Gainful Employment Gets Another Look on Capitol Hill

Approximately one month after the U.S. House of Representatives approved an amendment to prohibit the U.S. Department of Education from implementing its proposed "gainful employment" regulation, the chamber’s Education and the Workforce Committee convened a hearing titled "Education Regulation: Roadblocks to Student Choice in Higher Education," last Thursday that appeared largely designed to support efforts to block the rule.

It was in many ways a stark contrast to a Senate hearing on the same subject the previous week, during which Sen. Tom Harkin, D-Iowa, who heads the Senate education committee, called one for-profit institution "an absolute scam."

According to a recent report from the Education Trust, 24 percent of all Pell Grant recipients are attending for-profit colleges even though those colleges comprise only 12 percent of total college enrollment. In addition, the report said, for-profits account for 43 percent of all federal student loan defaults. Congressional lawmakers agree that these statistics are alarming and that there are both good and bad actors operating in the for-profit sector, but that’s about all they can agree on. More importantly, they seem unable to agree on a solution.

“At its heart, this issue is about student choice,” says Rep. John Kline, R-Minn., who heads the House education committee. “We all support transparency and accountability. We realize there are some bad actors that should be rooted out. But we should not deny students the opportunity to attend the college of their choice and gain the valuable skills they need to compete in the workforce.” He adds that rather than restrict access to an entire sector, individuals should be “empowered” to make informed decisions.

During the hearing, Jeanne Herrmann, chief operating officer at Globe University and the Minnesota School of Business, argued against the proposed rule, saying that schools cannot control how much students borrow. Further, she said, the rule would make it difficult to anticipate which programs would be restricted or made ineligible to participate in Title IV funding because schools do not have access to the earnings information by which the debt/income metric would be calculated. She said that educational outcomes, such as retention, placement and post-graduation licensure exam passage rates, should be used to measure quality.

Rep. Robert Andrews, D-N.J., also agreed that graduation and job-placement rates might be a better basis on which to judge an institution’s performance.

Meanwhile, two Democrats argued for what they thought should be greater issues of concern. Arizona Rep. Raul Grijalva expressed amazement that his Republican colleagues, who have been so steadfast in their determination to make government tighten its belt and use taxpayer money more prudently, would argue against a regulation that would use taxpayer dollars more efficiently. Rep. Timothy Bishop, D-N.Y., said he is troubled that the committee has had four hearings on the proposed regulation but has not spent “a second dealing with what I consider the single greatest problem confronting higher ed today — particularly its students — and that is the pending devastation of the student financial aid programs as proposed by the Republicans” in their continuing resolution to fund the remaining months of the 2011 fiscal year.

But other lawmakers on the committee from both sides of the aisle seemed more focused on how the rule would affect access and student choice. Rep. Donald Payne, D-N.J., expressed concern that the rule would limit access to a wide range of programs, not just the bad ones.

That’s exactly what disturbs Arnold Mitchem, president of the Council for Opportunity in Education. Indeed, he was the sole witness who focused on how underrepresented minorities and low-income students have been negatively affected by their experiences attending for-profits.

“I think all of us in this room agree that access is critical,” he said. “But access to what? Mountains of debt? Personal and career success must be the answer to the access question.

What we are witnessing at COE is that many low-income and first-generation students are not achieving success after participating in for-profit programs.” Instead, he said they graduate with significant debt as well s the inability to obtain gainful employment or transfer credits earned to more traditional higher education institutions.

The one thing that he and Kline may agree on is the need to help students make informed choices. But, according to Mitchem, the for-profit sector unscrupulously targets low-income families who are new to the college application experience and lack the ability to distinguish between a for-profit education and the traditional college experience. He placed some of the blame on government, implying that its willingness to provide financial aid funds to for-profits connotes an endorsement of them.

“Many who oppose greater controls on for-profit institutions argue simply that freedom in the marketplace is a core value of American institutions and that to interfere with the right of for-profit institutions to make a profit is inappropriate,” Mitchem said. He warned that such thinking too closely parallels that which enabled mortgage lenders to take advantage of low-income borrowers and, if left unchecked, “will in the foreseeable future undermine public support for the entire range of federal financial assistance programs.”

DIVERSE EDUCATION

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