Career College Association vs. Dept of Education, Round 2...Fight

by Daniel L. Bennett

Yesterday, I blogged about the double standards of the Obama Administration in its ruthless pursuit of strangling the for-profit education industry with a gainful employment metric. The Career College Association sent a detailed letter to Education Secretary Arne Duncan denouncing the current proposed metric, providing evidence from research that it commissioned from Charles Rivers Consulting and University of Chicago economist Jonathan Guryan which indicates that

18 percent of for-profit postsecondary programs would not satisfy the debt limit requirement of the gainful employment proposal

33 percent of students in for-profit postsecondary programs would be impacted.

[and] that by 2020, approximately 5.4 million students who are on track to attend programs would be denied access by the proposed regulation

The research also indicated that:

Because the limits on borrowing do not vary with the length of program, longer programs would be more severely impacted.

approximately 40 percent of students in 2- and 4-year programs would be impacted. We also estimate that the impact would not be limited to a few areas of study, but would impact a wide variety of programs.

The reports author, Dr. Guryan, described additional problems with the Department's proposed metric that are similar to issues that I mentioned in a post back in January, such as the regulation:

focuses on the ability of recent graduates to repay loans in the early years of their post-schooling careers.

it cannot logically make sense to say that the average student cannot afford to pay 8 percent of her annual earnings to cover student loans for 10 years if those loans paid for education that raised her earnings more than 8 percent each year for the rest of her working life.

A policy aimed at protecting students would compare the benefits of education and the costs of education. A key feature of education is that the costs are paid up front, both in terms of foregone earnings and tuition, and the benefits accrue over the entire working life. To focus
exclusively on the short-term benefits is to ignore the long-term benefits

the premise of limiting borrowing for education based on early-career earnings is inappropriate and would be harmful to low-income students who rely on student loans for access to education beyond high school.

[and] The use of the 10-year repayment length is another way that the regulation would overweight the early costs of education and ignore the future benefits.

The report concludes that:

Our analysis suggests that the ―unintended consequences‖—cutting off
access to hundreds of thousands of students who want postsecondary education—will be much more substantial than the intended consequence, which we believe to be—though we are not certain—reducing the number of students who over borrow.

To start, the Department of Education has not clearly defined what the problem is that the
regulation aims to address.

it should not be assumed that public postsecondary institutions, particularly
community colleges, would absorb these students.