You are here

Future Shock

Bureaucratic Knee Jerks?

And other ways to throw the workforce baby out with the political bathwater
University Business, Mar 2011

Why is it that higher education commentators sleep more soundly when Congress is out of session, federal regulatory agencies are closed, and the Stock Exchange rings its closing bell?

The average Joe has little time to distinguish the usual suspects when it comes to postsecondary vocational education reform -- and we use reform advisedly. After all, higher education aficionados can hardly keep abreast of the latest regulatory tinkering -- i.e., prohibiting incentive compensation, redefining gainful employment--and as a result, constricting the availability of federal financial aid to worthy students and the families and employers who support them.

In the wake of the Sixty Minutes investigative for-profit report and CNBC's "The Price of Admission," muckraking journalists have had a field day criticizing proprietary colleges and universities -- using secret student shoppers to sensationalize the deceitful practices of a few bad apples. Unhappily, these dragnets do little to raise public awareness about the practical impact of the proposed changes. Even though the purported intent of the regulatory noose is to avoid student loan defaults, this witch-hunt could end up hurting needy students, and chilling the enthusiasm of employers for creating jobs of the future -- hot jobs that rely on 21st century vocational and critical thinking skills.

To make matters worse, the Citizens for Responsibility and Ethics and the Coalition for Education Success (CES) report that the real impetus for these changes may not be to protect student consumers, but rather for private gain. Both organizations have reportedly collected documentary evidence of alleged collusion of well-known Wall Street short sellers with high-level U.S. Department of Education officials during the regulatory process. And most industry insiders suspect that the rule-making process was heavily stacked with perennial critics of the for-profit sector.

Though community colleges may have been the fastest growing segment of American higher education for the last 40 years, for-profit institutions have been the fastest growing sector of higher education for the past decade. Just consider the genuine success of larger for-profit players -- institutions that provide critically important career education opportunities to a new generation of student customers, emphasizing convenient, practical, and career-connected higher learning.

Contrary to popular misconception, for-profit postsecondary vocational institutions hold their own and, in many cases, exceed the student success rates of non-profit and public colleges. For many postsecondary vocational students, for-profits offer a first and invaluable opportunity to get a job foothold in a fickle economy and eventually prosper in the new, increasingly competitive global workforce.

Institutional research staff know that the success of for-profits can now be measured by independently verifiable outcome metrics--read as retention, persistence, elapsed time to graduation, and, importantly, career placement rates. Quietly, yet persistently, over the last several generations, non-profit and public higher education institutions have increased tuition and fees by approximately 6 percent in good times and bad. That's double the 3 percent annual increase in the cost of living.

In so many ways, the recent political flack over for-profit student financial aid reminds us of the so-called SPREE regulations of a few years ago -- proposed prohibitions that never got ultimate traction in Congress, even after all the public hearings and media hype. Ironically, these recently recommended regulatory triggers could actually cause successful postsecondary vocational programs to shut down. For those that survive, the newly proposed gainful employment and incentive compensation prohibitions could produce a dramatic increase in the default rate of students already in the enrollment pipeline.

Unfortunately, the Fed's regulatory prescription for reform could have the untoward, unseemly impact of chilling job creation--thereby shrinking the American knowledge worker talent pool. University Business readers know the last chapter of that book: U.S. firms bolt and go offshore to tap into cheap, yet intelligent labor--particularly in the areas of applied math, science, and technology.

Congress may now need to take one step back to move two steps forward in the legislative, regulatory, and enforcement processes. Rather than adopt the kneejerk response of the federal education bureaucracy, Congress would do well to hold their powder and monitor institutional performance, identify actual trendlines, and incentivize best educational consumer practices.

James Martin and James E. Samels, Future Shock columnists, are authors of Turnaround: Leading Stressed Colleges and Universities to Excellence (Johns Hopkins University Press, 2009). Martin is a professor of English at Mount Ida College (Mass.) and Samels is president and CEO of The Education Alliance.