In today’s episode, host Dr. Jason Altmire talks with Dr. Sandy Baum, nonresident senior fellow at the Urban Institute, and co-author of “Achieving the (almost) impossible: Consensus on for-profit education.” Dr. Altmire and Dr. Baum discuss if there is common ground between critics and defenders of for-profit institutions to implement lasting regulations.
Career education is a vital pipeline to high demand jobs in the workforce. Students from all walks of life benefit from the opportunity to pursue their career education goals and find new employment opportunities. Join Dr. Jason Altmire, President and CEO of Career Education Colleges and Universities (CECU), as he discusses the issues and innovations affecting postsecondary career education. Twice monthly, he and his guests discuss politics, business, and current events impacting education and public policy.
Jason Altmire (00:04):
Hello again and welcome to another edition of Career Education Report. I'm Jason Altmire, and we are thrilled today to be joined by Dr. Sandy Baum. She is a non-resident senior fellow for the Center on Education Data and Policy at the Urban Institute and professor emerita of economics at Skidmore College. She's an expert on higher education finance and speaks and writes extensively about issues relating to college access, college pricing, student aid policy, student debt, and affordability.
Jason Altmire (00:36):
She under PhD in economics from Columbia University, and she really is a somebody who knows more about these subjects than almost anybody. She writes and speaks extensively on them. What I think is most interesting for the discussions that we've been having in recent weeks regarded the rule making process, the role of for-profit higher education and schools and student related to accountability with higher education, especially in the for-profit sector. Dr. Baum has been in the past I think it's fair to say critical of the for-profit role in higher education.
Jason Altmire (01:16):
I guess I would start by asking Dr. Baum, what has been your concern? What has the research shown in your own research and others that has led you to be more skeptical, I think, than some about for-profit role in higher education?
Dr. Sandy Baum (01:31):
Well, there's a lot of evidence indicating that for-profit institutions disproportionately create problems for students. This doesn't mean that every for-profit institution is harming students, nor does it mean that every nonprofit institution is serving students well.
Dr. Sandy Baum (01:52):
But if you look at student loan borrowing levels, if you look at completion rates for anything other than short-term certificates, if you look at the problem of fraud and abuse of students who are promised one path, and then they find themselves on a different path, if you look at school closures, you just find that a large share of the problems come with students who have attended for-profit institutions. I think it's really difficult not to be concerned.
Dr. Sandy Baum (02:26):
I've always wondered why people who are involved with high quality for-profit institutions are not more concerned about this and are not more onboard with strong regulations that would eliminate or limit at least the reach of those institutions that don't serve students well.
Jason Altmire (02:48):
You've been a leader in that part of things, and that's one of the reasons we wanted to have you on the show to talk about the Opportunity America. Opportunity America is a Washington- based think tank that brings together... They're nonpartisan and they bring together people of different points of view to discuss issues related to economics and entrepreneurship and higher education. Over the course of the past two, two and a half years, they brought together groups of people, both supporters of the for-profit sector and higher education and detractors.
Jason Altmire (03:25):
They met, I think, it was six times a year approximately every other month for two years and came out with a report. Dr. Baum was very involved in that and actually wrote an op-ed, co-authored an op-ed after the report talking about some of the findings. I wonder, Dr. Baum, could you first talk about sort of the process and, generally speaking, who was involved and what the goals were for that Opportunity America think tank study?
Dr. Sandy Baum (03:56):
Well, as you described, it was a group of people who came from different perspectives. Some were deeply involved in for-profit higher education, and some were clear skeptics of the sector. Now, this was not a random selection of people on this issue. There are people who I don't know whether they weren't invited or they said no, but there was no one in the room who thought we should outlaw for-profit higher education, and there was no one in the room who thought that for-profit higher education was without problem.
Dr. Sandy Baum (04:29):
We started from point of respecting each other and saying, "We wanted to see if we could come up with any sort of consensus." My decision to participate in this group came from a couple of things. One, I think it's incredibly important that we develop a more effective regulatory process and system, and that's not going to happen if we don't get everybody onboard to some extent. I mean, the for-profit sector has shown that it's very good at preventing us from developing regulations that they really don't like and they think will really damage them.
Dr. Sandy Baum (05:08):
It doesn't make sense not to talk about it. We have to try to reach some consensus. It seemed like getting in the room together and talking about what we could do was the only constructive way to make progress.
Jason Altmire (05:21):
You asked the question of why high quality for-profit institutions aren't more supportive of some of these accountability measures, because it does. Most importantly, when a school does wrong, when they harm students, right, that is the most important factor. Students are harmed. Lives are drastically altered in a very negative way. But also it does embarrass the sector and it paints everybody in a negative light who are providing high quality education in the for-profit sector. One of the things that we have always advocated is that we're not opposed to accountability measures, right?
Jason Altmire (06:01):
Nobody certainly at CQ, the organization that I represent, and I don't think anybody in the sector opposes accountability measures. The issue that we have always said is that all schools in all sectors should be held to the same standards. We assume that when advocates talk about holding schools accountable, they're talking about all schools. When they talk about protecting students, they meet all students. They don't just mean the 8% of students that attend a for-profit higher education institution. They meet all students. I've talked before, I served in Congress.
Jason Altmire (06:39):
I was on the higher education subcommittee, and I was on the conference committee that finalized the language of the Higher Education Act the last time it was reauthorized. I think I can speak with some credibility to say it was never Congress's intent to exclude from accountability and certainly to exclude from scrutiny the outcomes of every other institution of higher education except for for-profit institutions and certificate programs at other schools.
Jason Altmire (07:10):
Now, that is what GE says, the Gainful Employment Rule says, but under section 454 of the Higher Education Act, it gives the department clear authority to apply accountability measures across the spectrum to all schools. What I felt was most interesting about the Opportunity America report and especially the op-ed that you co-authored, especially that it came from you, given your writings and thoughtfulness on the subject, was that it did recommend that accountability measures apply to all schools.
Jason Altmire (07:46):
I looked at your op-ed and just give you an opportunity to talk more about it, but there were things that were bolded in the op-ed. One of it says, "Our common commitment was to the idea that all colleges, regardless of whether they are public, nonprofit, or for-profit, should be accountable for student outcomes, including whether a program reasonably leads to a family sustaining job." I don't think that anybody can oppose that or should oppose that. I know there are some that do in the rule making process, but I wonder if you could talk a little bit more about that.
Jason Altmire (08:20):
I mean, it was bolded in the op-ed. It's obviously a very important point, and it's a point that is not necessarily being followed in the current rule making process. Can you talk a little bit more about your thoughts on that and then how the group came together to approve that language?
Dr. Sandy Baum (08:39):
Well, we all agreed that all institutions should be held accountable, but we also agreed that for-profit institutions are different in significant ways from public and private nonprofit institutions, and that they deserve special scrutiny, that there may be accountability measures that would apply only to them. That doesn't mean that other institutions shouldn't be held accountable, but it does mean that it's not problematic to say there are some things that are going to apply to for-profits and not to other institutions. That's a really important distinction.
Dr. Sandy Baum (09:17):
In other words, if you look at Gainful Employment, I mean, Gainful Employment applies to programs that prepare people specifically for employment in specific occupations. It includes some public and private nonprofit, many, many programs. It's fine to distinguish certain categories. That doesn't mean that there should be no accountability measures. I will tell you that one of the things that really convinces me that it's not a good idea to just focus on for-profits is the ease with which many for-profits have changed their status.
Dr. Sandy Baum (09:58):
The more we draw a sharp line, the more institutions are going to try to cross that line. That to me is a clear motivation for making sure that students are protected, as you say, no matter where they are. But I don't think it means by any stretch of the imagination that institutions that are owned by people who make profits from them...
Dr. Sandy Baum (10:23):
I mean, those institutions are different in some fundamental ways from institutions that are subject to regulatory bodies, that are the state or boards of trustees that have no financial interest in those institutions, that makes a very big difference, the difference in oversight in these two categories of institutions.
Jason Altmire (10:45):
You mentioned earlier the completion rates, for example, except for short-term cert certificate programs were worse at for-profits, the research would show. One of the things, I think, that bothers our sector is the way... Gainful Employment does this. It includes the entire spectrum of all types of for-profit institutions. It has the four year liberal arts online schools.
Jason Altmire (11:16):
Anyone who observes higher education would recognize that the online student does not have completion rates higher regardless of ownership status or that are even competitive, in many cases, with the same four year degree in an in-person setting. There's just different challenges to online education. But then you have the short-term certificate programs for trades. You have nursing programs that could be masters or doctoral level. When you're thinking about higher education in the for-profit sector, most people put them all together and they'll show the outcomes data.
Jason Altmire (11:59):
What I think we would like to see more of is, for example, TICAS, an organization that has not been supportive... The Institute for Access & Student Success has not been supportive of our sector. They put out the completion rates and they broke it out by community colleges. Community colleges had a 25% completion rate. The for-profit sector had a 51.7% completion rate all told.
Jason Altmire (12:29):
When the department put out their cohort default rates, they broke it out with HBCUs and community colleges, and HBCUs and community colleges both had higher cohort default rates than the for-profit sector. I think we would like to see more of that, of breaking it out and not just saying all private nonprofits from Harvard and Yale on down to everybody else are the same. Break it out. Let's take a look peer-to-peer.
Dr. Sandy Baum (13:00):
In a way, what you're doing is lumping together things that shouldn't be lumped together though. If you look for example, at default rates, it is true that the share of borrowers from community colleges who default is similar to the share of borrowers from for-profit colleges who default. But almost all students at for-profits default and a much smaller share of students at community colleges default. If you look at what share of students end up defaulting on their loans, it's dramatically higher up for-profit institutions.
Dr. Sandy Baum (13:31):
If I were developing an accountability measure based on default, I would weight it by the of this to borrower. Loans and defaults are much bigger in the for-profit sector as a problem. The completion rates, I think, are very difficult. Obviously community colleges have a huge completion rate problem. I mean, I think it's hard to deny that, but the composition of programs at community colleges is quite different from for-profit institutions, which are much more heavily weighted towards short-term certificate programs, whereas community colleges have more associate group programs.
Dr. Sandy Baum (14:04):
There's not one completion rate that should be the threshold, and you can't line up institutions and say that Yale is a better place than community college because of the completion rate. It's a whole different student body. But what you can say is there is some minimum threshold below which it's totally unacceptable. I don't care who your students are. If 10% of them ever get a credential, then 90% of them don't and that's a problem and recruiting those students is not acceptable. I agree that you have to look very carefully at different programs, different goals.
Dr. Sandy Baum (14:45):
Everyone needs to be held accountable, but finding the problems is different. You also have to look at earnings. The short-term certificate issue, there's now a lot of looking at this as we discussed short-term pay, but most of the evidence is suggesting that the earnings outcomes, even though there are high completion rates of certificates at for-profit institutions, their employment and earnings outcomes lag those of community colleges. You got to put all of these things together, not look at just one metric.
Jason Altmire (15:15):
Yeah, absolutely. I'm glad that you said that. I noticed in the report that we were talking about, the bipartisan gathering of thought leaders in the space, one of the recommendations that you all had, which I think leads to this. You and I both are I think making a similar point that we should compare apples to apples, compare oranges to origins when you're comparing institutions.
Jason Altmire (15:39):
One of the bullet points that you put out in the op-ed, as well as fleshed out in much greater detail in the report was that for proprietary institutions, you as a group recommended a series of escalating sanctions for poor debt to earnings outcomes, and then described what those were. But you recommended comparing colleges from similar institutions with comparable shares of Pell eligibility students. It wasn't an absolute standard irrespective of what type of school you were, you as a group recommended a relative standard where you...
Dr. Sandy Baum (16:16):
With an absolute threshold. That's really critical. That's very important. Because if you say your students have a very low chance of success, so, of course, no one succeeds, that's not acceptable. There has to be an absolute threshold in addition to making comparison to institutions with similar programs and similar students.
Jason Altmire (16:37):
Yeah. We think that's a critical point. One of the things that we hear from folks is, "Well, what are you all afraid of?" Right? As you say you are, people will say to us, "If you're offering a high quality education and the students are graduating and getting jobs, you shouldn't be worried about accountability measures because they won't apply to you." What we say is we're worried about the same thing that everybody else is worried about for having those same measures applied to them.
Jason Altmire (17:05):
The Texas Public Policy Foundation found out that if you applied the GE standards from the Obama era across all schools in sectors, 89% of the failures would've been outside the for-profit sector. What we're worried about is if you only apply those accountability measures to our sector, you will do so in a way that you would never have done so for other schools because you know it wasn't applied in a manner that was fair towards those students.
Dr. Sandy Baum (17:36):
I haven't seen that report. For example, right now the Department of Education has just proposed adding an earnings threshold to the debt to income threshold for Gainful Employment. People have run the numbers and there's no question that the for-profit programs are much more vulnerable because their earnings outcomes are much weaker. I think that the default measure would almost not matter anymore because there'd be such a high failure rate on the earnings metric.
Dr. Sandy Baum (18:07):
I doubt it's a going to go through as proposed, but that's sobering to think how many people go to college, borrow a lot of money, and then leave unable to make as much as the typical high school graduate. That's a real problem. We've got to solve that problem. We've got to solve it together.
Jason Altmire (18:25):
Do you think that there are certain types of for-profit schools that would be more vulnerable under that type of measure than others?
Dr. Sandy Baum (18:35):
Well, I'm sure there are, but I think you'd have to look more closely at it. I mean, one of the problems that we have is that there are clearly some programs that are training people for occupations that we need, but that simply don't pay adequate wages. I think we haven't figured out how to deal with that. Certainly we shouldn't make people pay a lot of money and borrow a lot of money to train for those occupations, but it is...
Dr. Sandy Baum (19:05):
I don't know enough to generalize about which for-profit institutions would be most vulnerable, but we certainly know that, for example, four year programs at for-profit institutions have the worst problems in terms of completion. I also worried a lot about their graduate programs, because black students disproportionately are getting their graduate degrees at for-profit institutions and graduating with huge amounts of debt. That is a problem that we absolutely have to tackle.
Jason Altmire (19:36):
We think that anyone who graduates with huge amounts of debt and can't find a job to be sufficient to allow them to repay that debt, that would be a problem across all of higher education.
Dr. Sandy Baum (19:47):
Right. Right. Agreed.
Jason Altmire (19:50):
Similarly, and I'll just kind of wrap with this and then let you have the last word beyond that, but you also in the op-ed that you co-authored, this was bolded, and there was a list of risks for students who were attending all types of institutions. You listed high dropout rates, graduates ill-prepared to succeed in the labor market, low wage jobs, things like that. And then this was bolded, these risks are present to differing degrees at many types of colleges and all students are entitled to the same protections afforded to students in proprietary colleges.
Jason Altmire (20:25):
What do you mean by that when you say all students are entitled to the same protections? Because on one hand, it would seem some advocates say you shouldn't have the same protections. For-profits are worse and therefore should be judged differently. But here, the group came to the consensus, and I'll read it again, that all students are entitled to the same protections afforded to students in proprietary colleges.
Dr. Sandy Baum (20:48):
Having the same protections for students in all institutions doesn't mean that exactly the same set of rules will apply. Because the fact is that by definition, students at nonprofit institutions have some protections that are not available to students in the for-profit sector, unless the government imposes them. But I disagree with people who think that nonprofit institutions by definition only have the best interest of students in mind and we don't have to worry about them.
Dr. Sandy Baum (21:19):
It's very clear that there are nonprofit institutions that either because they're under resourced or because they have rapid growth as a goal or whatever the reason is, are not serving a lot of students well and they need to be held accountable, as do for-profit institutions. But I think it's unrealistic to ignore the reality of the problems that have been generated by the for-profit sector of the risks that students face in that sector. We need to develop a strong regulatory system that holds all institutions accountable, but pay special attention to the unique circumstances of the for-profit sector.
Jason Altmire (22:03):
Let me just ask, you're very plugged into what's happening on the regulatory side and the discussion that you and I are having right now. How do you think all of this is going to end? There are going to be rules that are promulgated. There's going to be a comment period and the rules will take effect. Who knows what the future elections are going to show?
Jason Altmire (22:24):
But are we just going to get into another back and forth where a new administration is going to come in and a new Congress and we're going to be in the same position that we were a few years ago, or do you think we're going to be able to solve this problem in the long-term so that we don't have differing rules and overturning the prior administration every time a new president is sworn in?
Dr. Sandy Baum (22:46):
The fear that you described is one of the things that out led me to participate in this group and that leads me to believe that we have to develop a system of regulation that makes sense to people from lots of different perspectives. My hope is that we can do that, that we can accomplish that, that people are concerned enough now about the problem of under regulation, that we can get support for a system that's effective.
Dr. Sandy Baum (23:16):
It's hard. They're not going to be perfect rules. I mean, there's no way. I mean, you can find deep flaws with any specific rule that is proposed. We have to have a system that we can modify as we find its weaknesses, but we have to try to get everybody onboard with trying to protect students.
Jason Altmire (23:34):
We appreciate the thoughtfulness with which you have studied these issues and talked about these issues. As we wrap here, I just would give you... You know the discussion we just had. Is there anything that you would like to add or any type of closing remarks that you think would add to what we're thinking about?
Dr. Sandy Baum (23:52):
Well, I hope that people will pay attention to this discussion and will not immediately decide that arguing that all institutions should be held accountable means that you don't care about the for-profit problems and will not believe that if you think the for-profits are different, you are close minded and not tolerant of the for-profits. I think we all have to talk to each other and recognize realities and find a way for public policy to really do a better job than it has done in the past of holding institutions accountable for student outcomes.
Jason Altmire (24:33):
That was Dr. Sandy Baum from the Urban Institute. Dr. Baum, thank you very much for being with us today.
Dr. Sandy Baum (24:41):
Thank you for having me.