FOIA Request Reveals Department of Education Misrepresented Use of “Experts” to Determine Key Gainful Employment Metric

Finding Follows Discredited DOE Analysis Claiming Demographics Don’t Affect Graduation Outcomes

The Department of Education’s proposed eight percent debt-to-earnings metric to determine which for-profit college programs would be closed under the agency’s proposed Gainful Employment Rule wasn’t devised in consultation with industry experts according to information made public today by the Association of Proprietary Colleges, an organization representing New York’s degree-granting, proprietary colleges.

The DOE said in a March 25, 2014 Federal Register Filing that its proposed discretionary income and annual earnings rates are based on “expert recommendations.”  However, in response to a Freedom of Information Act request filed by APC, the DOE admitted that it does not have any documents supporting the reported consultations with experts on this subject. Rather, the basis for the DOE’s proposed Gainful Employment thresholds is a selective reading of slim and dated studies by two professors whose research focused on mortgage lending practices.

“It is extremely disheartening that the DOE would inaccurately claim to have engaged qualified expert opinion to determine a critical metric that would jeopardize  student access to  as many as 50 percent of all the nation’s degree programs if universally applied,” said Donna Stelling-Gurnett, executive director of the Association of Proprietary Colleges. “Effective government policy must be based on rules determined with fairness and integrity, and the evidence continues to mount that the proposed Gainful Employment rule is based on a philosophical bias, and not grounded with credible analysis or facts.”

The DOE’s proposed Gainful Employment Rule seeks to address increased concerns about poorly performing higher education programs that are characterized by low graduation rates and student populations with significant student loan debt. The Rule that the DOE unveiled has been met with criticism by APC and others for focusing primarily on proprietary (“for-profit”) institutions and using atypical metrics to assess program value. Programs must pass these metrics or risk losing their eligibility for federal student aid.

The DOE’s proposed ruling claims that the best way to measure the value of an education is based on a student’s debt-to-earnings ratio within 18 to 30 months of graduating. However, Federal Reserve Board research analysts and several academics (seehere) and (here) maintain that the value of a college degree must be measured over an extended period of time. Indeed, a study by the State Council for Higher Education for Virginia found a dramatic spike in earnings when outcomes are measured 20 years after graduation.

Two separate studies issued this year have questioned the statistical validity of the Gainful Employment rule. The Parthenon Group, a global strategy consultancy, was commissioned by APC to determine whether the Gainful Employment Rule truly reflects program quality. As reported (“The Parthenon Group’s Study Finds Department of Education Gainful Employment Regulations Based on Flawed Analysis; Proposed Gainful Employment Metrics Unfairly Penalize Schools that Serve Minorities and Low-Income Students“), they concluded that it does not and that the Department achieved its desired conclusion “by inexplicably omitting various student characteristics from its analysis – characteristics that the Department’s own previous studies had firmly established were important factors in measuring students’ success.”

Another study, this one by Mark Schneider, the former Commissioner at the National Center for Education Statistics and a leading authority on education policy, found that more than one-quarter of Texas bachelor’s programs and as many as 54 percent of the degree programs at the highly respected University of Texas would fail the proposed Gainful Employment metrics if they had to comply. As a public institution, however, its degree programs are not beholden to the GE rule. The study, however, supports contentions that the use of debt-to-earnings rates and program cohort default rate (pCDR) metrics to measure a program’s success are arbitrary and capricious, and do not adequately assess program value.

APC has released a video, titled “Gainful Employment’s Failing Grade,” highlighting the inappropriateness of judging a bachelor degree program on the earnings of its students just 18 months after graduation and suggests that the proposed Rule cannot accurately measure program quality without including a graduation metric. As the video demonstrates, the result is that programs with abysmally low graduation rates evade the reach of the Rule.

“APC wholeheartedly endorses the Department of Education’s initiative to introduce regulations that will shut down poorly performing programs that are not doing right by students or taxpayers,” said Stelling-Gurnett. “However, it is imperative that we get behind the right metrics, which cannot be assessed in light of the Department’s failure to release the data that supports what they are proposing. Given the serious questions raised about the metrics they created as their yardsticks, we call on them to release comparable data for all sectors of higher education so that independent assessments can be conducted on the rationality and impact of the DOE’s Gainful Employment Rule.”

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Emma Smith (esmith@starkmanpr.com)