May 26, 2023
The Return of the Gainful Employment Rule – If it strikes you as more than a little ironic that a government currently $32 trillion in debt and a Department of Education which seeks to cancel up to one trillion dollars in federal student loans is policing career colleges on the financial prospects of their degree programs, you’re not alone. But irony doesn’t adequately describe the outrageous return of the DOE’s gainful employment rule this week.
Kickstarted under President Obama and abandoned by President Trump, the Biden DOE has been planning the rule’s return since inauguration. As many already know, the GER will give the department the discretion to deny student loans for degrees or certificates in career training programs they deem inadequate with regard to the expected salary of graduates.
First, we note that the GER does not apply to degrees from traditional public or expensive private 4-year universities, where students are more than welcome to take on six-figures of debt to obtain a degree in philosophy, English, or interpretative puppetry.
Second, we question what gives the DOE the inside track to play career counselor to thousands of working adults seeking greater opportunity and new job skills. A new wrinkle in this most recent GER is that it measures post-graduation salaries in reference to workers with no more than a high school diploma, a completely arbitrary standard that has not received even the slightest economic study or analysis to determine its value.
So exactly how does the DOE determine if the projected earnings of a person from Michigan, seeking career training in Florida, to work in Nebraska are within an acceptable range to qualify for federal loans? Do they measure earnings in comparison to non-college educated workers in Michigan, Florida, or Nebraska? Just as having a degree in marine biology won’t get you very far in Wyoming, skilled-worker salaries vary greatly from region to region.
And exactly how do Washington bureaucrats in cushy swivel chairs comprehend a constantly changing job market where students are likely to seek training in an industry where forecasters predict significant future growth? Of course, they can’t, but yet that won’t stop them from slamming the door in students’ faces.
The DOE assures us they will give colleges under scrutiny ample opportunity to demonstrate that targeted degree and certificate programs lead to better employment opportunities, but it is a “guilty until proven innocent” system that will naturally be expensive and time consuming for institutions that don’t have millions in taxpayer subsidies to support them.
While favored institutions can shackle students with enormous debt and not have their departments or degrees scrutinized, the DOE marches on in its non-stop offensive against institutions focused on job skills and helping to fill the 5 to 9 million job shortages in skilled work. Never mind the possibility of career advancement, inside promotions, elevation to management positions, or the numerous ways people with a degree achieve upward mobility in our economy, if a handful of bureaucrats and their magic 8 ball decide a student’s chosen career path lacks the earning opportunity measured against an arbitrary standard, then end of story.
If federal student loans are to be conditioned upon future salary prospects then they should apply to ALL institutions and ALL programs of study equally. Better still would be no random litmus tests for obtaining loans, and to let students and the marketplace decide what opportunities await those seeking training in a given field. There are numerous ways the DOE could ensure students are not ensnared into a hopeless sea of debt; it is quite unfortunate that using the GER to attack career-oriented colleges is the path they chose.
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House Votes to Spike Biden Loan Forgiveness – In welcome news, the U.S. House voted this week to block the Biden loan cancellation plan, which Biden touted at the time would start by cancelling $20,000 in loans for more than 27 million borrowers at a price tag to the taxpayers of over half a trillion dollars. Sponsored by Rep. Bob Good (R-VA), the bill also calls for an end to the years-long moratorium on student loan payments that harken back to the government’s original Covid relief measures.
With two Democrats joining 216 Republicans, Good called Biden’s plan a “reckless, unilateral and unauthorized” scheme that would shift “hundreds of billions of dollars of payments from student loan borrowers onto the backs of the American people.” Given that 80 percent of U.S. adults either never had college loans or have paid them back, the debt cancellation plan is enormously inequitable in forcing blue collar workers and responsible borrowers to pay the tab of higher-income college graduates.
Though it is unlikely the Democrat-controlled Senate will take up the measure, this vote is a good start in solidifying the opposition to Biden’s brazen political handout to the wealthier, college-educated voters who in 2020 overwhelmingly cast their votes in his favor. A Supreme Court decision on the constitutionality of Biden’s debt forgiveness proposal is expected in the fall.
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The Historical Roots of College Privilege – Nearly all plans that offer blanket student loan forgiveness are regressive in nature and a massive transfer of wealth to the more affluent; borrowers are predominantly college graduates who earn a good deal more on average than the non-college educated taxpayer helping to foot the bill.
Interestingly enough, there was a time when national leaders called for shared sacrifice among U.S. citizens regardless of educational status, and the American people likewise held this proposition as a core value to our democracy. In this interesting read by attorney Michael Toth, we see how the idea of shared sacrifice started to splinter and fray along lines of privilege and education. As politicians and Supreme Court judges review and debate Biden’s student loan debt transfer onto the backs of working Americans, we can recall our past and hopefully correct our path, to possibly reignite this once binding value of shared equality in American life.
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Per CASE’s Unfair Application of “The LeBlanc Method” Report, career colleges face arbitrary advertising oversight and unreasonable outcome expectations, without receiving access to government subsidies. Meanwhile, many universities – including state-schools – aggressively advertise online classes, degrees, and certifications without scrutiny from the Department or accrediting bodies.
From our perspective, these colleges are provided no due process. The Department acts as judge and jury, making decisions unilaterally and ignoring the repercussions. Read more at Courthouse News Service and Higher Ed Dive.
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The Biden Administration is selectively promoting Borrower Defense to Repayment (BDR) loan forgiveness at career colleges and continues to look the other way as traditional school advertise 98% placement rates that often include volunteer work.
CASE believes that the federal government should apply BDR equally across all types of colleges. Read these student loan stories to see why loan forgiveness can’t just look the other way.
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Fast Facts…
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- $66 billion – Amount of student debt canceled by the Biden administration so far
- 179.2% – Percentage increase in college tuition from 2000 to 2020
- $21,370 – Average tuition at 4-year public school
- $48,510 – Average tuition at traditional 4-year private school
- $1.78 trillion – Total Americans owe in federal and private student loans
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