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Starting to Understand the Implications
I'll choose to stick with "you read it here first"
Phil Hill
June 21, 2023
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As subscribers probably recognize, I have described how the current set of proposed rules in the recent Notice of Proposed Rule Making (NPRM) goes well beyond Gainful Employment rules that are centered on non-degree programs and the for-profit sector. From May 22 under the section introducing some new visualizations of program data:
Why do I say “more than a thought experiment”? Because there are two parts to the proposed rules, and while the Gainful Employment ratios and debt thresholds do not apply to all programs, there are plans to collect and publicize most program data, as described in ED’s fact sheet.
Inside Higher Ed had a very good article yesterday that expands on this point and gets input from various industry observers.
The Biden administration is proposing to calculate and report whether students can afford their yearly debt payments and that they are making more than an adult who didn’t go to college for all postsecondary programs with more than 30 graduates or completers. Only those programs at for-profit institutions as well as nondegree programs in any sector could lose access to federal financial aid if they fail either of the tests in two consecutive years under the new proposed gainful-employment rule.
However, under a separate section of the regulations, the education secretary could consider how a program fared on those gainful-employment tests when deciding whether to end an institution’s eligibility for federal financial aid. Some experts questioned the department’s authority to carry out that change. [snip]
For programs that fail the debt-to-earnings test, students will have to sign something that acknowledges they saw the information. Creating that acknowledgment form and ensuring students sign it will be the institution’s responsibility. A similar requirement is not in place for the earnings premium, because the department said the non-GE programs “are more likely to have nonpecuniary goals.”
For those who think that a change in administration would end this approach, you might want to think again. This IHE article last week described a series of bills introduced by Senate Republican leaders, with a section that touches on the Gainful Employment-type metrics.
The Lowering Education Costs and Debt Act, on the other hand, would prevent colleges and universities from accessing federal financial aid for their students if program graduates don’t clear certain earnings thresholds. It would streamline repayment options, require some loan counseling, improve transparency about college programs to give students and families better information, standardize student aid offers, and limit graduate school borrowing, among other provisions. Over all, the different provisions, Cassidy said, would put “downward pressure” on colleges and universities to reduce costs.
If you read one portion - the College Transparency Act - you will see that Republican leaders (in the Senate, at least) are pushing for very similar disclosures. The difference being that the CTA has improvements in that it defines data sharing agreements between the Department of Education (ED) and the IRS (earnings data) and the Census Bureau (measuring what high school graduates earn for comparison), and that it clarifies the metrics for those in the workforce. With the current ED proposed rules, the actual details of the data sharing is hidden. But the point is that both major political parties are pushing similar transparency metrics.
Visualizations of Impact
I have revised the visualizations of the Gainful Employment data that could apply to all academic programs with sufficient data to show both metrics. On the vertical axis is a measure of Debt to Earnings (also known as Excess Debt Payments), where ED calculates that students have more debt than they can handle (8% of total earnings or 20% of discretionary earnings). Up is bad, down is good, zero is dividing line. On the horizontal axis is a measure of Earnings Premium (program graduates making more than a state average of high school graduates without a postsecondary degree). Left is bad, right is good, zero is dividing line.
To pass both metrics, a program would need to be in the bottom right quadrant. To avoid making prospective students sign a disclosure form that they have seen this data (too much debt), a program would need to be in the bottom two quadrants.
The size of each program is a rough measure of its enrollment.
With that in mind, let’s look at all academic programs with sufficient data, color coded by the credential type (Associate’s, Bachelor’s, etc).
Notice that there are a lot of programs that would fail the Debt to Earnings metric requiring a signed disclosure by students. This is particularly true for graduate programs - Master’s, Doctoral, First Professional degrees.
What if we did the same view but color coded by control, to show the differences between public, private nonprofit and private for-profit institutions?
For-profits have somewhat larger percentages of programs failing the Earnings Premium metric, but privates and publics have a greater percentage failing the Debt to Earnings metric (mostly for privates).
Let’s pick one program to clarify how the data is laid out (all from the College Scorecard). George Washington University (GWU) and its Law degree would fail the Debt to Earnings metric and require disclosure.
Trust me, if these rules make it through the process as proposed, this type of program disclosure will have an enormous impact. And I don’t think many people in higher education understand the implications.