Paranoia

Paranoia about the nefarious and conspiratorial intentions of the Federal government, “Washington bureaucrats,” and the Obama administration has been part and parcel of the conservative Republican mindset for some time now. You know: Obama’s going to take away your guns, indoctrinate your children, march you in front of death panels, make you read the Koran, raise your electricity rates to astronomical levels, etc., etc., etc.

If you’re like me, you’ve pretty much learned to let these ravings slide. Some of them are even kind of funny. But at times they can get your goat. Take, for example, this recent Missoulian opinion piece, by Joanne Blyton.

Blyton, a Republican House member from Carbon County, is all upset about the “gainful employment” rule being proposed by the US Department of Education, which establishes performance standards for vocational programs at community colleges and for-profit institutions such as trade schools. It’s a little complicated, but the basic idea is that under the rule vocational programs whose graduates exceed certain benchmarks with respect to their student loan burdens will lose their eligibility to participate in Federal student loans programs.* The idea is that if a program recruits students, teaches them a trade, tells them they will get a decent job when they graduate and helps them borrow money to pay for the training, it should deliver: Graduates should be gainfully enough employed to repay the loans and not have to use the lion’s share of their income to do it.

Now there is certainly room for a conversation about how this rule is written, how badly it’s needed, how well it will work, and whether it will have unintended consequences. One hopes that that conversation would be grounded in reality, but the representative from Carbon County doesn’t quite get there. According to Blyton, the Department of Education has embarked on a “strange quest to dismantle ‘for profit’ higher education.” She says the rule is an example of the “Orwellian doublespeak we see so often from Washington these days.” It would “severely restrict education opportunities for many Americans.” “It’s a blatant attempt to put a large swath of our higher education system out of business.” And it is “dangerous” because it gives the “Washington bureaucracy…new power to pick and choose favored institutions.”

This is all very odd. According to this report, the Department of Education estimates that there are about 8,000 vocational programs, housed mainly in community colleges and for-profit schools, that would have to comply with the standards. The programs enroll about a million students, which amounts to around 5 percent of total US higher education enrollment. And about 16 percent of these programs would fail under the proposed rule. So let’s get this straight: the rule applies to all vocational programs, not just to for-profit institutions. And while vocational programs are the principal offerings of for-profits, approximately 84 percent of them would not be affected by the rule. Students in the programs that would be affected make up less than 1 percent of total higher education enrollment. How can those numbers possibly be construed to mean that the Federal government wants to dismantle for-profit education or put a “large swath” of the higher education system out of business? How does establishing minimal standards for the success of programs amount to picking and choosing favored institutions?

Blyton is concerned about denying educational opportunity to the students who have no choice but to enroll in programs that can’t comply with the regulations, and well she should be. But she is tone deaf to the real problem these students face. Their educational background is typically poor, they are often disadvantaged economically and socially, their ability to evaluate the usefulness of the vocational programs on offer is limited, and as a result they can be easily deceived into enrolling in institutions that take their money – or worse, the money they borrow – and give them little or nothing in return. That, such as it is, is the educational opportunity we are talking about here. It certainly does not describe what most vocational programs or for-profit institutions provide. The vast majority give their students a useful education; that’s the same vast majority that will comply with the standards. But unfortunately, this educational market is one where bad actors can also easily get a foothold.**

You don’t have to take my word for it. You can go to this Department of Education site and download the “2012 GE Informational Rates.” Do it and browse around a little. You’ll find schools like the Southwest Acupuncture College in Santa Fe, whose graduates’ student loan payments are equal to half their income of $16,900. Or there’s the International Academy of Design and Technology in Chicago. Its graduates have to pay off student loans at an average of $4,300 a year, which is 22 percent of what they earn (better than the acupuncturists!) but 191 percent of their “discretionary” income, i.e. what they earn beyond the poverty level.

Now I’m not saying that the folks running these schools are snake oil salesmen, but there’s definitely a problem here. People are borrowing money to pay for vocational training that doesn’t appear to be doing them much good. Can we agree on that? Can we agree that this is an issue we should take seriously? And if the Department of Education wants to take this issue seriously, can we refrain from outlandish and unfounded accusations about what we think its “real” intentions are?

*Blyton’s description of these standards is a little off. If you want to delve into the details, check out this description by the American Council on Education.

** A wonkish aside: markets like this are characterized by what economists call “asymmetric information,” meaning that the sellers know a lot more than the buyers do about the true quality of the goods trading hands. Back in 1970, Geroge Akerlof wrote a paper in the Quarterly Journal of Economics (“The Market for Lemons: Quality Uncertainty and the Market Mechanism”) explaining why, in such markets, low quality goods tend to displace high quality ones. The paper became very famous and has been cited thousands of times in the past 44 years. For his work on asymmetric information Akerlof (with Michael Spence and Joseph Stiglitz) was awarded the 2001 Nobel Prize in economics.