In a recent article published by Inside Higher Ed, Senior Reporter Paul Fain, who has insightfully written numerous stories on Gainful Employment and demonstrates a depth of understanding around its myriad nuances, wrote about the possibility that privately held proprietary colleges (“for-profits”) could consider changing their tax status to become non-profit organizations.
The article demonstrates a fundamental paradox of the Gainful Employment rule: it all comes down to tax status. An institution with degree programs that may not pass the regulation today as a proprietary college would not be subject to the regulation as a non-profit institution. Same exact institution, same exact degree programs, same exact debt-to-earnings rate and program cohort default rate…but very different regulatory realities.
The Department of Education’s stated goal with Gainful Employment is to ensure that colleges offer quality, cost-effective educational programs that minimize student debt and lead to financially stable careers, with the onus falling on for-profit institutions and their degree programs. Focusing solely on for-profit colleges, however, does not adequately protect students. What about the students attending poorly performing taxpayer-supported community colleges, and others in the public and non-profit space? Are they not equally deserving of the Department’s intervention? Overlooking poor outcomes at not-for-profit and public institutions, while holding solely the proprietary sector accountable, seems at odds with the Department’s mission.
We agree that colleges should employ all available resources to ensure optimum outcomes, and maximize return on investment for their students. However, this should be true for institutions across all sectors of education. The responsibility to meet a sensible standard for the benefit of students (a standard that the proposed GE Rule does not meet) should not fall solely on for-profits. Indeed, as we’ve mentioned before, many programs at highly reputable public institutions would likely fail “Gainful Employment” if required to meet the same criteria. The Insider Higher Ed article underscores why one set of rules should be universally applied to all colleges, regardless of which prefix precedes “profit.”