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Level the Playing Field: A Thought-Experiment
The Department of Education has proposed tough new fiscal regulations on for-profit colleges and universities. ACTA has consistently called for an even-handed treatment of for-profit and nonprofit institutions. In the tradition of German research universities, we will perform a Gedankenexperiment, a thought-experiment. Let us take the "gainful employment" and loan repayment tests that the Department of Education intends to impose upon for-profit postsecondary institutions and imagine they apply to all public and private colleges and universities. Any institution, then, public or private, whose graduates have debt service payments greater than 12% of average earnings or 30% of discretionary income would no longer be eligible to admit students with federal student loans. So also eligibility to receive students with federal loans would evaporate for institutions if the percentage of former enrollees (whether or not they finished their degrees) making scheduled payments of interest and principal on student loans falls below 35%. Leaving aside the for-profit sector, how many of the 3500 or so non-profit undergraduate institutions in the United States, public or private, would survive under these regulations?
As reported on the Lehrer News Hour, the average college graduate, especially one with loans to repay, has significant challenges ahead in this ongoing recession. "For college graduates under the age of 25, the jobless rate is 9.5 percent. And between 2000 and 2009, earnings for grads with just a bachelor's degree fell by 15 percent. Yet public college tuitions rose 63 percent, and private schools went up 30 percent." Is "gainful employment" and loan repayment, measured in the middle of an economic crisis, a fair standard to use for the worthiness of a postsecondary institution? Perhaps the Department of Education's proposed criteria are just too blunt an instrument to use. And if this is bad policy for non-profit colleges and universities, chances are, it's also too clumsy a way to approach the for-profit sector. Harvard University Professor Dr. Bridget Terry Long argued in her recent report: "While recent reports focus on poor outcomes for students who attend for-profit colleges, research suggests that low levels of degree completion also plague some colleges in the non-profit sector. To improve the ability of consumers to make better college decisions, we need better information on all colleges and universities." (emphasis added). Diverse: Issues in Higher Education also emphasized this point: it is a message that policymakers and lawmakers need to hear.
Posted by Michael Poliakoff on December 07, 2010 at December 7, 2010 10:56 AM
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