Conservatives complained a lot about Barack Obama when he was president. But not everything he did was bad.
One of the things Obama did that actually made a lot of sense was try to stop throwing federal student loan and grant dollars at for-profit colleges that take in lots of taxpayer money and fail to give their graduates useful skills for finding jobs afterward.
This wasn’t about regulating colleges. It was about being a better shepherd of taxpayer dollars.
Our nation has for decades run a “money-for-nothing” system of subsidizing higher education through student indebtedness. Consequently, a lot of subsidy-seeking entrepreneurs learned how to game this system and steer those federal loan and grant dollars into their own pockets by offering courses of study of dubious merit.
The quickest way to tell the difference between these bad apples and the useful, good for-profit schools that benefit their students is to set standards of accountability.
Obama’s rule on this, the “gainful employment rule,” imposes requirements based on how each program’s average graduate is faring two years later. If graduates of any for-profit college program or of any non-degree program at any school have to pay more than 12 percent of income in loan payments each year (there’s an alternative test based on discretionary income), then the college loses access to federal money. It can still keep operating, just not with taxpayer backing.
When the rule was proposed, tons of cash flooded into Washington to block it. Big names on both sides of the ideological spectrum were paid handsomely to lobby and write op-eds about the horrific consequences this would have for for-profit colleges.
But in the end, considering that it’s the taxpayer on the hook for guaranteeing all student loans, it was a sensible idea. And this year, just as it was about to be enforced against several poorly performing shools, Trump’s Department of Education has given them at least a temporary reprieve by rescinding the rule and starting the process of writing another.
Based on comments so far from Education Secretary Betsy DeVos, it appears that the aim is to make a rule that will apply equally to degree programs at all colleges, not just for-profits. And that’s not a bad thing. Heaven knows there are enough useless degree programs. (We refer here not to academic disciplines that are more theoretical than practical — philosophy majors actually do well in the job market — but rather to those that lack rigor, preach pure ideology, or otherwise fail to enrich the human person.)
But the decision to let the low performers off the hook this year is disappointing. DeVos wants to let applicants rely on transparent information about colleges’ results via the College Scorecard, instead of setting statistical targets as Obama’s rule did. This, DeVos reasons, will punish bad colleges with the loss of funds when students take their loans and grants elsewhere — a sort of free market, consumer-choice solution to the problem of bad schools.
The argument makes sense at some level, and the College Scorecard is a good idea no matter what else is done. But when politicians and policymakers talk about heavily subsidized markets like education as if they were “free,” be wary. We’re talking about a market in which people spend money that isn’t their own on colleges whose precise value could be hard to weigh, depending on each student’s goals.
The cutoff of bad schools under Obama’s rule was going to save $5 billion in taxpayer money over ten years. Perhaps more importantly, it might have helped many students next year avoid going into debt needlessly. Which is to say, it’s well and good to create a system where consumer choice plays a role, but any new rule should still set reasonably high minimum performance requirements for colleges to remain eligible for federal money.
Federal student loans and grants have given rise to an unfortunate amount of rank rent-seeking, as well as a culture in which administrators at more serious colleges hike tuition each year by as much as they feel like they can get away with, irrespective of the value they offer.
In an ideal world, the loans and grants would be scaled back, not only to deter hucksters but also so that elite colleges and universities would be forced to stop leaning on the taxpayer by hiking tuition far beyond students’ ability to pay.
That won’t happen any time soon. But until it does, Trump and DeVos must at least avoid returning to the status quo ante before the gainful employment rule. One thing America doesn’t need is a generation of wealthy college administrators and another of deeply indebted graduates with no useful knowledge, skills, or prospects.
