Host (00:05):
Hello, and welcome to another episode of our podcast for Career Education Report. We have a guest today that's going to talk about gainful employment. And our guest is Andrew Gillen, senior policy analyst from the Texas Public Policy Foundation.

Host (00:22):
You may have seen that the Texas Public Policy Foundation put out a comprehensive study on gainful employment and it's something that people have been wondering about for a long time, how other schools would fare if the gainful employment regulations were applied to those schools.

Host (00:40):
This is a big point of in the ongoing discussion on how to hold schools accountable for their outcomes at the gainful employment measures under President Obama, and now again, being discussed in the current negotiated rule making session, only apply to for-profit schools and to career programs in other schools. But that leaves the vast majority of programs in higher education excluded from the accountability measures that they're applying to for profits.

Host (01:11):
We have always made the case that we felt like if you want to apply accountability measures, you're interested in ensuring high quality outcomes, you're interested in protecting students, we assume you mean all students and we assume you mean all programs across higher education. And the department does have the authority under Section 454 of the Higher Education act to apply accountability measures across all schools in all sectors.

Host (01:40):
And that's the case we've always been making, but the data hasn't existed, research hadn't been done in a comprehensive way to look at well, what really would have happened if you would've applied gainful employment regulations and those accountability measures across all of higher education, how would other schools have fared? Andrew Gillen and the Texas Public Policy Foundation has just put out a study that looks at that very question.

Host (02:07):
So Andrew, I would welcome you to the program and would love to hear your views on what the study shows.

Andrew Gillen (02:13):
Well, thank you so much for having me and it's always a pleasure to speak with people who are curious about our research. The goal of the study was basically to say, okay, if we took the gainful employment structure, which as you said, when it was actually applied back in 2014 through 2019, it was only applied to the for-profits and it was considered vocational programs, so that's certificate programs at public and private nonprofit colleges.

Andrew Gillen (02:39):
So essentially, any degree program at public or private nonprofits was excluded from the regulations. And so what we did with the new College Scorecard data which started coming out in 2019 was, we said, "Okay, we can pretty much recreate gainful employment." We had to make some statistical adjustments to the thresholds because there are some slight differences between the way the gainful employment measured income and debt and the way College Scorecard does.

Andrew Gillen (03:08):
And it's a very slight statistical adjustment. You get the cutoff set about 98% of what they were under gainful employment, so very, very minor statistical change there. But then once you have that, you can apply gainful employment to everybody. And so we call this gainful employment equivalent to basically drive home the point that it is not the exact same thing as gainful employment

Andrew Gillen (03:29):
But the huge advantage of that is that now we can apply it universally as opposed to selectively applying it to only some segments of higher education. And so when you do that, it completely changes a lot of the conclusions that people were reaching from the gainful employment original release.

Host (03:47):
The Wall Street Journal did an excellent series, and I believe it's ongoing, but over the course of 2021 did several lengthy articles in a row looking at some of this question, how mostly private nonprofit institutions did with regard to student outcomes and return on investment, and got a lot of traction on that question, because I think this has been at the heart of the gainful employment debate.

Host (04:14):
And your study has also gotten a lot of traction because I think this is an issue that folks who want to focus those regulations solely on the for-profit sector really want to zero in on those type of programs. This is not data that they wanted to see. And your results show that 89% of the schools that would have failed gainful employment measures had it been applied across all sectors were outside of the for-profit sector.

Host (04:45):
Only 11% of the failures would've occurred in the for-profit sector. But again, if you're somebody who's interested in accountability, I think you have a pretty difficult time explaining why you would exclude from those accountability measures 89% cent of the programs that would have failed.

Host (05:04):
And they're looking at reimposing something very similar to what was in place under the gainful employment measures under President Obama. So Andrew, if you could just dig a little bit deeper on how those numbers stack up and what does it show with regard to the type of schools that would've failed GE if it were applied to them.

Andrew Gillen (05:23):
When the original Gainful Employment data set came out, so there's only one iteration of the gainful employment data, and when you looked at the percentage of programs that failed, it was 98% for-profits, which makes sense because the for-profits were pretty much the only programs that were targeted. But that realization didn't filter down.

Andrew Gillen (05:47):
And so that, I think, is one of the main contributions of our new report, is that it says, "Okay, that 98% figure is very, very biased. What happens to that 98% if you apply gainful employment universally?" And when you do that, the 98% becomes 11%. So we are almost in order of magnitude off in the for-profit share of failing programs, which is huge. If you're an order of magnitude off, that is really, really bad unreliable result.

Andrew Gillen (06:19):
The other thing that you mentioned was the Wall Street Journal has been doing a wonderful series of articles, and other institutions and newspapers are looking into student debt as well. And what's really strange to me is that gainful employment and these Wall Street Journal exposes and all this other work that's going on, what it's really focusing on is essentially unaffordable debt.

Andrew Gillen (06:43):
And so people are going to define that slightly differently, even that one definition, the Wall Street Journal is using it slightly different, we've put out some work with a slightly different one, but we're all talking about unaffordable debt in some context.

Andrew Gillen (06:55):
And we actually have the data to identify by program which specific college programs are doing this. But then when you go up to the policy discussion, it's still all about for-profit versus public or for-profit versus private nonprofit, which is just completely baffling to me, because the whole point of having this program level data, which is a quantum leap. So a decade ago, all we had was college level data. So the only thing you could do is look at the college level, and then if you wanted to aggregate up to the sector level, okay.

Andrew Gillen (07:29):
But now we've got program level data and we're completely ignoring the main capability that gives us in reforming the way we approach accountability, which is we don't care about the institution level accountability or the sector level accountability anymore, we should care about that program level accountability, and wherever the chips fall, that's where it's going to fall.

Andrew Gillen (07:50):
My research so far has shown that there's a lot of segments of higher education that are going to perform worse than the current punching bag. So we did a report about a year or so ago on law schools. Now, the top law schools do great. Their graduates go on to earn fantastic salaries, they can easily afford to repay their debt, no problem, but there's a lot of law schools that don't have those same outcomes but are still having similar levels of debt for their students.

Andrew Gillen (08:16):
And so law schools are a good example of a program or a set of programs where we have the capability now to distinguish good law schools from bad law schools, so it wouldn't make sense to attack all law schools. We can actually identify which specific programs are harming their students as a whole. So I think that's the approach we should take across the board, whether it be law schools, whether it be for-profits, whether it be public universities.

Host (08:40):
And I wanted to take a step back and talk about gainful employment as it appears in the statute and what exactly it measures. I wonder, Andrew, if you could go into a little bit of detail on why the department is using gainful employment and what is that calculation that they're looking at. Yes, they are only applying it to for-profit and to a targeted set of career programs, but what is it exactly that we're talking about when we say gainful employment?

Andrew Gillen (09:11):
Gainful employment is one of those concepts, it was just laying there in the Higher Education Act. So the Higher Education Act originally passed in 1965, been amended a bunch since then, but there's always these phrases that are in these laws that are undefined or left up to be defined by the courts or regulation later on.

Andrew Gillen (09:31):
And basically, since 1965, nobody bothered to define what gainful employment was. And so for close to 50 years, nobody did anything with this phrase. But then in 2011, the Obama administration came out with the first iteration of what we now refer to as the gainful employment regulations, or just gainful employment for short.

Andrew Gillen (09:54):
So that original version gets thrown out, justifiably, by the court. They were focusing on a repayment rate and they didn't have very good justification for choosing the cutoff that they chose. But actually, the problem that I thought was even more severe with the original regulations was, it actually would've given the secretary of education veto power over any program offered by a for-profit university.

Andrew Gillen (10:19):
And that is just completely alien to our approach to higher education for the past 70 years. So the department of education traditionally, and until those 2011 regulations was never allowed to basically tell a school, "No, you can't offer this type of education." And the 2011 regulations would've done that, but locally, the courts threw those out.

Andrew Gillen (10:42):
The Obama Department of Education cleaned up those problems, issued a set of new regulations that was much more focused on debt relative to earnings, which I think is a great approach. So two things that I really love about the 2014 addition of the gainful employment regulations, it was, number one, it was the first time that the federal government had focused on program level outcomes, which as I mentioned earlier, that is just a huge, huge leap in how we should be thinking about accountability in higher education.

Andrew Gillen (11:17):
So now that we have program level data, we should only be really talking about program level accountability, because it's such a better way to think about accountability. A perfect example was in the original gainful employment regulations. One of the few private nonprofit programs that failed was a certificate program in theater studies or something like that at Harvard.

Andrew Gillen (11:39):
Harvard's a great school, nobody would've thought anything at Harvard would fail gainful employment. And if we're looking at institution level data, nothing ever would, because all the rest of Harvard's programs are doing great presumably, we never would've known that this one program at Harvard was leading to really, really excessive debt for students who are graduating from that program.

Andrew Gillen (11:59):
And so that, I think, is a perfect illustration of the value of this program level data. It avoids letting bad performing programs like good institutions escape accountability, at the same time, it avoids punishing good programs at low performing institutions. So program level data is really the way to go.

Andrew Gillen (12:19):
The second thing I really liked about the gainful employment regulations, it was the first time the federal government had really taken earnings into account as an outcome of college. So something like 90% of students go to college to get a better job or to earn more money or something pretty career-focused.

Andrew Gillen (12:39):
So college is obviously very important to achieving those goals, but until gainful employment, the government really hadn't done anything with earnings outcomes. So that's the other thing I really liked about the gainful employment regulations. And they even looked at excessive debt in a good way. So they looked at it relative to earnings.

Andrew Gillen (12:58):
So they looked at typical debt for program students and typical earnings, which is a good way. You could quibble with the exact metrics they used or the cutoffs that they used within those metrics. One of the alternative measures that we at TPPF have introduced is something just a little easier to understand.

Andrew Gillen (13:14):
It's just total debt as a percent of annual earnings. And the reason we did that is because it's a little easier to understand. I'm just a big proponent of simplicity when it comes to laws, regulations, that kind of stuff.

Host (13:28):
When the Department of Education, about 10 years ago, started to consider these topics, the data did not exist to make these types of comparisons in a user-friendly way. The College Scorecard as it is today did not exist. So when we had this high level debate about applying the rules to all schools and everybody should be held accountable to the same outcomes measures, there was no way to cross reference that in a user-friendly way.

Host (13:58):
And what I think the sector heard in response to that at that time was that would be really difficult, it would be time intensive, we're really interested in the way this impacts for-profit schools, so we're just going to go with that. Well, now 10 years later, you can't do that, at least not without having to explain yourself because the data does exist now and we are able to make these comparisons.

Host (14:21):
And you have done it at the Texas Public Policy Foundation, the Wall Street Journal has done it, others have looked into the access to data. And with the definition of gainful employment and the pushback that some give, "Well, we're restricted in the statute because gainful employment as it's written only applies to for-profit schools and these targeted career certificate programs in other sectors," well, I served in Congress the last time the Higher Education Act was reauthorized.

Host (14:52):
I was a co-sponsor of that bill, I was very active in its passage and I was appointed for that reason to the Conference Committee that finalized the language of HEA the last time it was reauthorized, and I think because of that, I can speak with some credibility to say it was in no way Congress' intent to shield from accountability the other schools across the rest of higher education from accountability and from scrutiny.

Host (15:23):
The gainful employment regulation, as it was drawn, relates to one small few sentences of a larger higher education bill. It was not Congress' intent to exclude from scrutiny everybody else, and it is certainly not prohibited under the statute as it's currently drawn. The department's hands are not tied.

Host (15:45):
If they want to make a conscious decision to use a much narrower intent, yes they can go through that gainful employment section a couple of sentences in a larger bill. That's not consistent with Congress' intent, and I can tell you, I don't think that's consistent with what the public would want. The public would want accountability across all schools and all sectors so that all students have the same protections.

Host (16:09):
And what the Texas Public Policy Foundation has shown is that the vast majority of schools who would have failed those gainful employment measures were they applied to them would be in the private nonprofit and public sector. Only 11% of the failures were in the for-profit sector if you just simply apply the rules equally.

Host (16:32):
And Andrew, I think what you have done is a great public service by doing this research. I'm sure it was tedious and time intensive, but this is something that has been spoken about rhetorically for a long time. But to actually have the data that shows, this is the impact, these are the programs that would have failed if the regulation was applied to them, I think that turns this debate on its head.

Host (16:58):
And I think that's why this study has gotten the attention that it has. So I would just say, in wrapping up, I would give you the opportunity to close out on why this was of interest to you and what is next in some of the issues you're going to look at regarding this topic.

Andrew Gillen (17:15):
So we are one of the organizations that is really diving into this, it's called the College Scorecard Data. It's basically just the program level data on earnings and debt outcomes. What it really should do in my view is completely revolutionize everybody's approach to accountability in higher education.

Andrew Gillen (17:34):
If I'm a student who graduates with excessive debt, whether I borrow too much or whether my school failed to educate me or whatever, that happens at every type of institution, every type of program. It's no better or worse for that student if they happen to attend at a for-profit or if they went to that Harvard Theater program, they still have unaffordable debt.It doesn't make any difference to the student the tax status of the university they attended.

Andrew Gillen (17:59):
So I really hope we can move beyond the debates of yesterday, which is basically stuck in this "how do we punish for-profits, how do help publics, how do we subsidize private non-profit?" To me, those are yesterday's debates. I think the future debates are really going to be focused on this program level outcomes data, because we have the data now. We have it and we aren't using it yet in an accountability sense.

Andrew Gillen (18:30):
So we at TPPF, we've come out with this metric, I mentioned earlier, debt as a percent of earnings, real simple to understand if you have more debt than you're starting salary, it's generally a red flag. I think we'll see a couple things with this new data. One, we're going to see debt and earnings used in accountability metrics.

Andrew Gillen (18:51):
Third Way's put out a price PIP, it's basically a time to repayment metric, Preston Cooper has put out a similar ROI measure, and these are just the three most recent papers that have come out. There's going to be a ton more of people looking at this.

Andrew Gillen (19:08):
Again, the important point isn't to focus on which specific metric and what specific thresholds we use, but just that we get some metric using this and some reasonable thresholds in there. The other thing that I think really should happen is basically this shift to program level accountability.

Host (19:24):
All of those are, are topics that are under discussion and we can certainly have a debate with the department and with policy analysts on what the most appropriate mechanism is to hold schools accountable, what are the right metrics, and that's exactly what the debate will be about. But the overriding factor is nobody opposes accountability.

Host (19:44):
We certainly support any accountability measure that does not have a loophole, that does not have a budget gimmick in there, as long as it applies to all schools in all sectors, and again, provides all students the same protections.

Host (19:59):
And what you have done at the Texas Public Policy Foundation has taken a huge step in making that possible because it makes the data inescapable for folks who wanted to keep their blinders on and pretend like this problem only applied to one sector.

Host (20:14):
Actually there are high and low performers in every sector and I really want to thank the Texas Public Policy Foundation for your leadership, for the work that was done, I appreciate you being on the program. This has been Andrew Gillen with the Texas Public Policy Foundation. Andrew, thank you very much for being with us.

Andrew Gillen (20:31):
Thank you for having me.

Host (20:33):
Thanks for joining me for this episode of the Career Education Report. Subscribe and rate us on Apple Podcasts, Google Play, Spotify or wherever you listen to podcasts. For more information, visit our website at career.org and follow us on Twitter @cecued, that's @C-E-C-U-E-D. Thank you for listening.