Growth Trends

Chad Adelman discusses trends in enrollment and completion growth in the for-profit industry:

While for-profits enroll only about 7 percent of all undergraduate students, their growth rate far outpaces public and private, not-for-profit institutions. Public college and university enrollment increased 19 percent from 2000 to 2008. Private, not-for-profit enrollment rose 15 percent over the same period. For-profit enrollment tripled.

It’s not just enrollment either. The growth in the number of degrees awarded by for-profit colleges over the last ten years is astounding. They gave out 127 percent more associate’s , 456 percent more bachelor’s, 804 percent more Master’s, and 572 percent more doctoral degrees. For comparison’s sake, the publics granted 27, 27, 27, and 29 percent more degrees, respectively. The raw number of degrees granted by for-profits still pale in comparison to those granted by publics, but, if these growth rates continue for another decade, it’ll be a much different story. For example, if the rates continue as they have, for-profits institutions would award more Master’s degrees than public universities by the year 2015. That would be a rather remarkable occasion.

Kaplan's Relationship with California Community Colleges

Sara Goldrick-Rab comments on it in a post for the Chronicle:

There's a bit of an uproar in California over an arrangement between the for-profit Kaplan University and the California Community College Chancellor's Office that makes it possible for students locked out of community college courses to enroll in a Kaplan course at a reduced rate. The arrangement stems from the overcrowding and under-resourcing of the California community college system, which is nothing less than under siege. Of course, it also stems from a completely sensible desire of Kaplan to expand its reach and enrollment. The California State Legislature, by failing to adequately support its community colleges, created that opportunity. Kaplan is doing exactly what we'd expect any educator to do—responding to student demand. We denigrate that action only because it will also result in profits. Let's at least be honest about that.

To me the really distasteful part of the backlash against Kaplan comes from those who are outraged that an agreement was reached to ensure the transferability of credits—an arrangement in which faculty were not consulted. Faculty members are used to being consulted on which courses they will and will not accept. Professors like to sign off on what courses can count to "replace" theirs—seemingly because they want to ensure educational quality, but let's face it, it's also because it helps to protect their jobs. The more courses deemed transferrable, the more it will become clear that the current system is inefficient—if many courses equate with each other, why have so many different people in different places teaching them?

But undergraduate education isn't meant to serve faculty; it's meant to serve students. This is something people seem too ready to forget. The president of the Academic Senate of the California Community Colleges was quite straightforward about her priorities when she told a reporter, "I'm hard pressed to see where we could ... make this favorable to faculty." Huh? Since when is ensuring the continuation of a degree, and the portability of credits, meant to be about helping the faculty?

I get it—this move opens the door to a lot of scary possibilities. One is that Kaplan and other for-profits will fulfill a need and let the legislature off the hook in future funding of state higher education. The degree to which we treat that as negative should be at least partly informed by empirical evidence on how California's community college students fare at Kaplan. Kaplan is to be commended for providing the data to allow a study on that topic to take place, and Scott Lay, president of the Community College League of California is a smart guy to recognize that as a real opportunity. Make that commitment a real one, and assess the outcomes of the arrangement. Then we'll have something more solid with which to pass judgment: evidence on how this affects students.

Eisman Condemns the For-Profit Industry

From Inside Higher Ed this morning:

Steven Eisman, the Wall Street trader who was mythologized in Michael Lewis's The Big Short as that rare person who saw the subprime mortgage crisis coming and made a killing as a result, thinks he has seen the next big explosive and exploitative financial industry -- for-profit higher education -- and he's making sure as many people as possible know it. In a speech Wednesday at the Ira Sohn Investment Research Conference, an exclusive gathering at which financial analysts who rarely share their insights publicly are encouraged to dish their "best investment ideas," Eisman started off with a broadside against Wall Street's college companies.

"Until recently, I thought that there would never again be an opportunity to be involved with an industry as socially destructive and morally bankrupt as the subprime mortgage industry," said Eisman, of FrontPoint Financial Services Fund. "I was wrong. The For-Profit Education Industry has proven equal to the task." Eisman's speech lays out his analysis of the sector's enormous profitability and its questionable quality, then argues that the colleges' business model is about to be radically transformed by the Obama administration's plan to hold the institutions accountable for the student-debt-to-income ratio of their graduates. "Under gainful employment, most of the companies still have high operating margins relative to other industries," Eisman said. "They are just less profitable and significantly overvalued. Downside risk could be as high as 50 percent. And let me add that I hope that gainful employment is just the beginning. Hopefully, the DOE will be looking into ways of improving accreditation and of ways to tighten rules on defaults." Stocks of the companies appeared to fall briefly in the last hour of trading Wednesday, after news of Eisman's speech made the rounds.

Why Should Pay for Student Loans Gone Sour?

I discuss a recent proposal to make private student loans dischargeable in bankruptcy in this article for Forbes. In the article, I identify several troubling aspects of the proposal and offer a few alternatives, including one that would share some of the burden of bad debts with the colleges whose students default or file bankruptcy.

Gainful Employment is a Bad Idea, Period.

My latest post on the CCAP blog:

I've been openly critical of the gainful employment proposal being considered by the Department of Education (here and here). The proposed rule is overly harsh and would likely result in many programs and schools going out of business and hundreds of thousands of students being shut out of postsecondary educational opportunities. An analysis by economic consulting firm Charles River Associates concluded that up to 1/3 of the students currently served by for-profit schools would be denied access. An analysis by financial aid expert Mark Kantrowitz concluded that the proposed rule is flawed, unrealistic and would lead to unintended consequences.

While I generally think that for-profit sector does more good than harm, there is some anecdotal evidence of foul play in the sector. This is by no means pervasive among the entire industry, nor is it limited to for-profit schools (Kevin Carey recently highlighted the scam of Southeastern University that was knowingly permitted to occur over multiple decades). There are admittedly scam artists in every sector of society, including the government and non-profit world. Does this mean that we need to regulate ourselves out of jobs, economic growth and individual liberty in an unrealistic effort to safeguard every nook and cranny of our lives, turning over human responsibility to far-off bureaucrats who have proven repeatedly ineffective at protecting its citizens? We simply can't prevent every crime or wrong doing in society.

By and large, economic interventionist policies by the government have lead to unintended consequences that are far worse than the situation present before the rules were implemented. Individual decisions and markets are the best allocator of resources, not central economic planners. So what are the unintended consequences likely to result from gainful employment?

First and foremost, hundreds of thousands of students will be shut out of the educational opportunities to improve their lives. The public and non-profit sectors do not have the capability or capacity to absorb these students, nor do they offer programs or schedules that meet the needs of this segment of the population. This is a negative for college access.

Second, it will be counterproductive to making college more affordable and productive, as the for-profit sector is the one bright spot in postsecondary education today that is showing real signs of management efficiency and innovation. It would also weaken competition and restrict the supply of education, which as economics 101 tells us, will lead to an increase in price.

Lastly and as I mentioned earlier this week, it will attack our freedom and individual liberty to make decisions that have consequences. Are we really willing to surrender this rare freedom and turn over our decision making to bureaucrats and politicians?

Apparently this group of folks (a consortium of politically left and special interest groups) thinks that all of the above negative consequences are acceptable, as they have written a letter to Secretary Duncan calling for even stricter gainful employment rules.

The solution to the problems of misleading advertising regarding employment and high levels of debt are really quite simple:

Mandate that colleges disclose to all prospective students the typical level of debt occurred by their students, program completion rates, data on where students have been placed and how much they are earning, and what the likely debt-to-income ratio will be for students finishing the program. This information would give students all the information that they need to make an informed and rational decision on what school and program to pursue. If prospective students don't like what they hear, then they can vote with their feet and go elsewhere. Because of the incentives, schools would seek to offer programs that provide relatively high rewards for students, while programs with costs that exceed the benefits would likely go wayside, and thus, eliminating most of the problem. For the remainder, violators and cheats would be dealt with harshly with loss of Title IV eligibility and possibly criminal punishment.

In The News Today: 05/20/10

Kaplan partners with community colleges to help bridge gap in offerings and control costs:

agreement allows Kaplan to provide classes that community colleges have cut. Students will be able to take the courses for a discount, and use them towards their associate's degree. Those who want to transfer to Kaplan's bachelor's program will also receive discounts and academic credits.

Bridgepoint transitioning towards e-texts:

launching a suite of Web-based course materials for general education classes this spring, with more discipline-specific e-texts coming in the next two years. While Bridgepoint is touting the program, called Constellation, as an opportunity for students to save cash as they avoid markups from third-party sellers, the school also expects to make money on the venture as it sidesteps fees paid to outside vendors.

Gainful Employment is an Attack on Freedom

Here's my latest post to the CCAP blog:

The Chronicle has extensive coverage today regarding the for-profit industry's efforts to stymie the gainful employment rule being proposed by the Department of Education. CHE has even developed a table detailing lobbying dollars spent and political contributions made by the industry. Democratic Congressman were the recipients of 70% of the for-profit industry's $400k in total political contributions, with George Miller (Chair of the House's Committee on Education and Labor) taking home honors as the top recipient of more than $70k in campaign contributions. On the Senate side, the top 5 recipients were all Democrats, with Harry Reid being the top recipient.

I've written in this space in the past about the implications of gainful employment (here, here and here) and have an article due out soon on the topic in Career College Central. I'm generally opposed to the Department of Ed's proposed metric, which would impose an unrealistic 8% student debt to income ratio that would force the closure of many programs and limit the career and college choices of students.

The for-profit industry has floated a counter proposal similar to what I have recommended in the past, namely that colleges provide full disclosure to prospective students regarding the debt that students at their school take on and the employment outcomes (placement rates, salaries, etc). This ought to be a respectable solution to those opposed to the for-profit sector in the name of consumer protection, as their main argument appears to be that students are lured into these schools based on false or limited information. If it is not and they continue to insist upon a top down approach in which bureaucrats decide how much debt is appropriate for a particular program, then these folks are obviously convinced that individuals do not have the capacity to make decisions that will affect their livelihood and should be stripped of decision-making rights in favor of turning such decisions over to the state. In other words, anonymous bureaucrats in far off places are better equipped to make decisions for people than the actual individuals themselves.

Here's the abbreviated case for full information disclosure:

If the students are presented with the information upfront, prior to enrolling, then they are responsible for the decision of whether to attend. If, for example, a prospective student is told that they will incur $25k in student loans, that their first job upon completion will likely pay $30k (likely to increase over time with experience), and that their monthly loan payment on that loan over a 10-year period would be $294 (which would be 12% of their income), then the student can make an informed decision of whether to pursue that particular program and compare it to other options. This presents the prospective student with enough information and potential career training options to make an informed decision.

The alternative, centralized decision making, will limit the number of options and essentially decide what fields that certain students (i.e. - those who don't have parents capable and willing to foot the bill) may pursue. This is an attack on freedom and only a few steps removed from the European education model in which students are directed towards a particular track (vocational or academic) early in their education - often middle school. This is in sharp contrast to the American tradition of a forgiving educational model that allows late bloomers the opportunity to pursue postsecondary education of their choosing.

Gainful Employment and Bob Shireman

Lots of press concerning the departure of Bob Shireman from the Department of Education and speculation on what this means for gainful employment. The Chronicle of Education has coverage here and here. Inside Higher Ed also has coverage.

Has Bob Shireman Completed his Agenda?

Over lunch I heard a rumor that Bob Shireman was to depart from the Department of Education. Kelly Field at the Chronicle confirms that Shireman will vacate his post at the end of summer. Will ED implement a gainful employment rule before he leaves is the billion dollar question.

Credential Inflation?

Here's my latest post to the CCAP blog:

Lately, I've been doing some thinking about the college wage premium and the growing number of college graduates. Advocates of higher ed have long espoused that college is the best investment that one can make, and that the returns to this investment are substantial. This line of reasoning has been continuously espoused by proponents for increasing the number of students going to and completing college, with folks implying that the labor market increasingly demands more college graduates. The evidence doesn't seem to support this claim.

The Bureau of Labor Statistics identified the 30 occupations that will experience the most numeric job growth between 2008 and 2018. Only 7 of the 30 occupations require a bachelor's degree or higher, with 5 of the top 6 occupations requiring on-the-job training only. According to BLS, these 30 occupations will create more than 7.3 million jobs by 2018. 2/3 of these jobs (nearly 4.9 million) will require no formal postsecondary credential.

So where exactly are all of these new college grads going to find jobs if they are not in fact in demand by the labor force? My hypothesis is that the US labor force has been and will continue to experience credential inflation. Jobs which in the past didn't require a postsecondary credential (and likely still don't), will increasingly be filled by those with college degrees because there is an excess supply of them. Why hire a high school grad when you can hire a college grad for roughly the same cost?

I think that this phenomenon helps explain why administrative, customer service, retail and other relatively low skill jobs are increasingly staffed by persons with a college education. It is not that these kinds of jobs require someone with a degree, but rather that college grads are willing to take these kinds of jobs. I think that credential inflation plays at least some role in explaining the wage college wage premium.

Credential inflation is not only bad for those without a college credential, as they are pushed out of jobs for which they previously were able to do, it is also bad for those with a college degree who spent a considerable amount of time and money to get that degree, only to wind up in a job for which the degree wasn't really necessary. In other words, the explicit and opportunity costs are high to seek a college degree.

The counter argument is that college is not only an economic investment, but that there is also the socialization and consumption value that needs to be considered. This is true, but the problem with this line of reasoning is that wage earners should not be taxed so that young people can have a good time and make new friends. Socialization and consumption are experience goods that individuals choose to purchase and as such, should be paid for by the benefiting party that voluntarily elects to purchase them.

Income Based Repayment

Please see my latest piece on Forbes.com, “New College Loan Rules Put Taxpayers at Risk.” In the article, I describe how the new Income-Based Student Repayment plan puts taxpayers at risk, will exacerbate the tuition bubble and sends the message that public sector work is good and will be rewarded.

Both Sides of the Coin

Daniel deVise of the Washington Post writes today about the for-profit sector, offering viewpoints from both sides of the coin:

The esteemed PBS program Frontline borrowed our name this week for a broadcast about the for-profit sector of higher education.

Like recent investigative pieces in the New York Times and Bloomberg BusinessWeek, the Frontline program questioned whether operating a college for profit is a good idea. I think I'm safe in saying that all three concluded it was not.

I have published both positive and negative appraisals of the for-profit sector on this blog, always with the important disclaimer that the Washington Post Company owns Kaplan University, a player in the for-profit industry.

(Incidentally, I shook hands with an actual employee of Kaplan University at a speaking engagement last week, so I can no longer say that I have never met one.)

In a nutshell:

For-profit colleges are a fast-growing and profitable sector, offering serious competition to both four-year and (especially) two-year public and private, not-for-profit colleges. They set up shop near freeway exits, offer classes at all hours and market themselves as a convenient, efficient route to a certificate or degree for a student who doesn't have a lot of free time. They are an overflow to over-taxed community colleges, which offer many of the same classes at much lower cost but also lower availability.

For-profits charge more than state universities but less than private universities, at least in terms of sticker price. For-profit students tend to carry more debt after completion than their counterparts in other sectors. That's partly because for-profit students are more likely self-supporting and, well, poor.

Perhaps the most unflattering material in the Frontline piece came from former for-profit employees who spoke of high-pressure sales techniques, call-center tactics more commonly associated with peddlers of time-share vacations and magazine subscriptions.

There was also the familiar procession of dissatisfied students, many of whom claimed they finished their studies with a degree that was not worth the money they had paid, because they had not been given sufficient training.

I spoke to Harris Miller, president of the Career Colleges Association. He lobbies for the for-profits, just as several of his counterparts on the non-profit side lobby for Harvard and U-Md.

Why all the bad press?

"For whatever reason, we haven't been able to communicate effectively," he said.

The criticism, he said, comes from "people who think that for-profit and higher education don't belong in the same sentence."

Miller calls it "attack by anecdote." He says he tries to remind reporters "that for profit is a tax status, not a financial status. Harvard has to run a profit every year. Otherwise, they'd shut down." He reminds his critics in not-for-profit education that "I don't think it's in our collective best interest to be shouting at each other."

But he faults his own sector for a certain lack of transparency, particularly in the past.

"I think there's been a historic tendency to kind of hide from the news media and from the research sector," he said. "We can't hide. We're too big. We're 10 percent of higher education."

He said the industry has to "be honest about the fact that there are some rogue employees in our schools," although not necessarily entire rogue schools. "The dark days were in the late 80s and early 90s. They had some bad actors. And Congress reacted. They probably over-reacted." More than 1,000 for-profit colleges closed, he said, in a wave of regulation and reform.

Lost in the blitz of negative coverage, he said, is the important role that the for-profit sector can play in raising the numbers of low-income and minority students who finish college. The sector serves a group of students more at-risk, by the government's definition, than any other. Three-quarters of students are working adults.

"And, yes, if they're going to go to school, a Pell grant, if it exists, is not enough, and they're going to have to borrow some money," he said.

For-profits, he said, are "serving a group of students who have been abandoned by the higher education system."

NPR Discusses For-Profits and Kaplan

NPR's All Things Considered aired a story on for-profit higher ed, highlighting Kaplan in particular. You can read the write-up and transcripts, or listen to the show.

Denouncing Bob Shireman

Stephen Spruiell of National Review wrote a piece attacking Bob Shireman's strong-armed approach to federal control of higher ed.

government subsidies are never no-strings-attached affairs. Once an activity is fully subsidized, it is one Bob Shireman away from being fully controlled.

Read more

A New Assistant Higher Ed Czar is Coming to Town

As reported by Kelly Field in the Chronicle:

The U.S. Senate education committee has approved President Obama's nomination of Eduardo M. Ochoa as assistant secretary for postsecondary education, a long-open leadership spot at the Education Department.

If confirmed by the full Senate, Mr. Ochoa, who is now provost and vice president for academic affairs at Sonoma State University, in California, would take charge of the Education Department's Office of Postsecondary Education, which administers most of the federal government's programs for colleges and college students. The assistant secretary has also typically served as the chief adviser to the education secretary on higher-education issues.

The position has been vacant since Mr. Obama took office more than a year ago. He nominated Martha J. Kanter for the other top postsecondary job, under secretary of education, in April of last year, and her appointment was confirmed last June. The president nominated Mr. Ochoa in February.

As assistant secretary, Mr. Ochoa would report to Ms. Kanter, who also came from California, where she was chancellor of the Foothill-De Anza Community College District.

Andrew Kelly on College, Inc

Andrew Kelly of the American Enterprise Institute has an excellent piece on the shortcomings of the PBS documentary, College, Inc. He identifies 4 key areas that the film failed to capture:

1. outside of a few stories about students who were bilked out of their money and given a shoddy education, the documentary says very little about how for-profits have rethought the core business of most colleges and universities---the teaching and learning of undergraduates.

2. the documentary seems to suggest that for-profit schools are subject to less accountability than traditional colleges and universities, and that these institutions should be subjected to additional regulatory burdens because of their profit motive...Many non-profit colleges and universities, some of which are of exceptionally low quality, also reap benefits from billions in federal aid; but, outside of the restrictions inherent in their tax status and some licensure requirements that vary across states, they are rarely subject to much more stringent accountability measures than these for-profit institutions

3. Martin and his interviewees often discuss the cost of for-profits, their spending on marketing and recruitment, and how the "costs" of for-profit often accrue to the "taxpayer." Clearly, these for-profits benefit from public money, and their tuitions are almost always greater than their public four-year and two-year counterparts...What this discussion ignores, however, is that the true "cost" of public community colleges to "the taxpayer" is much larger than the cost to the individual community college student because of the state subsidies that are "baked into" public colleges' operating budgets. In other words, public four year and community colleges do not charge tuition that equals what it actually costs to educate their students, because public subsidies make up the difference

Kelly continues:

Like most business ventures, for-profit colleges are filling a void that existing providers are leaving open. As Smith points out in the documentary, community colleges are unable, or perhaps unwilling, to fill this demand themselves.

these traditional institutions, and their four year brethren, have shown little inclination to search for innovative ways to serve more students and leverage their best faculty by harnessing technology. The for-profits have done so with gusto, and may provide lessons to these traditional institutions on how they might create and implement such practices.

There are multiple messages to take away from College, Inc, but one is more subtle than the others. When it comes to making the case for the niche they fill, the for-profit colleges and universities must be more proactive about showing us that they do add to the common good, and they must be more transparent about how they do so.

Opening up their data on student success, internal operations, and instructional innovation to outside researchers would help to close this credibility gap. At the end of the day, whether these institutions are good for higher education, and what might make them good, is an empirical question, and one that we should answer before jumping to hasty conclusions.

College Inc

PBS FrontLine aired its documentary, College, Inc., last night. You can watch the video online for free. Kevin Kuzma has a great review of the show over at Career College Central.

PBS vs. For-Profit Colleges

According to Inside Higher Ed this morning:

Airing tonight on PBS at 9 p.m. is Frontline's College, Inc., an hour-long look at for-profit higher education, its investors, and the U.S. Department of Education's efforts to regulate it. For close readers of Inside Higher Ed, the documentary won't bring much new to the table. It tells stories of students plunging deep into debt and unable to get jobs, touches on traditional academe's criticisms, and looks at the negotiated rule-making process aimed at reining in abuses of the Title IV federal financial aid system, with a particular focus on career colleges.

But it is likely to garner lots of attention -- from ordinary Americans, think tankers and Congressional staffers -- and to stir up press releases, editorials and conversations that will skew against the for-profit institutions just as the Education Department ratchets up its criticisms of the sector. The storyline is more balanced than many major-media examinations of for-profit colleges, but it's still a less-than-favorable depiction of the sector.

Universities and Illegal Tax Arbitrage

Here's My latest post on the CCAP blog:

Iowa Senator Charles Grassley is perhaps the biggest critic of higher education in Congress, seeking out scandals and improprieties in the Ivory Tower in an effort to effect change. He has thus far failed to achieve any great and lasting reforms, but I give him an 'A' for effort and his willingness to travel the road often not taken - battling the establishment. So what's Chuck up to these days? His latest criticism of higher education is the use of tax-exempt bonds by universities for (indirect) tax arbitrage. In other words, Grassley believes that universities are taking advantage of their non-profit status to raise cheap, subsidized capital that they use to bankroll higher risk investments and capital expenditures. So what is the problem you might ask? Tax arbitrage is outright illegal.

Grassley asked the non-partisan Congressional Budget Office to assess the extent to which tax arbitrage is occurring among universities. The CBO report indicates that:

the law as currently implemented allows many colleges and universities to use tax-exempt debt to finance investments in operating assets (buildings and equipment) while, at the same time, they hold investment assets that earn a higher return. (Investment assets are publicly traded and privately held securities, as well as land or buildings held for investment purposes.) To the extent that colleges and universities can earn untaxed returns on investments that are higher than the interest they pay on tax-exempt debt, they are benefiting from a form of “indirect” tax arbitrage.

the cost of allowing institutions of higher learning to borrow using such debt—measured in terms of the revenues that could have been collected if those institutions had borrowed using taxable debt—will be about $5.5 billion in 2010

Using data from information returns filed with the Internal Revenue Service by institutions of higher learning and by issuers of tax-exempt debt, CBO developed measures of tax arbitrage under a broader definition of the term that encompasses both direct and indirect tax arbitrage. Under one such definition, nearly all of the tax-exempt bonds that 251 colleges and universities issued in 2003 would be classified as earning profits from tax arbitrage. If some investment assets were set aside in a reserve, which would be excluded from the arbitrage measure under an alternative expanded definition, the amount of debt earning returns from arbitrage would be lower; even so, about 75 percent of bonds issued in 2003 would still be classified as earning arbitrage profits under that expanded definition.

"On the one hand, if colleges and universities use tax-exempt financing for projects that they would complete even without the subsidy, resources are just reallocated from taxpayers to the schools with no additional social benefit," the report says. "On the other hand, if the subsidy finances capital projects that would not otherwise have been undertaken and that create a social benefit in addition to the institution, it could improve the nation's welfare."

Additional coverage is available here, here and here.

In The News Today: 05/03/10

Albert Gray of the Accrediting Council for Independent Colleges and Schools offers his opinion in the Chronicle of Higher Education on the Department of Education's upcoming rules regarding gainful employment:

some high-cost, high-tuition programs offered by career colleges, like culinary arts or cosmetology, will face closure unless the salaries and wages for those legitimate and high-demand occupations are substantially increased—a function of economic conditions that are out of the institutions' control. The hospitality and aesthetics industries will confront even more profound shortages of qualified workers than exist today.

Accreditors review and measure student retention and placement, and maintain quantitative and qualitative standards on measurement of satisfactory academic process, student learning, and student and employer satisfaction. By adjusting the frequency, specificity, and depth of job-placement data required of member institutions, accreditors will have an enhanced ability to develop models of best practices and share—or ultimately require—their application.

and incentive compensation

Most objections to incentive compensation for admissions representatives are rooted in recruitment abuses by a small number of marginal institutions more than 20 years ago.

Completely eliminating a reward system that is tied to effective student enrollment could reduce the number of potential students who are attracted to, and ultimately enroll in, programs that will improve the quality of their lives.Reward structures in a variety of industries are moving toward such incentives, and many people in the education sector believe that demonstrates a best practice in student recruitment and retention.

What the Education Department and sector-based negotiators failed to recognize is that the emphasis on outcomes does not end with recruitment

Adam Sichko indicates that gainful employment is a threat to the health care profession:

a federal proposal tying college borrowing to future earnings will jeopardize high-demand nursing, medical assisting and information technology programs.

medical assisting, criminal justice and business programs have the highest student demand because they lead to jobs after graduation. Placement in those programs is around 90 percent, he said.

With an annual tuition of $7,335, Gutierrez said, it could limit borrowing for students enrolling in the medical assisting program since the starting salary in that field is roughly $24,000 a year. “It could force schools to either lower the cost or get rid of some programs"

I've commented on the implications of gainful employment many times on this blog. I also wrote an article for Career College Central awhile back discussing the Department of Education's NegReg process that you can read here.

I'm Not the Only One

Apparently I'm not the only one who suspects that Bob Shiremen is the unofficial higher ed czar. The Washington Times made the same suggestion.