A Better Approach to 'Gainful Employment'

Bipartisan federal legislation would give taxpayers and students data about college programs' labor market returns -- without imposing onerous regulations, writes Mark Schneider.

February 22, 2012

On February 9, Senator Ron Wyden, Democrat of Oregon, introduced a bill on the Senate floor entitled the “Student Right to Know Before You Go Act.” The bill gained bipartisan and bicameral support when it was introduced in the House by Duncan Hunter (a Republican from California and chairman of the House Subcommittee on Early Childhood, Elementary, and Secondary Education). 

Hunter and Wyden have been working together to increase the quality of educational data and improve transparency in measures of the success of colleges and universities. This proposed legislation was the product of this work. While its chances of passage are likely low, it is a smart piece of legislation that could help transform our expensive and inefficient system of postsecondary education.

A key provision of the bill would support states in expanding or creating postsecondary student level data systems that include measures of student success in the labor market (including average individual annual earnings by educational program, degree received and educational institution) from all institutions within the state, public and private (nonprofit and for-profit). It presents a much smarter approach to measuring what is called “gainful employment” than the U.S. Department of Education has managed so far.

In 2010, the Department of Education waded into the issue of the labor market returns of college degrees. This foray was tied to proposed regulations that would punish institutions whose students were not earning sufficient income to pay off their student debts. Whatever the merits of the idea, the department set off a firestorm with its regulations and with the quality of the data it released in August of that year.

The proposed regulations would have shut down a large number of the programs run by for-profit institutions plus some community college programs as well (like so much else surrounding the gainful employment debate, the number of programs affected was hotly contested). The department backtracked on the original regulations and last year issued watered down regulations. There was much to dislike about the department’s efforts, but one of the most problematic was putting the regulatory cart before the data horse. In short, the database to support the high-stakes regulations was at best thin and cast doubt on the department’s ability to base any gainful employment regulations on a sound foundation.

The department’s data capacity will be tested again next month, if it can stick to its plan to release new data on the labor market success of students in career-oriented programs. This time around, the Department is using wage data from the Social Security Administration and matching it to student debt data it holds within its Federal Student Aid office.

No one knows how good the matched data will be, and since the Social Security Administration (rightfully) has limited the ability of anyone outside of government to look at the merged dataset -- and since the stakes (although lower than proposed in 2010) are still high -- there will likely be a major dustup when the data are released.

This is why Wyden’s bill is smart: it builds the database first, and puts the linked data into the public sphere without the heavy-handed threat of government closure of programs.

Wyden’s approach gives everyone the opportunity to probe, poke and prod the data to develop a better sense of their limits and their strengths. Regulations can come later, but in the meantime, the availability of these data will allow students and their families to make more informed choices about the likely outcome of their investment of time and money in a given program in a given school. The data will also allow state policy makers to judge the rate of return on their state’s investment of taxpayer monies in different programs.

We can already anticipate some of the responses to this legislation: that we shouldn’t judge colleges on a single number like salaries or the return on investment, that college education is about so much more than simply finding a job, that many of the societal benefits of having an educated population will not be measured, and so on. Of course many of these statements are true.

But the national commitment to higher education is largely about economic development and creating a skilled competitive workforce. Would the Obama administration be pushing its ambitious postsecondary agenda if colleges just taught students to parse Proust? Would students flock to colleges and universities to learn postmodern poststructural critical theory? Students, their families, taxpayers, and government officials need to know the likely returns for investing so much time and so much money in the pursuit of a degree. And the Wyden bill is likely to get this information into the public sphere faster than any other approach we are currently pursuing.

On a more wonky note, the Wyden bill will help force the revision of the nation’s “premiere” data system for collecting information on colleges and universities. The Integrated Postsecondary Education Data System (IPEDS) was a reasonable data collection system in the middle of the last century, but to say it is creaky gives it more than its due.

In a nutshell, IPEDS is based on aggregated data collected for a declining number of postsecondary students (it already covers less than half). IPEDS needs to be replaced with student-level data such as the Wyden bill calls for. Wyden’s bill also makes the states full partners in this new IPEDS model, recognizing their critical role in higher education policy. In doing this, the IPEDS burden will be reduced for a great many institutions that submit both IPEDS and student data to the state.

In 2006, Congress banned the federal government from itself holding such a data system. At just about the same time, it authorized the expenditure of hundreds of millions of dollars to pay for the states to create them. Wyden’s bill will have these state systems brought together for a national view of the data, while prohibiting the feds from having access to personally identifiable information. This would improve the payoff of the nation’s investment in these data systems and keep the action at the state level, where it belongs and where, under current legislation, it can actually take place. 

Colleges and universities need to better measure the progress of their students as they work toward their degrees, they need to better measure what their students are actually learning, and they need to better measure how well students are doing in the job market after they graduate. Only then can we increase transparency and improve accountability. Wyden’s bill has many of the pieces of the puzzle right, and if it became the law of the land, it would mark a major step forward in improving postsecondary education.


Mark S. Schneider is vice president for new educational initiatives at the American Institutes for Research.


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