Report: Gainful Employment Elimination Signals 'Blasé' Attitude Toward Higher Ed Abuse

By Allie Bidwell, NASFAA Senior Reporter

Education Secretary Betsy DeVos’ decision to scrap the federal gainful employment regulations wasn’t just a step back in holding institutions accountable for student outcomes—it ensures no for-profit institution can lose access to federal funds, no matter how poorly it performs, argue former Education Secretary Arne Duncan and David Whitman, Duncan’s former speechwriter, in a new report.

The report, published Wednesday by the Brookings Institution, takes a strong stance against DeVos and the Trump administration’s decision to not just scale back, but wipe out the federal regulations, which sought to impose sanctions on career and vocational programs that failed to meet certain outcome thresholds. In the paper, Duncan and Whitman argued that the decision not only walks away from accountability standards, but also conservative principles.

“Her elimination of federal sanctions for low-performing programs marks a complete flip-flop from the administrations of Ronald Reagan and George H.W. Bush, which insisted on accountability for federal dollars and regulated outcomes like unfettered student debt in the federal student loan program,” they wrote.

They went on to say that the Trump administration’s defense of rolling back the gainful employment regulations—also shared by many Republican lawmakers—is a revival of Democrats’ defense of those same institutions from three decades ago. The argument was, and is, that “for-profit schools expand educational choice for disadvantaged students, and the poor performance of some programs merely reflects the demographics of their students and not the quality of the programs themselves.”

Democrats, however, ended their defense “in the face of overwhelming evidence that recruiting abuses and student debt burdens were heavily concentrated in the for-profit sector, even after taking account of student demographics.”

Duncan and Whitman said ending gainful employment sanctions is also an abandonment of a long-held conservative principle of fiscal responsibility, arguing that without sanctions, a for-profit institution won’t risk losing federal student aid no matter how poorly it performs.

They also argued that rolling back the regulations would cost the federal government $5.3 billion in student loans and Pell Grants in the next 10 years that would have been withheld from the poorest performing programs.

DeVos has argued that institutions would still be held accountable through changes to what’s reported on the College Scorecard, saying in the Notice of Proposed Rulemaking that the expanded set of information would “inform student enrollment decisions through a market-based accountability system.”

Duncan and Whitman pushed back on that idea, saying research has not shown that transparency without sanctions can have a noticeable impact on student behavior, and that the absence of any sanctions would ultimately hurt students.

“In the absence of federal standards like the gainful employment rule, poorly performing for-profit programs will resume taking advantage of hundreds of thousands of vulnerable students anew,” they wrote.


Publication Date: 10/18/2018

Alvin B | 10/19/2018 11:23:16 AM

The new rule would be a vast expansion of accountability, but history tells us that the responsibility for the accountability will fall, not on the academic departments, but on the shoulders of financial aid staff. Gathering GE data has been difficult for many schools, especially those who don't have IT staff or report writers in their shops. Do we really want to give the Department yet more authority to issue fines and sanctions? I understand the need to protect consumers and penalize diploma mills. Consumers are ultimately responsible for making decisions about the products they purchase be it a washing machine or higher ed. Joel T's comment is right on. Are schools ready for the proverbial 'basket weaving' majors...or now..'game designing' majors to be shut down for poor performance?

Lisa C | 10/19/2018 10:56:25 AM

From a FA administrator's view, I've hated the GE regulations since day 1. They are a complete pain to try to administer, report, keep track of deadlines, etc. A lot of things need fixed and simplified. But unlike a lot of people, I actually do agree with expanding them to all programs and enforcing the sanctions. If we're encouraging students to borrow loans for a degree that ultimately they won't be able to pay back with the salary they will be making, why is that condoned? It harms both the student and taxpayers. Ultimately over time, It might help align educational requirements with workplace outcomes better - let's stop requiring bachelor degrees for jobs that have low incomes, or reduce the cost of the degree, offer scholarships to offset the cost, or find other options.

Phillip M | 10/18/2018 10:43:01 AM

Mr. Arne Duncan refuses to acknowledge that in order to have access to Title IV funds you must be nationally accredited first. Most national accreditors require schools to report annually on each program’s performance of completion, placement, and licensure. There are required benchmarks set by these accreditors and failure to meet them will result in a loss of accreditation and Title IV eligibility. Therefore, to say that “no for-profit institution can lose access to federal funds, no matter how poorly it performs” is simply NOT TRUE. Furthermore, a “tax dependent” college (public sector) which offers the same programs as a “tax paying” college (for-profit) should be held to these same standards. Injustice For All by Mary Lyn Hammer is a verifiable source of analysis depicting the true statistics of the “tax paying” sector.

Joel T | 10/18/2018 10:11:14 AM

I have read that they are wanting to expand regulations to all programs as well, Jeff A. I wonder how the proponents of GE, along with NASFAA, will feel once they realize that this could lead down the path of under-performing programs to no longer be approved for financial aid?

For example, if the statistics show that students that receive a bachelor's degree in Art History or Master's of Liberal Arts are more likely to default on student loans, have a poor debt to earnings ratio, and the percentage of graduates employed in the field is low what would be your argument to Congress to say that the programs should still receive Title IV funding?

These regulations are a slippery slope, and I believe the proponents of the regulations should be wise to this when they keep asking the Congress and Department to pull more data at a program specific level. This could lead down a path that I do not believe they will like or enjoy.

There are other ways to address higher education entities with predatory practices.

Jeff A | 10/18/2018 9:37:48 AM

I don't mean the new 'rule', i mean the new disclosure 'plan'.

Jeff A | 10/18/2018 9:34:55 AM

The new rule is a vast expansion of accountability.

While the current rule only applies to effectively 6-7% of all students
enrolled in higher education, the new rule will provide benefits to all
consumers of higher education, with decision-making data presented in
a way they have never seen it before. In fact, with data available on the
very small scale it is, it actually does a disservice to all students. Many are
certainly enrolling in poorer performing programs where there was no
data available to make a comparison. Measuring programs on such a
small scale provides no practical way for consumers to make better
Once program level data is better understood across all higher education,
more stringent sanctions may be appropriate. But most certainly all
institutions will be motivated to improve overall outcomes, clearly a
benefit to students and employers who hire them.
To clarify, it is very possible there will be sanctions available to the U.S.
Dept of Education in the new rule.”
It is very noteworthy that former Secretary John King just recently
stated that he'd like to see some version of gainful employment expanded
to all programs in the reauthorization of the HEA. The new plan applies
the measurements his Department came up with to all programs. While he may
not be in favor of a change to sanctions, one must conclude that he would
be in favor of the direction the Department is going to expand debt-to-earnings
and possibly repayment rate accountability to all programs.”

Linda J | 10/18/2018 9:31:55 AM

I agree with Joel T. Very well put.

Joel T | 10/18/2018 9:25:31 AM

It is quite obvious that former Education Secretary Arne Duncan and David Whitman never tried to comply with the 412 page NSLDS GE User Guide, gather all of the information required for the GE Template that needed to be posted with a unique URL on every marketing piece and website sharing information about the program(s), create and submit all of this information for no one to really use or review, be forced into complying with these regulations even when your school does not participate in the Title IV loan programs and your students have no debt, or try to get a PPA re-certified while the Department dives into the minutia of GE programs that should probably be reserved for accreditation agencies.

I think NASFAA would do well to go back out to the schools and ask their feedback before touting an article of this nature. GE was despised on a pretty large scale in the higher education community, and this article gives the impression that NASFAA is out of touch with that.

You must be logged in to comment on this page.

Comments Disclaimer: NASFAA welcomes and encourages readers to comment and engage in respectful conversation about the content posted here. We value thoughtful, polite, and concise comments that reflect a variety of views. Comments are not moderated by NASFAA but are reviewed periodically by staff. Users should not expect real-time responses from NASFAA. To learn more, please view NASFAA’s complete Comments Policy.

Related Content

Let's Talk: Financial Value Transparency and Gainful Employment


Let's Talk: Financial Value Transparency and Gainful Employment: Let's Talk: Financial Value Transparency and Gainful Employment


View Desktop Version