The U.S. Department of Education awards more than $120 billion a year in grants, work-study funds, and low-interest loans to approximately 13 million students across the country. Many of those students get a quality education and a valuable credential — but some do not. Far too many students fall victim to predatory schools, which convince students to hand over their federal student aid money and then leave them worse off than before they had enrolled — in debt and with no worthwhile credential. Others attend schools that charge exorbitant tuition but provide very little return on investment to students. Postgraduate incomes from these programs are too small to effectively cover the debt incurred for the degree. Either way, students and taxpayers lose.
Last year, the Department and the Biden Administration attempted to remediate this situation through billions of dollars of targeted loan forgiveness for defrauded students at DeVry University, ITT Technical Institute, and other schools. In these cases, the schools had already taken students’ aid dollars, often leaving these students in perilous financial straits. Making these students whole is a critical step, but it is not enough: We need front-end solutions that minimize the federal aid dollars flowing to these low-value schools and programs in the first place.
As a first step, the Department has asked the higher education community for input on how it could identify low-financial-value programs and increase transparency to the public about them. Arnold Ventures has long supported quality and accountability in higher education, and the team submitted formal comments, summarized below.
One of the best ways to identify low-financial-value programs is to assess whether:
- Graduates can afford to repay their loans
- Graduates are earning more than they would have without attending college
These metrics reflect how much money students earn post-graduation, especially relative to their debt, a good test of whether a program or school is providing enough value. The Department should collect data to support the use of these metrics and use them to develop a public watch list for students and families.
However, a watch list is merely the first step. The Department must continue to strengthen and implement gainful employment regulations to provide accountability for low-financial-value schools without delay. And Congress must establish a meaningful quality assurance system for all schools and programs to ensure a strong return on investment for both students and taxpayers in higher education.
Read our formal comments here.