The COVID-19 pandemic is wreaking havoc on our higher education system. Congress took steps in the CARES Act to stop the bleeding, including placing a six-month pause on the majority of student loans and allocating $15 billion to support colleges and their students. That was absolutely needed. And it is likely that additional funding will be needed to help students, borrowers, and institutions weather this storm.
But as Congress works on the next response package (CARES 2), it needs to think about more than just dollars. Policymakers need to pair those dollars with smart rules and regulations that will ensure this investment leads to good outcomes for students during this crisis.
Here are three clear ways Congress can act to mitigate the potential harms we see coming in higher education:
Creating on-ramps for students who drop out or delay entering college
As schools have shifted to remote education and students face a variety of very real economic challenges, we are likely to see many students pause their education (or potentially delay going to college). Unfortunately, research shows that once a student delays their education, he or she is unlikely to ever complete a degree. But we know that a degree is the best bet for economic stability and mobility, and we know that students who have debt but no degree are most likely to default on their loans. Congress can put in place common-sense policies in the financial aid system, like resetting requirements on satisfactory academic progress, that will make it easier for students to enter or re-enroll and persist in college.
Identifying schools likely to close and managing that closure process
Pre-COVID, the higher education sector was already experiencing a rise in school closures, especially among small private schools (there were 112 school closures from 2016 to 2017 alone). With tightening budgets from reduced state funding, lower revenue from room and board and potentially other sources, like athletics, that trend will certainly accelerate. Schools that close precipitously leave students in the lurch, often unable to complete their degree or transfer to other schools. Taxpayers are also often on the hook for many of the costs associated with closure. Congress has the opportunity to be proactive in preparing for these closures.
First, they need to implement a better way to assess which schools are at risk of closing. The current financial responsibility test helps us understand colleges’ preexisting financial situation, but we need more up-to-date information to respond to the crisis. Congress should put in place real-time monitoring to assess schools’ financial viability and likelihood of closure as a result of the emergency.
Second, when schools are identified as likely to close, Congress needs to have in place an orderly process to manage that closure. This process will need to be developed in close partnership with the states, as they bear the lion’s share of the responsibility for school closures. It should include support for states as well as funds that a school can access to manage their wind down in exchange for clear protections for students and strong accreditor oversight.
The problem of predatory for-profit colleges.
Director of Higher Education Kelly McManus explains how a downturn in the economy can exacerbate the problem of predatory for-profit colleges.
Protecting students and taxpayers from predatory behavior
Enrollment in higher education tends to surge during recessions, as people seek additional training to make them more competitive in challenging labor markets. The last recession made it clear: For-profit institutions, which have disproportionately bad outcomes for students, will exploit this market. In fact, from 2007 to 2008, for-profit enrollment increased more that 20 percent. And some of these institutions were (and will be) deeply predatory. In the last recession, we saw a huge rise in duplicitous marketing and recruitment tactics, especially targeted at veterans and at historically vulnerable populations of students. Unfortunately, the public sector is often limited in its ability to compete for this increased demand because of the simultaneous, often draconian, budget cuts it is facing from the states.
Congress should learn from what happened 12 years ago and put in place guardrails to assure history does not repeat itself. There must be stringent oversight of any federal dollars that go to for-profit institutions to ensure the benefit is for students, not for financial incentives for executives and shareholders. It should also create a “Secret Shopper” program to monitor the marketing and recruitment practices of institutions; this type of program would help identify bad actors early on and prevent further harms.
Clearly, COVID-19 is elevating a lot of risk in higher education. But there is action that Congress can take now to mitigate some of these harms. As Congress negotiates CARES 2, we hope they take a proactive view of how they can help students now and also protect them from harm moving forward.