Education & Gainful Employment
Over the years I have written various critical pieces about for-profit schools. As I have emphasized before, I have nothing against the idea of a for-profit school. As such, my criticisms have not been that such schools make money. Rather, I have been critical of the performance of such schools as schools, with their often predatory practices, and the fact that they rely so very heavily on federal funding for their profits. This article is, shockingly enough, also critical of these schools.
Assessment in and of higher education has become the new normal. Some of the assessment standards are set by the federal government, some by the states and some by the schools. At the federal level, one key standard is in the Higher Education Act and it states that career education programs “must prepare students for gainful employment in a recognized occupation.” If a school fails to meet this standard, then it can lose out on federal funds such as Pell Grants and federal loans. Since schools are rather fond of federal dollars, they are rather intent on qualifying under this standard.
One way to qualify is to see to it that students are suitably prepared. Another approach, one taken primarily by the for-profit schools (which rely extremely heavily on federal money for their profits) has been to lobby in order to get the standard set to their liking. As it now stands, schools are ranked in three categories: passing, probationary, and failing. A passing program is such that its graduates’ annual loan payments are below 8% of their total earnings or below 20% of their discretionary incomes. A program is put on probation when the loan payments are in the 8-12% range of their total earnings or 20-30% of discretionary incomes. A program is failing when the loan payments are more than 12% of their total income or over 30% of their discretionary incomes. Students who do not graduate, which happens more often at for-profit schools than at private and public schools, are not counted in this calculation.
A program is disqualified from receiving federal funds if it fails two out of any three consecutive years or it gets a ranking less than passing for four years in a row. This goes into effect in the 2015-2016 academic year.
Interestingly enough, it is matter of common ideology in America that the for-profit, private sector is inherently superior to the public sector. As with many ideologies, this one falls victim to facts. While the assessment of schools in terms of how well they prepare students for gainful employment does not go into effect until 2015, data is already available (the 2012 data seems to be the latest available). Public higher education, which is routinely bashed in some quarters, is amazingly successful in this regard: 99.72% of the programs were rated as passing, 0.18% were rated as being on probation and 0.09% were ranked as failing. Private nonprofit schools also performed admirably with 95.65% of their programs passing, 3.16% being ranked as being on probation and 1.19% rated as failing. So, “A” level work for these schools. In stark contrast, the for-profit schools had 65.87% of their programs ranked as passing, 21.89 ranked as being on probation and 12.23% evaluated as failing. So, these schools would have a grade of “D” if they were students. It is certainly worth keeping in mind that the standards used are the ones that the private, for-profit school lobby pushed for—it seems likely they would do even worse if the more comprehensive standards favored by the AFT were used.
This data certainly seems to indicate that the for-profit schools are not as good a choice for students and for federal funding as the public and non-profit private schools. After all, using the pragmatic measure of student income relative to debt incurred for education, the public and private non-profits are the clear winners. One easy and obvious explanation for this is, of course, that the for-profit schools make a profit—as such, they typically charge considerably more (as I have discussed in other essays) than comparable public and non-profit private schools. Another explanation is that (as discussed in other essays) is that such schools generally do a worse job preparing students for careers and with placing students in jobs. So, a higher cost combined with inferior ability to get students into jobs translates into that “D” grade. So much for the inherent superiority of the for-profit private sector.
It might be objected that there are other factors that explain the poor performance of the for-profit schools in a way that makes them look better. For example, perhaps students who enroll in such programs differ significantly from students in public and non-profit private schools and this helps explain the difference in a way that partially absolves the for-profit schools. As another example, perhaps the for-profit schools suffered from bad luck in terms of the programs they offered. Maybe salaries were unusually bad in these jobs or hiring was very weak. These and other factors are well worth considering. After all, to fail to consider alternative explanations would be poor reasoning indeed. If the for-profits can explain away their poor performance in this area in legitimate ways, then perhaps the standards would need to be adjusted to take into account these factors.
It is also worth considering that schools, public and private, do not have control over the economy. Given that short-term (1-4 year) vagaries of the market could result in programs falling into probation or failure by these standards when such programs are actually “good” in the longer term, it would seem that some additional considerations should be brought into play. Naturally, it can be countered that 3-4 years of probation or failure would not really be short term (especially for folks who think in terms of immediate profit) and that such programs would fully merit their rating.
That said, the latest economic meltdown was somewhat long term and the next one (our bubble based economy makes it almost inevitable) could be even worse. As such, it would seem sensible to consider the broader economy when holding programs accountable. After all, even a great program cannot make companies hire nor compel them to pay better wages.