Navigating the Impact of Gainful Employment on Higher Education

By Dave Sherwood, Co-Founder & CEO of BibliU

The landscape of higher education is constantly evolving, shaped by regulatory changes, economic trends, and shifting student demographics. 

One regulation that has recently garnered significant attention is the U.S. Education Department's gainful employment rule, which aims to provide students and their families with essential disclosures regarding program affordability and outcomes. Under this regulation, programs must demonstrate graduates' ability to afford yearly debt payments and earn more than non-college-educated adults in their state. Failure to meet these criteria could result in the loss of access to federal financial aid, posing significant challenges for institutions and students alike. 

400 graduate programs enrolling roughly 120,000 students would be subject to this new requirement of disclosure, according to Education Department estimates.  As leaders in the higher education sector, it's crucial to comprehend the ramifications of this regulation and collaboratively navigate its impact on our institutions and the students we serve.

The Controversy Surrounding Standardized Measurement

Standardized measurement in higher education, such as that imposed by the gainful employment rule, has sparked significant debate. While critics raise valid concerns about the limitations and complexities of applying uniform metrics across diverse programs and institutions, there are also potential benefits to standardized measurement that warrant consideration.

One of the primary arguments in favor of standardized measurement is the potential to promote transparency and accountability within the higher ed sector. By establishing clear criteria for assessing program affordability and outcomes, standardized measurement can provide critical insights into the value proposition of different educational offerings. This transparency can help students and their families make informed decisions about where to invest their time and resources.

Moreover, standardized measurement has the potential to drive institutional improvement and innovation. Data-driven approaches can facilitate continuous improvement efforts and foster a culture of accountability and excellence within the higher education community.

However, it's important to acknowledge the practical challenges associated with implementing standardized measurement. The diverse missions, student populations, and institutional contexts of colleges and universities pose significant obstacles to achieving uniformity in measurement and reporting. Local and national employment rates and job markets also have a notable effect on post-graduation outcomes. 

Recent trends in California's tech sector provide a compelling example of the importance of understanding regional variations in employment trends and the impact of government policies on workforce readiness. Despite being a traditional hub for tech innovation, California has experienced a decline in tech employment, reflecting broader shifts in the labor market. According to national data, California has seen 7k jobs in web search & related, 11k in software publishing, 15k in streaming & social networks, and 21k in computer systems design & related leave the state. This drop is largely due to roles being offered to individuals outside of California. This decline underscores the need for nuanced approaches to assessing employability dynamics and tailoring strategies accordingly.  In recognizing these nuances, policymakers and industry stakeholders can develop targeted interventions to support workforce development initiatives and stimulate job growth in areas experiencing decline. 

As higher education leaders grapple with the complexities of standardized measurement, it's essential to strike a balance between accountability and flexibility. While standardized measurement can provide valuable insights into program affordability and outcomes, it must be implemented in a manner that recognizes the diverse needs and contexts of students and institutions. The higher ed community can engage in constructive dialogue, leverage data insights, and adopt evidence-based practices to harness the potential of standardized measurement, driving positive change and promoting student success.

Data Insights from the American Council on Education

Recent findings from the American Council on Education (ACE) shed light on the multifaceted impact of the gainful employment rule on higher education institutions across various sectors. ACE's research reveals that the rule's requirements disproportionately affect certain types of institutions, raising concerns about equity and access to federal financial aid.

Historically Black colleges and universities (HBCUs) and minority-serving institutions (MSIs) face unique challenges under the gainful employment rule. According to ACE's analysis, about 33 percent of programs at HBCUs not subject to the rule would fail the debt-to-earnings or earnings premium test, while 8 percent of those at MSIs would do so. These findings outline the importance of considering the diverse missions and student populations served by these institutions when evaluating their performance and outcomes.

At public institutions, the impact of the gainful employment rule is less pronounced but still significant. Approximately 6 percent of programs at public colleges and universities would fail the debt-to-earnings or earnings premium test. Private nonprofit institutions also face challenges in meeting the requirements of the gainful employment rule, with 11 percent of programs at these institutions at risk of failing the debt-to-earnings or earnings premium test. 

As higher education leaders grasp the implications of the gainful employment rule, it's essential to consider the broader context of regulatory frameworks, economic trends, and institutional realities. Institutions can develop data-driven strategies to navigate the complexities of compliance while prioritizing transparency, accountability, and student success.

Promoting the Return on Investment (ROI) of a College Degree

The concept of promoting the ROI of a college degree is undoubtedly important, especially in today's landscape where the value of higher education is scrutinized more closely than ever before. Demonstrating the tangible benefits of investing in a college education is essential for encouraging individuals to pursue further learning and for justifying the considerable financial commitment that often accompanies it. In the context of gainful employment, this rule can be helpful in guaranteeing ROI, according to Forbes: “The new rule is a welcome tool that will hold more career-training programs accountable for the value they bring - or fail to bring - to their students. The rule also ensures that students in a wide range of certificate and graduate programs can have the information they need before they invest their time and money in a program that may not pay off for them.” 

Promoting the ROI of a college degree can contribute to greater transparency and accountability within the higher education sector. By providing clear and accessible information about program affordability, graduation rates, employment outcomes, and salary prospects, institutions can empower students and their families to make informed decisions about their educational pathways. This transparency fosters trust and credibility, enhancing the overall reputation of higher education institutions.

It's important to acknowledge, however, the complexities associated with measuring the ROI of a college degree. While financial metrics such as earnings potential and employment rates are valuable indicators of success, they may not capture the full spectrum of benefits that individuals derive from their educational experiences. Factors such as personal growth, intellectual development, and social connections are often significant but may be more difficult to quantify.

A standardized approach to measuring the ROI of a college degree can be inherently flawed, as it fails to account for the diverse range of student backgrounds, aspirations, and career paths. Not all graduates follow linear trajectories from college to career, and their success may not be solely defined by immediate post-graduation outcomes. Recognizing the multifaceted nature of student success requires a more holistic and inclusive approach to assessing the value of higher education. 

Setting Institutions for Success

“The department estimates that about 1,700 programs serving nearly 700,000 students would fail the debt-to-earnings ratio test or not pass the earnings threshold, which is based on how much adults who didn’t go to college earn,” as per Inside Higher Ed. To make sure all aspiring students have opportunities available to them when it comes to earning a degree, leaders in the sector must take into consideration ways to strengthen programs and guarantee students the output they deserve upon graduation. 

When it comes to promoting this type of program success in regards to gainful employment,  supporting an adequate ROI for a degree is imperative. To maintain the trust of the public, institutions must act on this vision. This crisis can also have effects on enrollment rates if not properly addressed.  

Cutting the costs associated with earning this degree can help achieve this goal: some methods for working towards this goal are investing in online programs, structuring curriculum to prepare students for the workforce, and procuring affordable course materials for learners. Using BibliU as an example, providing access to affordable course materials and personalized learning experiences through the Universal Learning model empowers students to achieve their academic goals while minimizing debt.

Another tactic that can affect ROI revolves around integrating work experience into the school curriculum. Various institutions across the world implement compulsory internships or co-ops for all students in order to promote real workplace experience. The goal of this model is to increase employment rates post-graduation. In the same vein, institutions that bring in local industries to design courses in relation to specific jobs and/or fund scholarships that guarantee a role upon graduation can find similar success.

At the end of the day, transparency in the marketing surrounding an institution plays an important role in making sure students can make informed decisions. Evidence showing loan to typical salary upon graduation for each specific career path could give students insight into potential ROI. As previously mentioned, success in school is not limited to any one singular number, but having the most information possible can only benefit learners as they make big decisions regarding their educational journey.   

As higher education leaders navigate these complexities of the gainful employment rule, it's crucial to prioritize transparency, accountability, and student success. Through embracing innovative solutions, fostering collaboration, and advocating for policies that support educational excellence, institutions can adapt to meet the evolving needs of students and the workforce.

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