecca Natow’s new book on the topic.)

In a long-expected announcement, the Department of Education announced Wednesday morning that it would be renegotiating two key higher education regulations (gainful employment and borrower defense to repayment) that were initially negotiated during the Obama administration, with the first meetings beginning next month. To get an idea of how expected these announcements were, here are the stock prices for Adtalem (DeVry) and Capella right after the announcement (which began to break around 11:30 AM ET). Note the fairly small movement in share prices, suggesting that changes were baked into stock prices pretty well.

It is extremely likely that the negotiated rulemaking committees won’t be able to come to an agreement (again), so the new rules will reflect the Trump administration’s higher education priorities. Here is my take on what the two rules might look like.

Gainful Employment

The Obama administration first announced its intention to tie federal financial aid eligibility for select vocational programs (disproportionately at for-profit colleges) in 2009 and entered negotiated rulemaking in 2009-10. The first rules, released in 2011, were struck down in 2012 due a lack of a “reasoned basis” for the criteria used. The second attempt entered negotiated rulemaking in 2013, survived legal challenges in 2015, and began to take effect with the first data release in early 2017. Nearly all of the programs that failed in the first year were at for-profit colleges, but this also led to Harvard shutting down a failing graduate theater program. No colleges have lost aid eligibility yet, as two failing years are required before a college is at risk of losing funds.

The Trump administration is likely to take one of three paths in changing gainful employment regulations:

Path 1: Expand the rules to cover everyone. One of the common critiques against the current regulations is that they only cover nondegree programs at nonprofit colleges in addition to nearly all programs at for-profit colleges. For example, doctoral programs in education at Capella University are covered by gainful employment, while my program at Seton Hall University is not. Requiring all programs to be covered by gainful employment would both preserve the goals of the original regulations while silencing some of the concerns. But this would face intense pressure from colleges that are not currently covered (particularly private nonprofits).

Path 2: Restrict the rules to cover only the most at-risk programs. It is possible that gainful employment metrics could be used along other risk factors (such as heightened cash monitoring status or high student loan default rates) to determine federal loan eligibility. If written a certain way, this would free nearly all programs from the rules without completely unwinding the regulations.

Path 3: Make the rates for informational purposes instead of accountability purposes. This is the most likely outcome in my view. The Trump administration can provide useful consumer information without tying federal funds (a difficult thing to actually do, anyway). In this case, I could see all programs being included since the data will be somewhat lower-stakes.

Borrower Defense to Repayment

Unlike gainful employment, borrower defense to repayment regulations were set to affect for-profit and nonprofit colleges relatively equally. Here is what I wrote back in October about the regulations when they were announced.

These wide-ranging regulations, which will take effect on July 1, 2017 (a summary is available here) allow individuals with student loans to get relief if there is a breach of contract or court decision affecting that college or if there is “a substantial misrepresentation by the school about the nature of the educational program, the nature of financial changes, or the employability of graduates.” The language regarding “substantial misrepresentation” could have the largest impact for both for-profit and nonprofit colleges, as students will have six years to bring lawsuits if loans are made after July 1, 2017.

These regulations have been halted and will not take effect until a new round of negotiated rulemaking takes place. They were generally unpopular among colleges, as evidenced by a strong lobbying effort from historically black colleges that were worried about the vague definition of “misrepresentation.” The outcome of this negotiated rulemaking session is likely to be a significant rollback of the scope to cover only the most egregious examples of fraud.

Although these two sets of negotiated rulemaking sessions are likely to mainly be for show due to the Department of Education’s final ability to write rules when the committee deadlocks, they will provide insight into how various portions of the higher education community view the federal role in accountability under the Trump administration. The Department of Education doesn’t livestream these meetings (a real shame), but I’ll be following along on Twitter with great interest. Pass the popcorn, please?

Highlights from the Gainful Employment Data Release

In one of the Obama administration’s final education policy actions, the U.S. Department of Education released a long-awaited dataset of earnings and debt burdens under the gainful employment accountability regulations. These regulations, which survived several legal challenges from the for-profit college sector, require programs that are defined to be vocationally-oriented in nature (the majority of programs at for-profit colleges and a small subset of nondegree programs at public and private nonprofit colleges) to meet one of two debt-to-earnings metrics in order to continue receiving federal financial aid.

Option 1 (annual earnings): The average student loan payment of graduates in a program must be less than 8% of either mean or median earnings in order to pass. Payments between 8% and 12% of income puts programs “in the zone,” while payments above 12% of income result in a failure.

Option 2 (discretionary income): The average student loan payment of graduates in a program must be less than 20% of discretionary income (earnings above 150% of the federal poverty line) in order to pass. Payments between 20% and 30% of discretionary income puts programs “in the zone,” while payments above 30% of discretionary income result in a failure.

Any colleges that fail both metrics twice in a three-year period (using both mean and median earnings) or colleges in the oversight zone for four consecutive years are currently at risk of losing access to federal financial aid. However, both the Trump administration and Congressional Republicans have expressed interest in scrapping this accountability metric, meaning that colleges may not actually face sanctions in the future.

This data release covered 8,637 programs at 2,616 colleges, with about two-thirds of these programs being at for-profit institutions. Overall, 803 programs (9.3%) failed and 1,239 programs (14.4%) were in the oversight zone, with the remaining 76% of programs passing. As shown below, there were large differences in the pass rates by type of institution (note: the incorrect headers on the original post have been fixed). No public colleges failed (likely due to lower tuition levels because of state and local subsidies), and failure rates in the private nonprofit sector were also fairly low. Yet Harvard, Johns Hopkins, and the University of Southern California all had one program fail—leaving these prestigious institutions with some egg on their face. (UPDATE: Harvard suspended admissions for their graduate program in theater that failed gainful employment within one week of the data release.)

Distribution of gainful employment scores by sector and level.
Percentage of programs
Sector Fail Zone Pass N
Public, <2 year 0.0 0.7 99.3 293
Public, 2-3 year 0.0 0.3 99.7 1,898
Public, 4+ year 0.0 0.3 99.7 302
Private nonprofit, <2 year 0.0 10.3 89.7 78
Private nonprofit, 2-3 year 3.5 22.0 74.6 173
Private nonprofit, 4+ year 4.7 9.0 86.3 212
For-profit, <2 year 4.4 19.7 76.0 1,460
For-profit, 2-3 year 11.5 20.1 68.4 2,042
For-profit, 4+  year 22.5 21.4 56.1 2,174
Total 9.3 14.4 76.4 8,637
Source: U.S. Department of Education.
Notes:
(1) Percentages may not add up to 100 due to rounding.
(2) The “total” row excludes five foreign colleges.

 

For-profit colleges that only offer shorter programs (primarily certificates) did pretty well in the gainful employment metrics, with only 4% failing and 20% in the oversight zone. The worst outcomes were by far among four-year for-profit colleges, with 23% failing and 21% in the oversight zone. These poorer outcomes are not being driven by the large for-profit chains. DeVry, Kaplan, Strayer, and Phoenix combined to have just 16 programs fail, while four colleges (Vaterott, Sanford-Brown, the Art Institute of Phoenix, and Virginia College) all had at least 19 programs fail.

I then examined how the different sectors of colleges performed on the debt-to-earnings ratios for both annual income and discretionary income, with the distributions of ratios shown on the charts below. (Red vertical lines represent the cutoffs for being in the oversight zone (left) and failing (right).) These graphs confirm that public colleges have the lowest debt-to-earnings ratios, followed by private nonprofit colleges and for-profit colleges.

gainful_annual_jan17

gainful_disc_jan17

There are three important drawbacks of this data release that are worth emphasizing. First, 133 programs, all at for-profit colleges, are still in the process of appealing their classification (67 that failed and 66 that are in the oversight zone). Second, this only includes a small subset of programs at public and private nonprofit colleges even as similar programs are covered at for-profit colleges. For example, for-profit law schools are included in the gainful employment regulations (and the outcomes aren’t always great). But law programs at nonprofit law schools aren’t covered by the regulations, even though the goal at the end of the program is similar and many colleges expect their law schools to generate excess revenue for their university. Third, by only covering people who completed a program, colleges with low completion rates may look good even if the quality of education induces students to leave the program in disgust.

Regardless of whether federal financial aid dollars are tied to graduates’ debt-to-earnings ratios, it is important to make more program-level outcome data available to students, their families, and the general public. There have been discussions about including program-level data in the College Scorecard, but that is far from a certainty at this point. At the very least, the incoming Trump administration should propose making comparable earnings and debt available for vocationally-focused degree programs at public and private nonprofit colleges.

Five Higher Education Suggestions for President-Elect Trump

It’s pretty safe to say that Donald Trump wasn’t the candidate of choice for much of American higher education. Hillary Clinton received nearly 100 times as much in donations from academics as Trump, and the list of academics supporting Trump doesn’t have a lot of well-known names. But the typical American saw the election in a far different way than your average New York Times reader (as evidenced by the big divide in support by educational attainment), and Trump is now the president-elect after a stunning victory.

Here are my recommendations for Trump in the realm of higher education policy as he prepares to move from Trump Tower to the White House in just over two months.

(1) The Department of Education won’t go away, but certain functions could be reassigned. Although the Republicans kept control of the House and Senate, the margins are razor-thin—perhaps a four-vote margin in the Senate and a tenuous grip on the House thanks to divides between establishment and activist Republicans. This makes getting rid of the Department of Education extremely unlikely. Some functions, such as handling student loans, could go to the Department of the Treasury. Others could possibly go to states in the form of block grants. Yet there will still be a need for some administration in Washington to handle basic functions.

(2) Reach out to career staff members at the Department of Education. Trump ran on the concept of “draining the swamp,” but replacing longtime Washington staffers all at once comes at a risk. Career staff members who have served in multiple administrations have knowledge about how programs work that is difficult to replace, so it is essential to keep some of those staff members to help ensure a smooth transition across administrations. Will longtime staffers want to work for Trump? It’s anyone’s guess, but Trump’s transition team should make a good-faith effort to reach out.

(3) Make Higher Education Act reauthorization a priority. With unified (but tenuous) Republican control, Higher Education Act reauthorization suddenly looks more plausible than it did last week. A Trump administration should focus on the HEA in an effort to govern through the legislative branch rather than using executive orders and administrative rules—policies that conservatives have despised. 2017 reauthorization is probably unlikely given the administration’s other priorities, but 2018 or 2019 could work.

(4) Make more higher education data available to the public. The Obama administration made some good strides in the area of consumer information, culminating in the College Scorecard. Yet they also didn’t make data on a range of outcomes (such as PLUS loan default rates or program-level data) available to either the public or researchers. I signed onto a letter along with over 100 researchers last month calling for the Department of Education to release additional data on the federal student loan portfolio, and the Trump administration should release the data. Even if Trump wants to back down in terms of high-stakes accountability, consumer information is important.

(5) Visit a number of colleges across the higher education spectrum. Like most presidents, Trump is a product of high-prestige colleges (attending Fordham and Penn). I’d love to see him experience the great diversity of American higher education, including rural community colleges, HBCUs, technical institutes, and the workhorse regional public university sector. I hope that some colleges extend invitations to Trump—and that he accepts them.

Borrower Defense to Repayment Regulations: The Obama Administration’s Greatest Higher Education Legacy?

President Obama famously said in 2014 that “I’ve got a pen, and I’ve got a phone.” Although he has used his pen to sign some substantial changes in federal higher education policy (such as ending the bank-based student loan program in favor of federal Direct Loans), his pen has been used more frequently to authorize the Department of Education to start implementing new regulations without going through Congress. The regulatory process has been used to expand income-driven repayment programs, implement gainful employment rules for students in select vocationally-oriented programs, and tie federal TEACH grants to some measure of teachers’ effectiveness. These efforts have been generally opposed by congressional Republicans, which have held a majority in at least one chamber of Congress since 2011.

But from the perspective of colleges, the newest set of regulations may end up being the most influential. The Department of Education recently unveiled the final regulations known as “borrower defense to repayment” in a response to concerns about colleges defrauding students or suddenly closing their doors. These wide-ranging regulations, which will take effect on July 1, 2017 (a summary is available here) allow individuals with student loans to get relief if there is a breach of contract or court decision affecting that college or if there is “a substantial misrepresentation by the school about the nature of the educational program, the nature of financial changes, or the employability of graduates.”

The language regarding “substantial misrepresentation” could have the largest impact for both for-profit and nonprofit colleges, as students will have six years to bring lawsuits if loans are made after July 1, 2017. Notably, this language treats intentional misrepresentation and honest errors in the same way, and also does not define what “substantial” is. For example, if a student enrolls in a program with a posted job placement rate of 98% and later finds out that college administrators e-mailed each other about how to hide a 48% placement rate, most courts would probably consider this to be substantial misrepresentation. But what if a well-meaning person accidentally transposed an 89% placement rate to get 98%? These errors do happen in data submitted to the federal government, and currently there is no penalty for this type of mistake.

As some have warned, the ambiguity of the language will likely open up the door for more lawsuits against colleges with a wide range of misrepresentations—particularly as the regulations allow for class-action lawsuits that colleges could previously restrict. Courts across the country vary considerably in their friendliness toward plaintiffs relative to defendants, meaning that colleges located in more plaintiff-friendly states such as California and Illinois may be more at risk of lawsuits than colleges in defendant-friendly states such as Delaware and Iowa. But even if a college can prevail in a lawsuit, it still has to pay its legal fees and also may be subject to bad publicity.

Although these new regulations are a clear and needed victory for students who attended undeniably fraudulent colleges, the ripple effects regarding the definition of “substantial” misrepresentation could affect a broad group of well-intending nonprofit colleges that either made honest mistakes or happened across a sympathetic judge or jury. Eventually, a series of court cases—perhaps in conjunction with additional federal guidance—should help settle the legal landscape, but in the meantime colleges will be watching these regulations with a great deal of anxiety.