Obama Did Persecute For-Profit Colleges

Some on the left scapegoat for-profit colleges for the problems of higher education. The Obama administration crafted a set of “Gainful Employment” regulations primarily targeting these programs. If a pool of graduates had too much debt relative to earnings, the government would cut off financial aid to its students. These and other regulations helped drive a sharp decline in for-profit enrollment. But new data released by the Education Department reveals just how misguided these policies were.

It isn’t only for-profit colleges that are selling dud degrees. Public and nonprofit schools, including some of the most prestigious, have many programs that fail an updated Gainful Employment test too. With the test updated to fit current Education Department data gathering, at Columbia the bachelor’s program in rhetoric and composition/writing studies falls short (median earnings $19,700, median debt $28,556), as does the program in visual and performing arts (median earnings $21,800, median debt $25,500). Those getting a master’s degree in fine and studio arts at Yale have meager median annual earnings of $17,200 and median debt of $21,200. Nor is the problem limited to the arts and humanities. Professional programs in law at the University of North Carolina at Chapel Hill, in optometry at the University of California, Berkeley, and in dentistry at Harvard fail too.

Throughout higher education, more than 270,000 students used federal financial aid while graduating from failing programs over a two-year span. Only 28% of those students attended a for-profit college. This is larger than their share of graduates, about 8%. But ideological hostility to the for-profit sector has blinded many on the left to the 72% of financial aid recipients who graduate from failing public and nonprofit programs.

Given the prevalence of failing programs across all types of universities, the Trump administration was correct to reject the Obama administration’s practice of targeting for-profits while exempting most public and nonprofit programs. But Gainful Employment is a good test for college programs; the mistake was to apply it selectively rather than universally. All colleges that offer programs with low earnings relative to debt should be cut off from federal aid.

Updating the Gainful Employment rule and applying it to all institutions of higher education would protect students, parents and taxpayers. Fewer young people would enter the workforce saddled with debt they have no way of paying off, and fewer parents would have to help them shoulder the load. Meanwhile, taxpayers wouldn’t be forced to throw their hard-earned money at wasteful institutions.

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