Colleges Face New 'Gainful Employment' Regulations For Student Loans

HughPickens.com writes: Education Secretary Arne Duncan says the Education Department wants to make sure loan programs that prey on students don't continue their abusive practices. Now Kimberly Hefling reports that for-profit colleges who are not producing graduates capable of paying off their student loans could soon stand to lose access to federal student-aid programs. In order to receive federal student aid, the law requires that most for-profit programs, regardless of credential level, and most non-degree programs at non-profit and public institutions, including community colleges, prepare students for "gainful employment in a recognized occupation" (PDF). To meet these "gainful employment" standards, a program will have to show that the estimated annual loan payment of a typical graduate does not exceed 20 percent of his or her discretionary income or 8 percent of total earnings.

"Career colleges must be a stepping stone to the middle class. But too many hard-working students find themselves buried in debt with little to show for it. That is simply unacceptable," says Duncan. "These regulations are a necessary step to ensure that colleges accepting federal funds protect students, cut costs and improve outcomes. We will continue to take action as needed."

But not everyone is convinced the rules go far enough. "The rule is far too weak to address the grave misconduct of predatory for-profit colleges," writes David Halperin. "The administration missed an opportunity to issue a strong rule, to take strong executive action and provide real leadership on this issue." The final gainful employment regulations follow an extensive rulemaking process involving public hearings, negotiations and about 95,000 public comments and will go into effect on July 1, 2015.

Comments

This is the latest in a long unfortunate evolution

[pthisis]

A liberal arts or pure science education is not meant to be a professional degree. It's a way to learn a lot about a particular topic, independently of whether that directly helps your employment chances or not.

Historically, there was a fairly sharp delineation between universities and vocational schools--even "white collar" vocational schools like engineering were at separate institutions (often A&T or A&M schools), and lawyers and doctors were primarily apprenticed. At some point doctors, and later lawyers, became highly skilled professions that needed more formal training. To a degree it made sense to combine medical schools with pure sciences under one university, since some of the basics overlap.

But it had the unfortunate side effect of starting the thought in people's minds that universities are vocational institutions, rather than institutions of higher learning. I certainly don't mean to insinuate that a liberal arts degree has no application in the real world--quite the contrary. But it's intentionally targeted at longer-term learning rather than particular vocations per se, and not everyone who pursues a higher degree does so as a job entree.

Nonetheless, the law schools and med schools were followed by a spate of mergers between technical institutes and universities. Suddenly non-university vocational institutes were looked on as crappy and inferior, and it became a mantra (for no good reason) that you needed a 4-year college/university degree to succeed at jobs that historically had been done quite successfully without it. Even a shorter professional program started to become more prestigious if allied with a 4-year college, for no good reason (e.g. nursing schools at universities being, generally, valued more highly than independent nursing colleges).

The result was a massive spike in the number of people going to 4-year colleges--that number has sextupled or so over the past 60ish years--and a massive decline in the number of people going to vocational and technical schools. The latter have become a joke to the point where vocational school brings to mind TV commercials for Devry or Andover tractor trailer driving or dental hygeniest schools.

The downfalls of this are manifold. University prices skyrocket as everyone seeks to get in, whether they are really interested in a university degree or not. Vocational schools fold and a large percentage of the people who'd have attended them are forced into universities, exacerbating #1. Jobs see more and more college degrees, and start expecting them, making people start viewing colleges and universities as professional/career prep schools.

And universities become disincentivized to teach pure liberal arts or even theoretical mathematics, as they start being judged based on how good they are as job factories rather than as educational institutions; the result is a short-term focus that harms long-term research and eventually job opportunities (much akin to eliminating R&D budgets, but on a national scale).