Wednesday, September 15, 2010

One more time on gainful employment

After taking a summer hiatus, The Itinerant Professor is back in full swing. Yes, just like network television shows, this blog takes a summer hiatus. And just like major league baseball stars, it also refers to itself in the third person.

Enough posturing. The big news this fall is the overwhelming response to the proposed gainful employment rules published by the Department of Education in the Federal Register in July.  "Overwhelming" as in over 83,000 comments on the rules submitted to the Department, according to The Chronicle of Higher Education, far in excess - by scores of thousands - of any other proposed rules by the Department in recent memory .

As Inside Higher Ed pointed out in a recent article, the vast majority of these came in from students, employees, and supporters of for-profit institutions, often coordinated by the Career College Association (CCA), the lobbying arm for the for-profit sector.  These were not the result of grass roots efforts, but more akin to the "astroturf" campaigns where companies or other organizations try to make contacts with Congress or federal agencies appear to come from individuals alone, rather than as part of an orchestrated campaign.  The IHE article described how Education Management Corp. hired a "Republican-affiliated strategy firm" to encourage and assist employees of its many for-profit institutions to write letters in response to the gainful employment rules.  The article noted that the CCA "also coordinated bulk submissions of hundreds of comments."

The story about Education Management Corp. was first published by Stephen Burd of the New American Foundation's Higher Ed Watch blog:
“This week, employees throughout EDMC and our schools will be receiving phone calls during business hours from our partners, the DCI Group, to assist you in crafting personalized letters to U.S. Secretary of Education Arne Duncan detailing for him your own views on Gainful Employment,” Todd Nelson, EDMC’s chief executive officer, wrote last Tuesday to the company’s approximately 20,000 employees in an e-mail, which was obtained by Higher Ed Watch.

 “You will be asked a series of short questions that will help DCI Group create a unique letter. These personalized letters will then be delivered to you for a signature, along with a pre-addressed stamp envelope,” wrote Nelson. “We encourage you to mail the letters as quickly as possible so that your comments are received before September 9. The entire process should take no more than 10 minutes of your time, but its impact on EDMC would be immeasurable.”
One of the major criticisms of the rules raised by the CCA campaign is that they would likely force many for-profit institutions, or at least some of the programs in those institutions, to close, as students in them would no longer be eligible for federal Title IV student aid funds.  The campaign has emphasized how this would severely affect access to higher education by poor and minority students, since they are disproportionately enrolled in this sector.  A recent press release by the CCA stated that:
By closing programs and placing others in a tenuous “restricted” category, the ED gainful employment proposal has the potential to push 2.3 million students out of higher education, according to a CCA commissioned economic analysis prepared by Charles River Associates. This number includes 790,000 fewer females, 210,000 fewer African-Americans, and 190,000 fewer Hispanics.
[In the interest of full disclosure, I should note that the CCA had approached me earlier this year about hiring me to conduct this study for it, but I declined.]

The question now is how the Department is going to react to all these comments.  It clearly knows that a good portion of these are the result of the astroturf campaign, and thus, are likely to be discounted in importance.  Secretary of Education Arne Duncan has been fairly strident in his criticism of the for-profit sector and the need for the gainful employment rules, and has shown little inclination to back down on the preliminary rules published in July.

My guess is that the Department will stand its ground, and attempt to implement the rules largely as published.  An early indication of this was the press release issued by the ED earlier this week when it announced the most recent student loan default rates for FY2008, which rose from the previous year - not a great surprise, given the recession.  But in releasing the data, Secretary Duncan noted that:
"The data also tells us that students attending for-profit schools are the most likely to default," Duncan continued. "While for-profit schools have profited and prospered thanks to federal dollars, some of their students have not. Far too many for-profit schools are saddling students with debt they cannot afford in exchange for degrees and certificates they cannot use. This is a disservice to students and taxpayers, and undermines the valuable work being done by the for-profit education industry as a whole," Duncan continued.
So stay tuned.  The Department is scheduled to issue the final rules on November 1, with the rules scheduled to take effect next July 1.


  1. This argument drives me crazy-not because there needs to be tighter regulations, more because all "for-profits" are clumped into the conversation as if they are all the same. Let's call it out. We are largely talking about for-profit trade schools, correct? If so, let's call it that. There are many for-profits that are doing wonderful work that these regulations will hardly impact if implemented. Yet, by including all for-profits in the conversation, they all get a "bad reputation" when many of the institutions should be awarded not condemned for their work. My ultimate fear is that the students attending reputable for-profits will be hurt most from this rhetoric. I don't work for a for-profit, but I think many traditional colleges can learn from the good ones. my soapbox--now. :-)

    I'm curious to know why you declined to do the study, tho. :-)

  2. You're right, Andy - and this is another of the complaints of some, that all for-profits get lumped together. But the rules are designed to distinguish the "good" from the "bad" institutions. They don't seek to punish the entire sector, but only those institutions (or more specifically, programs within institutions) that can't demonstrate reasonable employment outcomes in relation to the cost of the program.

    And remember that, as I noted in my post on this topic in July, that the proposed rules would apply not just to the for-profit sector, but to public and non-profit private institutions also.

    As for my decision to decline doing the study - that's a post for another day :)