A recent article published by The Chronicle of Higher Education questions the use of student loan default rates as a reliable metric, suggesting that the numbers reported can be manipulated by the colleges reporting them.

In the piece (“Student-Loan Default Rates Are Easily Gamed. Here’s a Better Measure“), Ben Miller writes that the short timeframe during which default rates are measured opens the door for colleges to improperly influence their numbers, for example by encouraging graduates struggling to meet their repayment obligations to seek a deferment or forbearance on their loans. Doing so would give the student a payment reprieve and the college a temporary pass from that loan being counted in their default tally.

Mr. Miller writes that there needs to be another metric added to the mix — namely, graduation rates — to increase the reliability of data used in program value assessments. Although he doesn’t specify the GE Rule, it’s reasonable to make that inference. That concept certainly caught our attention as we’ve been advocating since Day One for such an obvious and practical measure of program performance to be included among any Gainful Employment metrics.

As we’ve written before, the GE Rule takes no accounting of program graduation rates in its performance assessment, which is counter-intuitive at best:

“The GE rule ignores traditional measures such as program completion and job placement rates to focus on financial targets, specifically student loan debt relative to earnings solely during the first few years of their professional careers. That doesn’t sound right to us. Look at it this way: under the current draft of the regulation, a program that enrolls thousands of students but only sees a dozen graduate could still pass the proposed rule since it only applies to programs with at least 30 graduates. As well, a program can pass the rule if it has a median debt of zero even if very few students graduate or find employment. How does that serve students’ best interests — or taxpayers’ for that matter?”

In his article, Mr. Miller writes that the inclusion of graduation rates casts program outcome statistics in a very different light. The absence of this transparency could, of course, lead students to make half-informed decisions about where they should enroll. The same can be said for the GE Rule, which mandates heightened disclosures from some colleges, but not others. Indeed, it requires NOTHING at all from many colleges and universities because they have been essentially granted amnesty from the regulation, regardless of how poor their program outcomes may be.

 

Research shows that approximately 60% of community college programs will be permanently exempted from the GE metrics simply because they do not graduate enough students for the Department to calculate rates. There are programs at public colleges where the on-time graduation rates consistently have been as low as ONE percent for the last 10 years, yet they will not be held accountable under the GE Rule because they were granted an exemption based on their tax status. Their poor performance numbers will never reach John or Jane Q. Public because they don’t have to disclose it.

As George Leef, Director of Research for the John W. Pope Center for Higher Education Policy, so succinctly wrote in a commentary last year about a column in the New York Times regarding Gainful Employment: “Clumsy federal regulations meant to solve one problem (the fact that many students who enroll in for-profit colleges don’t graduate and find ‘gainful employment’) are likely to have the unintended consequence of harming students who will be lured into non-profits that will be worse for them.”

And that likely outcome should fail everyone’s test of what’s best for the students the Department says it seeks to protect with this regulation.

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