Anti-student agenda at Education Department under DeVos is Trump's most radical move
Robert Shireman
Opinion contributor
A week ago, on a sleepy August Friday in Washington, Betsy DeVos took what is her most radical step yet. The Education Department proposed to eliminate — not just weaken, as many people had expected — so-called "gainful employment" guidelines that cut off federal student loans to colleges if the majority of graduates earned so little that they were not able to pay off their loans.
Under the DeVos proposal, for-profit colleges could use any trick in the book to lure in students with grandiose images of career success, charge them far above the actual cost of instruction, and leave them steeped in debt and unable to find a good paying job. And that's exactly what will happen.
The gainful employment rules, like the DeVos plan last month to limit loan relief for defrauded students, were designed in response to a long history of predatory recruiting and abuse in the for-profit college sector. When I was in the Obama administration, we thoughtschools like Corinthian Colleges and ITT Technical Institutes should be held accountable for trapping students — often vulnerable people like veterans, low-wage workers and first-generation college-goers — in programs that give them worthless degrees.
For-profit colleges have a history of abuse
At the very least, taxpayers shouldn't be propping up these predatory schools in the form of billions of dollars in federal student aid flowing to for-profit colleges. In putting a measure of accountability into a largely unregulated, scandal-ridden sector, the gainful employment rules were a baseline minimum standard of consumer and taxpayer protection.
Betsy DeVos thinks students are just not being good shoppers, but the real problem is that the federal government enables and endorses career programs that are way overpriced. By how much? A whopping 78 percent, according to economists who compared tuition at training programs where federal aid was available to those where it was not. To for-profit schools, the amount of aid available is a signal of the price they should charge for tuition, regardless of the underlying costs. Taking every penny maximizes profits, after all. The gainful employment rule would have repaired that problematic incentive.
The Education Department would make it so that even if schools cheat students, it is the student who must navigate a byzantine process and prove that the school acted with malicious intent. And if a borrower succeeds in that near impossible feat, they'll be granted only partial relief on their loans. Say you're buried in debt and can't earn enough to dig out? Too bad, you should have done a better job recognizing charlatans and researching default and earnings data before enrolling.
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Betsy DeVos insists that the gainful employment rule unfairly targets for-profit schools. But by eliminating the rules, for-profit colleges will now be held to lower standards than public and nonprofit schools, which have strict financial controls to prevent the misuse of federal funds. Those financial controls, n determining an institution's incentives, make a big difference.
As the Century Foundation revealed this year, of the more than 130,000 borrowers who have filed fraud complaints with the Education Department, more than 98 percent involved for-profit colleges. Put differently, students who enrolled at a for-profit college in recent years were 1,000 times more likely to file a fraud claim than someone who enrolled at a public university.
The Trump administration's proposal is sure to lead to a repeat of the scandals that have besieged the federal student loan program time and again, harming hundreds of thousands of current and unsuspecting future students. And it will hurt taxpayers, too. The department's own analysis estimates that revoking the rule will add $5.3 billion to the federal budget,mostly for students at schools that would be ineligible for funding under Obama-era rules. In other words, DeVos is actively transferring billions of dollars in taxpayer money directly into the coffers of executives at our country's worst-performing for-profit colleges.
Trump's radical anti-student agenda
Many predicted an anti-student agenda from the Trump administration, but few thought it would be this bad. The Education Department is operating more like a K Street lobby shop than a federal agency. Indeed, DeVos has filled top agency positions with former for-profit executives, allowing them to dictate policy and even disregard the findings of career department staff.
With all the distractions of our current president andenticing headlines about the multimillion-dollar DeVos family yacht set adrift, it's easy to lose sight of the ways in which the Trump administration is fundamentally changing critical national policies. Nowhere are these changes more radical than in the Education Department, and few are as damaging as repealing the gainful employment standards.
Make no mistake: For-profit colleges are paying close attention. It's time we pay attention, too.
Robert Shireman is a senior fellow at The Century Foundation and former deputy undersecretary for education in the Obama administration. Follow him on Twitter: @Bob_Shireman