Once reserved for the privileged, college attendance has been increasing over the last two decades, as data from the National Center for Education Statistics (NCES) readily attest. Indeed, the pursuit of a college degree is no longer the sole domain of the privileged few. Thanks in part to the proprietary sector providing newfound access to higher education opportunities otherwise denied to some students, more and more people are able to attend college today, regardless of socioeconomic status.
Without question, federal financial assistance has also played a significant role in increasing access to higher education. Without tuition support, an untold number of students would not be able to receive the knowledge and training they need to pursue their professional aspirations. Today we see these two themes – access and affordability – talked about passionately in Washington as part of the GE debates.
Another theme is the very purpose of higher education itself. Policymakers, it seems, wish to quantify the value of a college degree and assess its worth based on its graduates’ career outcomes. Proprietary colleges in particular have come under fire, as the activities of a handful of bad actors are repeatedly highlighted by those with their own agenda to discredit and diminish the strong outcomes and enviable student-centric cultures that many proprietary colleges provide year after year. Their primary message point is that proprietary colleges do not adequately prepare their students for gainful employment, leaving them saddled with student debt burdens that are out of alignment with likely post-graduation earnings.
And that’s where the GE Rule comes in, of course. The Department of Education’s stated intention is to improve the performance of sector schools and protect taxpayers’ interests by limiting federal financial aid funds to programs where graduates’ debt-to-income ratio is more than eight percent, and where their cohort default rate is higher than 30 percent. By the Department’s logic, these metrics alone determine a program’s quality and ability to provide relevant, meaningful workforce preparation and training.
So, what are these damning percentages based on? When you consider that average debt-to-income ratios for all colleges nationwide – encompassing not-for-profit and public institutions, too – sits at 13 percent, it seems incongruous that the Department would choose to enforce such a prohibitive and unjustified metric. Not only this, but lawmakers suggest that earnings data under GE may be scrutinized as early as 18-30 months after graduation – hardly the high point of most young adults’ professional lives.
Since the Department has not released supporting data to rationalize its methodologies, we must look at the bigger picture.
A Federal Reserve Bank of New York research paper released earlier this year entitled, “Are Recent College Graduates Finding Good Jobs?”, examined the earnings of college graduates up to five years after graduation to see if, at this early stage of their careers, their postsecondary education had paid off in terms of earnings. The answer? An unsurprising and fairly conclusive “no.”
That’s not to say that their degree wasn’t worth it. Numerous studies have shown that, in the long run, a college education is one of the best investments a young person can make. For example, according to the U.S. Census Bureau (“The Big Payoff: Educational Attainment and Synthetic Estimates of Work-Life Earnings”), on average, a college graduate can expect to earn roughly $900,000 more than a person with only a high school degree over their working life. But, in the short term, an astounding 44 percent of graduates across all sectors of higher education reported “underemployment” – that is, they found themselves working in roles that do not require a college degree a full five years after graduation. Significantly, the report also noted that the number of graduates aged 22 to 27 years old working in jobs that were either part-time, or earning compensation of less than $25,000 per year, had risen considerably since 2000.
Does this mean that we should dismiss higher education’s worth completely? Of course not. The report recognized that unemployment and underemployment among college graduates are not only symptomatic of a weakened economy, but are far from new phenomena. And, as the report’s authors rightfully observed: “Recent graduates tend to take some time after they graduate to find jobs that fit their education.” In no way do they surmise that a complete overhaul of the higher education system is necessary.
Interesting then, that the Department of Education is introducing punitive measures that predominantly affect programs at for-profit colleges – measures that entirely overlook the difficulties all graduates face when attempting to enter the workforce and source meaningful employment.
Most troublingly, they appear content to do so using questionable data (or no hard data at all) and a demonstrably ill-conceived, truncated measurement period of as early as 18-30 months after graduation, contrary to data from the last two decades showing that individuals have lower earnings when they just begin their careers.