What Does a Failing Program Look Like?

Yesterday, the U.S. Department of Education announced it was giving schools about three additional months to comply with two requirements under the gainful employment regulation finalized in 2014. This delay is troubling given the urgent need to protect students and taxpayers from career education programs that consistently leave students with debts they cannot repay.

In January, the Department released the first set of official career education program rates under the gainful employment rule. Fully three-quarters of the rated programs passed the modest standards outlined in the rule, which measure graduates’ debt compared to their incomes to ensure that federally-funded career education programs at public, non-profit, and for-profit colleges are complying with the statutory requirement that they “prepare students for gainful employment in a recognized occupation.” In fact, nine out of 10 colleges with rated career education programs had no failing programs, including the for-profit college chains American Public University, Capella University, Concorde Career College, ECPI University, Empire Beauty School, Grand Canyon University, and Strayer University.

But 803 programs (9%) failed the test because they consistently leave students with more debt than they can repay. Some of these programs were at schools that have since closed, including ITT Tech and Westwood College. But many other failing programs are still enrolling students and receiving hundreds of millions of taxpayer dollars. What do these programs look like? Here are some examples.

• Florida Technical College in Orlando charges $31,555 for its associate’s degree in medical assisting, and its graduates typically earn only $14,500 a year – less than the federal minimum wage working full-time – and owe over $17,000 in federal student loan debt.
• McCann School of Business and Technology in Hazelton, PA charges $30,860 for its associate’s degree in medical assisting, and it has only a 7% on-time completion rate and a 46% job placement rate. Its graduates typically earn only $20,300 – less than the average earnings of high school graduates – but graduates of this program at all McCann School locations in 2014-15 had over $26,000 in student loan debt.
• Art Institute of Pittsburgh charges $44,804 for its associate’s degree in graphic design, yet only 12% of completers finish on-time, and those who graduate typically earn less  than $22,000 per year and have over $40,000 in federal student loan debt.

These and other failing programs are leaving students worse off than before they enrolled, and taxpayer dollars should not be subsidizing them.

The good news is programs like these are now required to warn current and prospective students that they failed and will lose eligibility for federal grants and loans next year if they do not improve. This warning requirement was not affected by the Department’s announcement yesterday. And other failing programs have stopped enrolling new students, including all of the failing programs at the University of Phoenix, and Harvard University’s graduate certificate program in theater arts, where students typically graduated with $78,000 in debt but earned only $36,000.

Even better news? There are thousands of career education programs offered at locations across the country and online that are not leaving graduates with huge debts they cannot repay, including programs at for-profit, public, and non-profit colleges whose graduates earn over $60,000 a year. Many programs where graduates have manageable or no debt are offered near programs that are failing or in the zone requiring improvement. For instance, two for-profit colleges in Harrisburg, Pennsylvania, offer medical/clinical assisting certificate programs, but the graduates of Keystone Technical Institute typically earn $10,000 more and have significantly less debt than graduates of the Brightwood Career Institute. In Miami, Florida, graduates of the public Miami Dade College’s medical/clinical assisting certificate program typically have no debt and earn twice as much as the graduates of the same program at the nearby for-profit Florida Education Institute, where graduates also have thousands of dollars of debt.

Thanks to the gainful employment rule, career education programs are required to disclose key information like their cost, typical graduate earnings and debt levels, and job placement rates so students can make more informed decisions about where to enroll. Programs that fail the rule’s minimum standards also have to warn current and prospective students. And to protect taxpayers from subsidizing programs that consistently underperform and leave students worse off, failing and zone programs have to improve in order to continue to receive federal funding.

In anticipation of the rule, many schools have already improved their programs, ended failing programs, lowered their prices, and/or started providing more career placement assistance. These are positive reforms, but the hundreds of failing and zone programs demonstrate that far more improvement is needed to ensure that the more than $24 billion in federal grants and loans spent each year on career education programs are improving, not ruining, people’s lives.