The Department’s Justification for its Limited Focus in the Gainful Employment Rule

As readers of this blog know, I have argued against the Gainful Employment Rule that was just released by the Department of Education.  My rationale for my position, like the apparent rationale of the Department of Education for its position, has been driven by a commitment to improvement in the quality of higher education.  I join my education colleagues at the DOE in the fundamental premise that society’s outcomes from higher education can and should be better than they are.

But when I reviewed the report on the Rule, I was disappointed to see the tortured logic for focusing only on the for-profit sector even though the preamble of the rule makes the case that the DOE has a strong justification for applying its rules to all institutions of higher education in order to improve the quality of higher education.  The document that was released with the Rule states that “The Department of Education has a particularly strong interest in ensuring that institutions that are heavily reliant on Federal funding promote student academic and career opportunities.”

Of course, for-profit institutions are not reliant on direct funding from the public sector in contrast to traditional, public institutions which receive an average of 84% of their funding from non-tuition, including federal research grants, hospital revenues, etc., according to a report to the Department of Education from Jane Wellman a few years ago.  Excluding federal research support and other non-direct student support leaves a little less than half of the total or about $19,000, she says, for direct student support.  Two-thirds of even the non-research, per-student support for public colleges and universities was from public sources, according to her analysis of National Center for Education Statistics (NCES) data.  The Department’s logic, then, for its limitation of the Rule to for-profits is understandable only if (a) per student support from state and local funding is ignored as a justification for its interest in quality higher education, (b) if one excludes federal research support from its public interest in the quality of students’ education in public institutions, and (c) if one is willing to call student loans federal funding.

But the heart of the Department’s argument for focusing only on for-profit institutions is its differentiation of “gainful employment programs” from others, presumably traditional institutions.  In order to do so, the Department returns to the 1965 discussions that led to the Higher Education Act’s (HEA) creation in President Lyndon Johnson’s administration.  Among other aspects of the HEA was the creation of low interest loans to students, including students at for-profit institutions.  Some 46 years ago, the for-profit sector looked very different from today.  While it had included business programs from the middle of the 19th century, its programs generally were pragmatic and vocational and did not compete directly with the business, education and health sciences programs that we recognize at traditional schools.  The NCES reports that these three programs alone now lead to 35% of all college degrees in the U. S.  These high enrollment programs are now not only representative of most traditional colleges and universities but representative in essentially comparable curricula from many for-profit institutions.

But in the 1965 Senate hearings that led to the inclusion of for-profit students in the federal loan program and the use of the gainful employment language for the first time, the discussion was not about the college degrees of today in business, education and the health sciences.  They were about a more limited variety of technical and career-oriented degree programs that characterized the for-profit sector of that time.  When the University of Iowa’s Distinguished Professor Kenneth B. Hoyt testified before the Senate Committee, he spoke about his life-long interest in the development of programs of vocational guidance, career counseling, and career education for employment-bound high school students.  His commitment to these programs led to his testimony, quoted from 1965 by the Rule’s justification of its for-profit-only focus, “I have found no reason to believe that such funds (i.e., federal loans) are not needed, that their availability would be unjustified in terms of benefits accruing. . . .”  Along with other testimony, Professor Hoyt’s testimony before U. S. Senate supported what was to become the inclusion of low interest loans for students’ seeking gainful employment at for-profit institutions.

Professor Hoyt was not making an argument for differentiating for-profit education from traditional public and nonprofit education, and I do not believe that legislators were necessarily doing so either.  Instead, Professor Hoyt and others were arguing for treating educational institutions – whether for-profit and focused on gainful employment or traditional and focused on a liberal arts education – the same.   To distort Professor Hoyt’s comments into a justification for applying quality standards only to the for-profit sector is to misuse his comments as a justification for the Department’s rule-making.

One wonders why?  I continue to believe that the premise under which I work is shared by those in the Department of Education, i.e., that society’s outcomes from higher education can and should be better than they are.  I do not dispute that there have been abuses in the behavior of a few institutions from the for-profit sector of higher education, but I do believe the Department’s and some legislators’ approach to revealing them seemed more vendetta than dispassionate fact-finding.  What I hope for is that the Department’s interest will now turn to addressing that premise that I believe its staff shares with me.  I look forward to efforts that are directed more squarely at quality improvements, assurance of learning, graduation rates, and increased access from all categories of higher education institutions.


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