The for-profit college industry is taking fire from all directions because a substantial number of for-profit colleges offer aggressively marketed programs of little value in the job market, leaving individuals unable to repay their debts and saddling taxpayers with the default burden. Much of the bad press is deserved, but the atmosphere of scandal and abuse detracts from a larger point: We have failed to adequately connect college and careers. The current abuses are but the worst-case examples of this failure.
This failure has broader implications because a postsecondary credential has become the prerequisite for middle class earnings, but there are enormous discrepancies in earnings returns between different credentials. Sometimes, a particular certificate is worth more than a particular bachelor’s degree. For example, 27 percent of people with licenses and certificates earn more than the average bachelor’s degree recipient does. This information is not intuitive, but it is available, and prospective students should have access to it to understand what they’re getting.
Like it or not, postsecondary education is already almost entirely occupational. All certificates and occupational associate degrees are intended to have labor market value. Academic associate degrees have minimal return unless they lead to a bachelor’s. Only 3 percent of bachelor’s degrees are liberal arts, general studies, and humanities degrees -- the remaining 97 percent have an occupational focus. (Add in English, philosophy, religion, and cultural and ethnic studies and you're up to 8 percent.) Moreover, for most students, liberal arts degrees are preparation for graduate and professional degrees, virtually all of which are intended to prepare students for careers.
The current dust-up shouldn’t be about for-profit colleges being all bad, nor about public colleges being off the hook. Rather, we should attempt to use data to find out which colleges are performing for their students.
The current scandal has arisen because of bad information. Slick subway ads and glossy brochures will not suffice to provide potential students weighing their options with accurate career advice. There is a real alternative to late-night infomercials that promise undeliverable outcomes. In fact, the detailed elements of such a system already exist -- including unemployment insurance wage records, transcript and program data, job openings data, and detailed information on occupational competencies.
It’s just a matter of putting them together effectively -- some states have already built the rudiments of such systems -- and making the information publicly available and in online, user-friendly formats.
To build this data system, wage record data would have to be tied to transcript data. Wage record data, which is actual wages at the individual level as reported by an employer, has been around since the late 1930s and is used to verify eligibility for unemployment insurance. These records are held at the state level by employment services agencies, and are also given to the federal government every three months. Transcript data is not currently collected by any federal agency, but is available in varying degrees in all but five states. Eleven states have already linked their transcript and wage record data, and are able to track earnings returns to postsecondary programs. Only seven states can link transcript and wage record data for programs at proprietary schools. This system is still nascent, but has enormous potential to help students evaluate their options, as well as inform institutions in planning new programs and evaluating existing ones.
Building a user-friendly interface is the next step, if we wish for this information to be useful for consumers. Imagine being able, with a few clicks and keystrokes, to explore various careers, find out how many jobs are currently available in the field, how many there are likely to be over the next several years in your area, what education and training programs exist in your local area and online, what they cost, what financial aid is available, and what the average salaries are for graduates of each program. Such a system would empower individuals to choose careers that would truly benefit them, and encourage institutions to offer programs that would prepare them for the jobs that will actually exist.
Such an information system would not eliminate, but would reduce, the future need for intrusive federal oversight or expensive additional state-level regulation. Further, such information systems that connect postsecondary programs with labor markets represent a savings to the taxpayer, improving efficiency in matching programs to careers and curbing the enormous cost of student loan default.
Educators and others may worry that tying curriculums to careers may subjugate education to economics. We clearly need to aspire to a pragmatic balance between postsecondary education’s growing economic role and its traditional cultural and political independence from economic forces. While it is important that we not lose sight of the non-economic benefits of education, the economic role of postsecondary education -- especially in preparing American youth for work and helping adults stay abreast of economic change -- is also central to the educator’s broader mission to cultivate thoughtful individuals.
The inescapable reality is that ours is a society based on work. Those who are not equipped with the skills and credentials necessary to get, and keep, good jobs are denied full social inclusion and tend to drop out of the mainstream culture, polity, and economy. In the worst cases, they are drawn into alternative cultures, political movements, and economic activities that are a threat to mainstream American life.
The current abuses are a wake-up call -- they signal the disenfranchisement of students who are denied access to the middle class and full social inclusion because they lack information on what kind of education can get them there.
Anthony P. Carnevale and Michelle Melton
Anthony P. Carnevale is director of the Georgetown University Center on Education and the Economy, and Michelle Melton and Laura Meyer are research associates there.
The current student financial aid system and the existing process for assuring quality in higher education share a common problem: key stakeholders in both are either being asked or are seeking to do things they are not capable of doing well. Many of the changes suggested in recent higher education debates would worsen this mismatch of function and responsibility. American higher education does need to be reformed in key ways -- but these changes should focus instead on making sure each group of stakeholders is capable of doing what it is being asked to do.
What is wrong with the current structure? In short, federal and state governments, accrediting agencies, and institutions are being asked to do important tasks without having the requisite skills, resources, and -- often -- legal authority to do them. By the same token, the traditional role of faculty in judging quality is being largely ignored. Parents and students are also required to provide a set of information that often requires estimates and guesses that are not easily made, all at risk of federal penalty if not done correctly.
Federal and state governments are increasingly being asked -- or are themselves seeking -- to assess the quality of higher education. According to proposals now under discussion, federal and state governments would become more involved in issues such as measuring learning outcomes and regulating credit hours. These proposals seem largely to ignore the traditional role of faculty in judging whether and what students have learned, and the responsibility of institutions in establishing credit hours.
To the extent any of these proposals become reality, there would be a tremendous shift in the relationship between government and higher education in this country, as federal and state governments have not typically involved themselves in academic matters. This would also make American higher education more like primary and secondary education, where state and local governments are much more involved than teachers in setting standards for testing and curricular matters. We think moving higher education in the direction of K-12 education would represent a terrible misstep.
Further, President Obama has set a goal to increase graduation and attainment rates very rapidly in this country, much faster than what historical trends suggest is feasible. At the same time, the administration is proposing to require institutions that provide short-term training to collect information on how many of their graduates have jobs and to punish schools whose graduates are unable to find jobs in the fields for which they are trained. They also propose to penalize or eliminate federal aid eligibility for students attending schools where too few graduates repay their loans. While these initial rules would be limited to non-degree programs, it is hard to imagine -- if they prove successful -- why they would not be applied to all of postsecondary education in the future.
While undesirable lending practices certainly should be curbed, an approach based on punitive actions that restrict access while requiring difficult data collection is unlikely to succeed. Further initiatives are needed that deal with chronic predatory practices while preserving and enhancing access in a way that is administratively practical. But to require institutions at any level to collect employment and income data about their graduates is to give them a task that they have not been responsible for in the past and for which they have little skill or resources to accomplish in a reasonable way.
And, one might add, how are job placements to be measured? If a student trains in science and finds a job selling insurance, is that to be counted as success or failure? Will this requirement encourage higher education institutions to become more vocationally oriented than they are already? Will there be a negative impact on general education, innovation and creativity? As a practical matter, are institutions in high-unemployment Detroit to be held to the same standards as schools in the high-employment Washington, D.C., area? Making schools responsible for their job placement rates is likely to result in fewer disadvantaged students enrolling and thus a drop in their participation rate.
Federally recognized accreditors, in addition to reviewing the academic and administrative capacities of institutions before granting accreditation, are also required to review the financial condition of institutions as laid out in Title IV of the Higher Education Act. They therefore must determine whether the institutions are complying with the bewildering complexity of federal student aid regulations. While the accreditors do their best to meet these obligations, they are not well-structured to do any of this financial or administrative review. The system might well benefit from the federal government turning instead to licensed auditors for this work on a contracted basis.
Colleges and universities in the current system are regularly asked to police student aid applications and then required to modify financial aid based on these audits. But without legal access to applicants’ financial records, they must rely on the accuracy and authenticity of student/family submissions, as the IRS will not share individual filings and the institutions lack subpoena authority. The current aid structure also provides little or no incentive for institutions to keep their costs down – if anything, it adds to these costs through stiff administrative requirements. As a result, the aid system does little to encourage institutions to produce the desired results of increasing the participation and attainment rates of low-income students while protecting student interests.
Students and parents are required to fill out the complicated FAFSA and supplemental forms that require data that have already been submitted as part of the federal income tax process. They are further required to answer a difficult set of questions about their assets and liabilities that are not part of the tax filing process. How can student aid officers then be expected to verify the information they receive from parents or students? Moreover, borrowers who qualify for income contingent repayment plans they are required to resubmit their income information because the Internal Revenue Service has been unwilling to supply that information to lenders or other note holders who must arrange these alternatives repayment plans.
Rethinking the Roles
These responsibilities must be re-sorted if the effectiveness of the system is to be improved. To do this, what is needed is a new compact among the key stakeholders in which each is asked to do what it is capable of doing without being asked to stretch well beyond its capabilities. This new compact might look something like this:
Accreditors would no longer be required to review the financial strength of institutions as part of the accreditation process. This would free them up to focus their resources on reviewing institutional academic and administrative capabilities. The federal government instead would rely on contracted auditors as well as its own compliance procedures that define the financial health of institutions. By not having to do financial reviews, accrediting agencies could play a key role in the development of new ways to access institutional performance, such as the qualifications frameworks that many countries in Europe and elsewhere use to clarify what is expected from graduates of secondary and tertiary levels of education and training. There are many approaches to framework-building, and it would be useful to institutions and their constituencies if accreditors could experiment with approaches to sharpen internal measures of quality.
The states under this new configuration could take the lead in engaging with institutions and faculty in the process of measuring and improving the quality of higher education. The Irish quality assurance process provides an example of how government and institutional officials in concert with faculty can work effectively to measure quality in programs within institutions. This programmatic evaluation of quality, in turn, could be used to enhance the institutional accreditation process, as accreditors would have these programmatic reviews available to them as they review the institution as a whole. This would also recognize the reality that programs, departments and schools within an institution can vary considerably in their quality, a fact not really recognized in the traditional institution-based accreditation process in this country.
The U.S. Department of Education would take on the primary responsibility for reviewing the financial capability of institutions, replacing accreditors in this regard. The department’s well-developed formula for assessing the viability of an institution should suffice for this purpose. The role of the IRS vis-a-vis higher education would also change. The IRS already is responsible for auditing those families that claim tuition tax credits. That role might be expanded in two ways: One is to provide income tax information to other federal agencies and institutions for use in the calculation of federal student aid eligibility, by allowing students and parents to check off when filing their income tax forms. And the IRS should also be required to provide income information used to calculate eligibility for borrowers repaying on an income-contingent basis.
Institutions, as a general principle, should not be asked to provide information or to collect information that which they cannot realistically provide. This includes doing audits of income tax forms of parents and students applying for student financial aid. It is also not clear that asking for the employment status and/or income of their graduates is a proper allocation of responsibilities. On the other hand, it seems perfectly reasonable to ask institutions to provide more information about their current students; including how many are Pell Grant recipients and how many of them graduate. It also seems fair to assume institutions would more readily provide this information if it were linked to how much performance-based federal funds they received.
All institutions should also be given more responsibility for their students who borrow and who default on their student loans. This increased responsibility could include having institutions pay a fee for each of their students who default and then allowing or encouraging institutions to pay off the loans of some of their students who did not receive adequate training as evidenced by their chronic unemployment. This shift in responsibilities would seem far preferable to the proposed regulation that would require institutions to gather information on the employment status of all their previous students.
As part of the new compact, students and parents should be able to use their income tax submission as a way to apply for student aid. Moreover, for students and parents who do not pay taxes because of their low income, those on welfare, Medicaid, food stamps and EITC should be fully eligible for federal student aid rather than the current practice that reduces their aid because of the receipt of these non-taxable benefits.
In sum, this reordering of responsibilities would lead to more effective functioning of the student financial aid and quality assurance systems. Each stakeholder would be asked or required to perform tasks that they are well-suited to performing. Institutions, parents, and students would not be asked to provide information that they often do not have. Accreditors would be freed up to do reviews of academic and administrative operations of the institutions as well as initiating reforms such as the development of qualifications frameworks. Faculty would be re-engaged in the process of assuring quality and quality improvement in a policy-relevant way.
This is a much prettier and effective picture than the one we face in the current set of debates.
Arthur M. Hauptman and A. Lee Fritschler
Arthur M. Hauptman is an independent public policy consultant. A. Lee Fritschler is a professor in the School of Public Policy at George Mason University and former assistant secretary for postsecondary education at the U.S. Department of Education.
The authors of the Government Accountability Office’s for-profit secret shopper investigation pulled off a statistically impressive feat in August. Let’s set aside for the moment that on Nov. 30, the government watchdog quietly revealed that its influential testimony on for-profit colleges was riddled with errors, with 16 of the 28 findings requiring revisions. More interesting is the fact that all 16 of the errors run in the same direction -- casting for-profits in the worst possible light. The odds of all 16 pointing in the same direction by chance? A cool 1 in 65,536.
Even the most fastidious make the occasional mistake. But the GAO, the $570 million-a- year organization responsible for ensuring that Congress gets clean audits, unbiased accounting, and avowedly objective policy analysis, is expected to adhere to a more scrupulous standard. This makes such a string of errors particularly disconcerting.
In fact, the GAO is constituted precisely to avoid such miscues. Its report-vetting process entails GAO employees who are not involved with the project conducting a sentence-by-sentence review of the draft report, checking the factual foundation for each claim against the appropriate primary source. While the research is compiled and proofed, legislators who requested the investigation may keep in routine contact with the GAO to stay apprised of the inquiry.
The GAO issues hundreds of reports a year, and by most accounts revisions of the kind released two weeks ago are almost unheard of. As a former GAO assistant director who worked at GAO for a decade on issues including higher education explained to us Wednesday, the organization’s rigorous review process leaves little or no room for error.
He said, “[It is] extremely rare for the GAO to issue corrected testimony or reports. In fact, in my 10 years that I was there, I never once saw that happen.” He went on to say, “It is stunning to me, given [the GAO] process, how this many errors could have happened. It raises a lot of questions as to the pressure the GAO was under. . . . They must be sweating bullets over at GAO.”
What kinds of mistakes are we talking about here? The corrections were generally changes in emphasis or wording that altered the complexion of the finding. For instance, the original report claimed that a financial aid officer purposely ignored an undercover applicant’s supposed $250,000 in savings when calculating eligibility for financial aid. What the report neglected to reveal was that the financial aid representative did so “upon request by applicant.” This does not necessarily exonerate the financial aid officer, but it does raise questions about the impetus for the inappropriate behavior.
In another instance, an applicant went from being informed that he or she “could take out the maximum in student loans” despite not actually needing that much (revised) to being told that he or she “should” (original) do so. And in a different scenario, a for-profit official supposedly told an applicant that massage therapists could earn up to $100 an hour -- when the review showed that the official actually said that the applicant could expect to earn up to $30 an hour, a figure that is below the Bureau of Labor Statistics’ estimate of $34 for therapists in California.
The list goes on and on. Each of the GAO’s 16 corrections indicates that the recorded evidence was presented in an inaccurate or incomplete fashion, in every case portraying for-profits in a negative light.
What happened? Our source speculated that the pressure of issuing the report in time for Sen. Tom Harkin’s Aug. 4 committee hearing and in time to support the issuance of the Department of Education “gainful employment” regulations led GAO investigators to be less careful than normal.
The problem is that the “we were in a hurry” defense doesn’t explain why the errors all point in the same direction — one that happens to reflect the policy preferences of the chairman of the Senate HELP committee and of administration appointees at the Department of Education. Lanny Davis, the veteran Clinton hand who has now taken to the barricades for the for-profit providers, told us Wednesday that he thinks there is an obvious distinction between “gross incompetence” and “setting out to deceive” — and that the original GAO report crosses the line. “Given that all 16 of the so-called mistakes portrayed career colleges in a negative light, I believe there is no sliver of possibility that this was not an intentional distortion of the truth by somebody with an agenda or somebody who was pushed into doing it,” Davis argued.
The issue goes beyond incompetence or politically motivated misinformation in a government report; the message of the GAO’s initial publication has been “baked in” to the Harkin hearings and the Department of Education’s rulemaking on gainful employment.
Our GAO source observed that the original report’s finding that all of the investigated providers were up to no good was “woven into the overarching narrative that there are a lot of bad actors out there that have to be dealt with.” Even though the GAO’s revisions were substantial enough to merit a public correction, the narrative has crystallized and been wielded by Harkin and Department officials to press the case for their agendas as recently as this week (see Harkin’s December 14 speech on the Senate floor). Even more troubling, despite finally acknowledging the litany of errors that permeate the report, GAO spokespeople have asserted that “nothing changed with the overall message of the report, and nothing changed with any of our findings."
The bigger question is whether we can be confident that the GAO has caught all of the errors or is being honest with the report’s critics. The former GAO official speculated that the recent corrections could be just the "tip of the iceberg in terms of the mistakes made in the report. It calls into question the entire report because it shows that there were not sufficient quality controls in place for whatever reason.” Complicating things is that the GAO is not subject to Freedom of Information Act Requests, which makes getting to the bottom of things just a bit difficult. (Of course, the Department of Education is subject to FOIA requests, and the advocates for the career college sector have filed suit to obtain the primary source materials.)
Regardless of how this gets sorted out, this affair has crippled efforts to talk honestly about problems that need to be addressed. It is hardly shocking that there are unscrupulous for-profit providers trafficking in misinformation and misusing federal student aid dollars. Every sector, public and private, faces such problems. And the practices of all providers that collect public funds deserve to be scrutinized and monitored. The government has every right to police how its student aid dollars are being spent.
But trampling public confidence in an esteemed federal watchdog helps no one — not the individual students that are being taken advantage of by fly-by-night providers, not the colleges that are acting in good faith, not the bureaucrats charged with regulating the sector, and not the taxpayers who wish to root out corruption in student lending.
Frederick M. Hess and Andrew P. Kelly
Frederick M. Hess and Andrew P. Kelly are director of education policy studies and a research fellow in education policy studies, respectively, at the American Enterprise Institute.
In an interconnected world, where data collected for one purpose can be easily transferred and used for new, unforeseen purposes, we must be vigilant to protect consumers from uses of their data that do not match their expectations.
Transparency is the cornerstone of the modern privacy regime. An individual has the right to understand what data is being collected about him and to make informed choices about how that data is going to be used.
Last July, the U.S. Department of Education (ED) proposed its “Gainful Employment Rule,” which seeks to establish complex measures for determining whether education programs at proprietary postsecondary education institutions (and vocational programs at nonprofit colleges) lead to gainful employment in a recognized occupation. Under the proposed rule, a program’s eligibility for federal student financial aid under Title IV of the Higher Education Act would be based on meeting certain metrics related to student loan debt. ED recently sent a revised version of this regulation to the Office of Management and Budget, the agency in charge of reviewing regulations before they are made final. The revised rule could be out any day.
One measure that the Education Department proposes to use assesses whether a program’s annual loan payment is either 8 percent or less of the average annual earnings of program completers or 20 percent or less of discretionary income of program completers. These ratios might change in the final rule. In order to calculate average annual earnings and discretionary income, ED proposes that the Social Security Administration (SSA) would take the actual incomes of all students who completed a program and aggregate the students’ incomes into a number that ED would use to make the gainful-employment calculation.
Unfortunately, the proposed Gainful Employment Rule suffers from a fatal privacy flaw: it fails to provide transparency into how the federal government will collect and treat student data required to implement the rule. There is much to be applauded in the department’s effort to address loan debt and employment; the problem is not in these goals but in the methods the ED is planning to use to achieve them.
The first problem with the proposed regulation is that the details of how ED will receive student income data and how this data will be treated have not been resolved. Based on a preliminary agreement between ED and SSA, released by Social Security Commissioner Michael Astrue in response to an inquiry by Senator Orrin Hatch, it appears that the Education Department is planning for SSA to provide student income data to ED. However, there are no details as to exactly what additional data SSA will be collecting about students and what technical and administrative safeguards the agency will have in place to protect the increased data collection. ED and SSA must provide transparency into this process. Students and institutions need to know how SSA will handle their data.
Further, in his letter to Senator Hatch, Commissioner Astrue seeks to ease the Senator’s privacy concerns by stating that the data provided by SSA to ED will be “strictly statistical.” However, this raises additional transparency problems as both students and institutions will not have the ability to see how data about them is being used to make decisions that may be detrimental to their interests.
Without understanding what data went into the Education Department’s calculation, institutions and students will simply be informed of ED’s conclusion that they failed to meet a certain threshold and that they will no longer be eligible for federal financial aid. This black box calculation flies in the face of the uniformly accepted privacy principle of transparency.
This lack of transparency would also lead to further data collection by the institutions. As institutions would be unable to obtain the same data that the SSA used to make a calculation, in order to contest an adverse ED decision, an institution would have to provide income data that it has collected about its former students and potentially collect even more information than it had previously collected in order to perform its own income calculations.
In addition to the lack of transparency, the additional data that would be collected and maintained about students raises further privacy and security concerns. By collecting and linking more information about a student, the information the government already holds about a student will become more available should an errant government employee desire to misuse this information or should an unauthorized individual gain access to the data as a result of a data breach.
The consequences of a data breach can be profound – just ask Sony or Epsilon. And the government is not immune to these risks. In 2010, there were 104 reported government/military data breaches according to the Identity Theft Resources Center. Nineteen of these breaches were at federal agencies or military organizations, including the General Services Administration, the Department of the Interior, the Veterans Affairs Department, the State Department, and the IRS.
In short, any Education Department regulation that seeks to collect and use data about students must be fully transparent. Students and institutions must know what additional information is being collected, who is collecting this data, and exactly how the data is being used. This process cannot result in a privacy black hole. Any calculations that impact students and institutions must be done in a way that both protects student privacy while also giving the students and the institutions the ability to review and challenge unjust results.
Daniel J. Solove
Daniel J. Solove is a professor of law at the George Washington University Law School and the founder of TeachPrivacy,a company that helps schools develop a comprehensive privacy program.
The Education Department's proposal to start charging a variable interest rate instead of a fixed, low rate to borrowers who combine multiple federal student loans into one is a "viable option for reducing federal costs" in student loan programs, the U.S. Government Accountability Office said in a February letter to Republican lawmakers, who had requested the review.
Rep. John Boehner told a group of college presidents Tuesday that members of Congress are tired of hearing from constituents who can't figure out why their children can't transfer credit from one institution to another.
"We hear about it nonstop," Boehner (R-Ohio) said. He said that both of his daughters were "caught up" in the issue, thinking that they were taking courses that would transfer -- only to find out that wasn't the case.
Margaret Spellings gave her first address to a college audience Monday, telling college presidents that they should work to provide better information about their institutions, and that they should back President Bush's budget plans.
For much of the last year, community colleges and the Bush administration have, symbolically, been dancing cheek to cheek. Given what's in the Bush administration's 2006 budget proposal, they may spend the next few months fighting toe to toe.