Regulatory review for all

I had not thought about this for a while until this recent article brought it to mind, Harvard, Too? Obama’s Final Push to Catch Predatory Colleges Is Revealing by Kevin Carey.

The Obama administration has for some years been pursuing the private education sector for exploitive practices - basically promising too much to prospective students and delivering too little in terms of an education valued in the marketplace. I don't disagree with the policy given that students are often taking out loans for near worthless certificates. My only disagreement has been with the fact that the scope is restricted to private sector schools.

If it is a problem there, why might it not be a problem in traditional four-year schools as well? There is certainly plenty of anecdotal data to support that the problem is real there as well. The past administration's stance of only going after for-profit school has appeared ideological at best (profit = bad) or collusive at worst. Academia (four year schools) have provided much funding and certainly a lot of intellectual covering fire for the administration. They are clearly an ally. And while most are not for profit institutions, all of them are commercial institutions. Any commercial enterprise is always concerned about competition. Going after for-profit schools appeared to me as if the Administration were doing a commercial favor to their academic allies by reducing the number of competitors in the field. Corrupt, in other words.

It has also concerned me that the result of the Administration's structuring of the regulatory review process has effectively meant that the programs most used by the poorest are the ones most targeted while the universities most attended by the upper middle class get a free pass. This has seemed discriminatory to me. By all means, protect students from unscrupulous programs which promise more than they can deliver. But protect all students, not just the ones who it is easy to ignore if you get it wrong.

Carey reports an interesting datum to support my skepticism about the differential effectiveness. Most for-profit schools do not offer a four year degree. They confer certificates and it is certificate-granting schools which have been the target for scrutiny. But by a quirk, one Harvard program got caught up in the methodological review and indeed, they were found to be equally bad at serving the interests of their students.

For the past eight years, the Obama administration has waged a battle against predatory for-profit colleges. On Monday, the Department of Education released a final salvo — a list of hundreds of college programs that load students with more debt than they can afford to repay.

The failing-program list included ITT Tech, which filed for bankruptcy under federal pressure late last year, as well as industry leaders like Kaplan University and the University of Phoenix. And there — among a host of local graphic design, fashion, cosmetology and barber schools — is Harvard University.

The fact that such a world-famous institution of higher learning was caught in a regulatory net devised to protect students from exploitative trade schools suggests that even the most prestigious colleges may not be paying enough attention to whether their degrees are worth the price of admission.

The Obama administration’s rules on for-profit colleges are based on two statistical measures of individual programs: how much money typical program graduates are required to spend on student loan payments every year, and how much they earn in the job market two years after graduation. If this “debt-to-earnings ratio” is too high for multiple years — if graduates need to spend too much of their income paying down loans — then the program is ruled ineligible to receive federal financial aid.

Republican members of Congress and people working with the incoming Trump administration have called for rolling back the for-profit college regulations. Harvard’s inclusion suggests it might make sense to expand the rules to include nonprofit programs with similar problems.

The Harvard program is run by the A.R.T. Institute at Harvard University (A.R.T. stands for American Repertory Theater). It’s a small program, admitting about two dozen students each year into “a full-time, two-year program of graduate study in acting, dramaturgy or voice pedagogy.” On average, graduates earn about $36,000 per year.

The problem, from a regulatory standpoint, is that they borrow a lot of money to obtain the degree — over $78,000 on average, according to the university. The total tuition is $62,593. And because it’s a graduate program, students can also borrow the full cost of their living expenses from the federal government, regardless of their credit history.

After accounting for basic living expenses, the average Harvard A.R.T. Institute graduate has to pay 44 percent of discretionary income just to make the minimum loan payment.

Were the new administration to apply the same regulatory scrutiny to all institutions of higher learning, it would be much fairer and likely would dramatically improve life outcomes for all incoming students.