The Department of Education’s Gainful Employment (GE) Rule had a stated intent to ensure that students studying in certain higher education programs receive a quality education that adequately prepares them for gainful employment. Programs that failed the Rule’s performance metrics would quickly lose access to federal student aid programs.

While the Department’s stated aim is commendable, its proposed regulation is not. It relies on flawed metrics that have been resoundingly dismissed by respected academics and researchers. Institutions whose student bodies are disproportionally minority or economically disadvantaged, or have primarily fine arts curriculums, are shown to be most harshly and unfairly penalized. A number of organizations and legislators have spoken out against the Rule. A lawsuit filed by APSCU – the Association of Private Sector Colleges and Universities – challenging the validity of the regulation remains in progress in the District Court for the District of Columbia.

  • PROPOSED RULE FAILS TO ACCOMPLISH PUBLISHED GOALS: There is a significant disconnect between what the Department said it wanted to accomplish with the GE Regulations and what the proposals can realistically measure or achieve. APC agrees with the Department of Education on ensuring that colleges offer quality educational programs that don’t saddle students with onerous debt and do lead to gainful employment, but the proposed GE rule simply won’t deliver such outcomes.

For example, the Department is concerned with programs that “are experiencing a high number of withdrawals … because relatively large number of students enroll but few, or none, complete the program which can often lead to default.”[1] However, the Department has failed to include a graduation rate as a measure of program success. In fact, the way the Rule is written more than 60% of community college certificate programs will be exempt precisely because they do not meet the Rule’s 30 graduate minimum. This makes no sense.

In addition, the Rule is supposed to create a “transparency framework” so that “information is disseminated to students, prospective students, and their families that is accurate and comparable…” For a student trying to compare a degree program at a proprietary college and a degree program at a nonprofit or public college, the Rule fails since it inexplicably does not require the information from the nonprofit or public college.

  • APPLICABILITY GAPS: If the Department asserts these metrics have merit and are in students’ best interests, then they should be in place to protect ALL students, not just those enrolled in proprietary colleges. The Department refers to all GE programs as “training” programs, but does not note the thousands of Associate, Bachelor and Master’s degrees programs that are considered GE programs.

There’s a growing body of information showing that a large number of degree programs offered by public and non-profit institutions would fail the proposed debt-to-earning rates, including more than half the programs in the entire Texas public university system. Indeed, as many as 30-50% of ALL programs nationwide would fail to pass the current regulations if they were held to that same standard, yet they are granted amnesty. Also exempt are community college degree programs and most community college certificate programs, regardless of their high default rates or abysmal graduation rates.

  • NO SUPPORTING DATA: Despite requests to do so during the negotiated rule-making discussions and subsequent Freedom of Information Act requests, the Department of Education failed to release supporting documentation and information on the calculation of the 2012 Gainful Employment Informational Rates, which are even more incomplete than the previous iteration in 2011. There is no data for 85% of GE programs and, incredibly there is no data for 97% of certificate programs at community colleges. This omission not only casts a pall on independent inspection of the impact and overall rationality of their methodology, but it also thwarts interested parties from providing informed comment on the proposed GE Regulations’ impact on students, the institution and greater higher education community.
  • METRICS ARE ARBITRARY AND CAPRICIOUS: The Department adopted untested one-off metrics, failed to conform the GE Rules to any accepted methodology, and conducted no appropriate studies to test its hypothesis as to how the metrics would actually function, while the research that it did perform was careless if not deliberately misleading.

A third-party study conducted by The Parthenon Group, a global strategy consultancy, concluded that the GE Rule was based on flawed analysis, and that the Department ignored student demographic data that its own previous studies had clearly established were important factors in measuring students’ success.

A separate study conducted by Mark Schneider, the former Commissioner at the National Center for Education Statistics and a leading authority on education policy, also found that the metrics do not adequately assess program value. That study looked at more than 500 programs throughout Texas public university system, and found that more than one-quarter of bachelor’s programs and as many as 54 percent of the degree programs at these publicly funded institutions would fail the GE Rule if they had to comply (but, of course, as public institutions, their degree programs are not subject to the GE rule).

That said, there is no logical connection between the Department’s stated objective to measure a program’s success in preparing students for good jobs and the use of debt-to-earnings rates to do so. The regulation ignores traditional measures such as program completion and job placement rates to focus on financial matters, specifically student loan debt relative to earnings solely during the first few years of their professional careers. That seems indefensible, particularly given that, under the current draft of the regulation:

  • A program that enrolls thousands of students with a mere handful of graduates could still pass the proposed Rule since the Rule would only apply if the program had more than 30 graduates in the covered years.
  • A program can pass if it has a median debt of zero (based on extensive taxpayer subsidies), even if very few students graduate or obtain employment.
  • OVERSTEPS REGULATORY PROCESS IN PLACE: Accrediting bodies, rather than the Department, have long been recognized as the appropriate entities to evaluate the quality of institutions’ programs. The proposed GE Regulations improperly usurps the role of accrediting bodies, despite Congress having expressly assigned the role of evaluating program quality to them. The Board of Regents within New York State’s Department of Education and Middle States Commission on Higher Education, both accrediting bodies with oversight of APC members, require these colleges to develop academic programs with extensive and broad-based general education courses.  Indeed, APC colleges have been urged and in some cases required to avoid a narrow vocational focus, which is contrary to the general assumptions underlying the proposed GE Regulation. Colleges have created curriculums and programs that focus on the long-term career success of their students, rather than the near-term earnings highlighted under the proposed metrics.
  • INADEQUATE PROGRAM IMPROVEMENT OPPORTUNITY: The proposed transition period and zone status created to account for the retroactive nature of the debt-to-earnings (D/E) metrics (which measure the debt of students who graduated three to five years earlier) do not truly allow a real or meaningful opportunity for institutions to improve their programs. Colleges can, theoretically, impact the “debt” part of D/E rates, but the economy, local labor market conditions and employers determine earnings. Reducing student borrowing would be one way to do that. However, the Department’s own regulations and policies constrain institutions from even taking action with respect to student debt since colleges are obligated to provide students the full amount of Title IV loans for which they are eligible under a statutory formula. Thus, institutions could only reduce tuition and/or increase scholarships or other forms of institutional aid, but even so, it takes time to change tuition policies, develop scholarship programs and build up the financial resources to offer additional scholarships. These changes cannot be implemented overnight and the Rule does not allow any period for institutions to get the benefits of any changes they might make.  Rather, they are condemned based on historical data that they cannot change before the Rule is put into effect.
  • COMPLIANCE REQUIRES HIGHER EDUCATION ACT VIOLATIONS: The proposed GE Regulations indicate that the Department intends to collect and utilize data on private loans for students who also receive Title IV funding, which would violate the decision of the District Court in APSCU II and the federal statute, 20 U.S.C. § 1015c, prohibiting the creation of certain federal databases containing student data. The courts in 2011 banned this aspect of the regulation, yet the Department proposes to collect students’ private loan data once again.