The U.S. Department of Education on Monday released the first-ever debt-to-earnings ratios for graduates of career and technical training programs, required under the Department’s Gainful Employment (GE) rule. Overall, 803 programs (9 percent) failed to meet the minimum debt-to-earnings threshold required by the rule, while an additional 1200 (14 percent) were considered “in the zone”, the Department term for schools that neither passed nor failed to meet the GE standard. For the remaining programs (74 percent), completers’ earnings were high enough to justify the debt burden their graduates took on.
While these numbers cover just a fraction of colleges and programs that receive subsidies through the federal student aid programs, it marks a clear first step toward bringing meaningful quality assurance in higher education for students and taxpayers. Many supporters of the GE rule have expressed concerns the incoming administration will immediately roll back these and other Obama-era higher education regulations. But rather than retreat from this first foray into accountability and transparency in higher education, the Trump Administration should adopt the GE standard for all postsecondary education programs that enroll students who receive federal grants and loans. Doing so would help students make more informed decisions about where to attend college and how to finance their education. In addition, holding all colleges accountable would protect the government from using taxpayer dollars to make loans that are unlikely to be repaid.
Take cosmetology, for example. As the graphic below shows, these programs have earned themselves a bad reputation for their low earnings potential, despite wide popularity among students, who generally need to take out federal loans to attend them. Of the programs subject to GE regulations in this field, nearly half of the 891 programs that are offered failed to meet the GE threshold. Legal Assisting earned a similar rate of success: just 56 of 109 programs met this benchmark. For students attending these programs, the odds of picking a worthwhile program are barely better than a coin flip. Taxpayers funding grants and loans to students in these programs will be left covering costs for students who are likely to default on their loans because their debt payments are expected to make up an unreasonable share of their income.