Coffee With Robert Shireman

The following is from an excerpt from a recent exchange between Robert Shireman, former deputy undersecretary of education, and Michael Clifford, founder and chairman of SignificantFederation.com, as moderated by analyst Ariel Sokol.

Ariel Sokol: If the new gainful employment rules are good for regulating for-profits, why shouldn't they be used for every single Title IV institution?

Michael Clifford:
For-profit institutions have argued for the last several years that they have been targeted. After all, if federal oversight (e.g., 90/10, GE) is good for the for-profits, why isn't it good for all of higher education? This question is at the core of sector participant duress. There is an inherent unfairness that all institutions are not governed by the same rules. And let's not play games that the current regulations are structured based on statutes already passed by Congress. If we're going to establish a relationship between income and debt, it should be associated with all schools. The excuse isn't to say that Congress won't bite, but our lawyers have concocted a legal way for us to regulate at least part of the industry where we believe excesses exist.

The for-profit industry would have found the regulations much more palatable assuming that all institutions were subject to the rules. Rather than be a battle of for- vs. non-profit, the issue would have been reframed as good vs. bad institutions.

Robert Shireman
Most of the regulations apply to all types of institutions. The gainful employment regulation uses the statutory definition of career education programs, which includes most for-profit programs as well as public and non-profit programs of less than two years. If, in fact, all the schools that run afoul of the regulation end up being for-profit institutions because their students end up with worse outcomes, I hardly see that they would have cause to complain. As a friend of mine said, that would be like bank robbers complaining that the bank robbery statute only applied to them. One fundamental rule that applies only to nonprofit and public institutions is that no one is allowed to hold an ownership interest in the college’s revenues and assets. That prohibition exists to protect consumers and taxpayers. If Michael does not want that rule to apply to his colleges, then it is logical and appropriate for other rules to substitute.

Ariel Sokol: Let me ask the question a bit differently — why shouldn't every single postsecondary programs have published debt to income ratios and repayment rates accessible to accreditors, academics, and the general public?

Robert Shireman
It should. Graduates' earnings information is already available in Florida and one or two other states, at least for public institutions. One issue that needs to be addressed is how to account for people who go to graduate or professional school after their bachelor's degree.

Michael Clifford
Bob, why didn't you insist on a level playing field? Yes, Bob and I agree that it should.

Click through for full conversation text.

SIGNIFICANT FEDERATION

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