DeVos’ gainful deregulation is a step toward higher education reform

Yet another Obama-era regulation is in the process of being thrown out at the Department of Education.

Secretary of Education, Betsy DeVos is planning to lead the repeal of regulations that unfairly target for-profit universities and threaten them with the loss of student loan funds.

{mosads}The regulations stretched the wording of the Higher Education Act of 1965 far beyond its original purpose and subjected for-profit institutions to so-called “gainful employment” standards that, if applied across the board, would have flunked many traditional and prestigious four-year universities.

A former Obama administration Department of Education official called DeVos’ repeal of gainful employment guidelines an “anti-student agenda.” Others have insinuated that the Trump administration position on gainful employment is merely the result of connections with the for-profit lobbying industry.

But the experts and policymakers predicting dire consequences as the result of this department rollback are engaging in a negative response. An accurate analysis of the higher education picture is not of a market beset by predatory for-profit actors, but instead of a stagnant and expensive behemoth, propped up by federal loan backing, that has failed to meet student needs in the 21st century.

The gainful employment regulation requiring that for-profit university students achieve a certain debt-to-income ratio sounds reasonable at first blush in light of the impending student loan crisis. But zooming out to the bigger picture reveals that most four-year, non-profit, traditional institutions could not meet the standards slapped on for-profits by the Obama administration.

While the regulations required students from for-profit universities to spend no more than twelve percent — or a mere eight percent to get placed in the “warning zone”— of their incomes post-graduation on loan payments, students who chose traditional, four-year institutions were not subjected to the same standards.

The average debt-to-earning ratio among all types of higher education institutions is 13 percent, and a full 39 percent of graduates from private universities would be considered above the cutoff.

In fact, for-profit schools were situated squarely between public universities, which offset tuition with direct taxpayer dollars, and private institutions — which do not — according to the metrics used by the department. Yet only students utilizing non-traditional options or pursuing more unconventional certification were targeted for these new government burdens. 

Furthermore, the formula used by the department to calculate metrics for for-profit schools put together graduates’ income levels (measured only immediately post-graduation, not long-term), debt levels and other statistics Moreover, it was only intelligible to a few department regulators and lobbyists from both sides.

Like many promulgations of the unaccountable administrative state, the opaque formula used in the regulations not only made what should have been a simple issue too complex for the average American to understand, but also raised the specter of bureaucrat abuse. 

The largest problem in higher education is hardly for-profit institutions, which offer flexibility and other benefits for students who are older, have families, or are in the military. Nor does the department’s proposed replacement for gainful employment guidelines, a type of U.S. World News & Report-style spreadsheet listing loan ratios and future earnings, get to the heart of the issue.

Instead, we must re-examine an entire higher education marketplace, drunk on ever-increasing federal loan financing, that no longer provides the value-add for either career or what used to be called a classic liberal-arts education that a degree once promised. 

Parents and students today are at a crossroads. A confluence of factors — high student loan debt, the lackluster career success of over-credentialed Millennials, and the anti-free speech campus insanity chronicled on outlets like campus reform — have come together to encourage a reassessment of “the more degrees the better” thinking left over from the early 2000s.

Higher education is no doubt in need of reform, and there are some predatory practices in the industry, regardless of whether an institution files its tax returns as a for-profit or non-profit.

Secretary DeVos and the rest of the Trump administration are taking a good first step by repealing discriminatory guidelines that limit options, particularly for non-traditional students.

But real reform will only take place when Americans start questioning the value of a four-year degree as compared with innovative alternatives, and ask the federal government why it has chosen to so heavily subsidize a pathway that has yielded far from ideal results for students and young adults.

Inez Stepman is a senior policy analyst at Independent Women’s Forum (IWF). She has worked in education policy for seven years, her research focuses on educational freedom, school choice, and the cultural impact of empowering parents with control over their children’s educations.