What Advocates Want in the Education Department’s List of Low-Value College Programs

Some advocates are hopeful this list will shed light on college programs saddling students with unmanageable debt.
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  • The Department of Education asked for suggestions on how to compile a list of low-financial-value college programs.
  • Many advocates pointed to the gainful employment measures as a starting point.
  • Others questioned whether a list would actually aid prospective students.

The Department of Education (ED) plans to create a list of "low-financial-value" college programs, but there is disagreement on how to put together that list.

ED asked the public for suggestions concerning how to create a list of these low-value programs. Essentially, the department wants to inform students of programs that aren't providing them a solid return on investment (ROI) and may burden them with federal student debt if their degree or credential won't help them pay it back.

Advocacy groups and organizations representing institutions began to flood ED's inbox with suggestions in recent weeks.

Here are some takeaways from a BestColleges analysis of comments from seven organizations submitted to the department:

Some Question the Value of This List

Not all sides are convinced that such a list of low-financial-value programs is worth the department's time.

Joint comments from the National Student Legal Defense Network and the Project on Predatory Student Lending make the case that ED's time would be better spent holding these schools accountable, not just putting them on a list. Any such list of low-value programs would be overshadowed by the fact that Federal Student Aid (FSA) allows students enrolled in these programs to access federal financial aid.

"We have doubts, based on direct experience with student loan borrowers, that the publication of any institutional or programmatic 'watch list' could overcome the actual or perceived 'seal of approval' created by an institution's participation in the federal student aid program," the joint letter states.

The comments also point out that now-Undersecretary of Education James Kvaal signed off on a letter in 2019 essentially making the same argument. When Kvaal was president of the Institute for College Access and Success, he co-signed a letter that said:

"The disclosure of key data elements can inform student choices and help colleges improve, but no evidence to date supports information disclosures as a standalone strategy to improve students' decision-making processes across the board."

The American Association of Community Colleges (AACC) and the Association of Community College Trustees (ACCT) oppose this list for a different reason.

A joint letter from these organizations argues that any such list would be insufficient because it would only include data from students who use federal financial aid to fund their education. However, nearly half of the students at community colleges don't use federal aid, meaning a large portion of the population served would not be considered.

Finding the Right Metric to Use to Determine 'Low Financial Value'

In finding a metric, there is some agreement among student and borrower advocacy groups.

Separate comment letters from Third Way, the Institute for Higher Education Policy, and New America urged the department to use a debt-to-earnings ratio to determine low financial value. The comments from Third Way and New America specifically call for the implementation of metrics the department proposed in early 2022 for its upcoming gainful employment (GE) regulation.

BestColleges previously reported that under the proposed GE rule in March, a program passed the requirement if its graduates left school with an annual loan payment less than 8% of their annual salary or that payment makes up less than 20% of their discretionary income. It also created an income threshold where a program could fail if its graduates' median earnings are less than the median earnings of working adults in their state ages 25-34 who hold only a high school or GED diploma.

Gainful employment only applies to for-profit institutions and credential programs at all institution types.

Third Way and New America argue that ED should apply the metrics to all programs for this low-financial-value list.

"With this, we can actually make apples-to-apples comparisons across different programs," Rachel Fishman, acting director of the Education Policy program at New America, told BestColleges.

Fishman added that GE is a relatively low bar to clear and is meant to distinguish programs with extremely poor ROI.

There is worry among some groups that such a list would be disproportionately represented by high-need but low-earning fields, including social work, counseling, and public health. The American Council on Education (ACE) voiced this concern in its letter to ED.

"Society has a vested interest in seeing people enter and succeed in these fields, and identification as low-financial-value programs will act as a powerful disincentive to students to enroll," ACE wrote.

Fishman disagrees. By setting the bar low with the GE metric — which has an earnings minimum of someone with a high school diploma — programs for these fields should be shielded from the list. If they aren't, that's a sign the institution needs to take a closer look at why its program isn't producing ROI for students.

"These are not the programs that tend to get ensnared in GE," she said. "Most programs will pass a GE test."

One area this metric could be expanded is when it applies to graduate school programs.

Michelle Dimino, deputy director of education at Third Way, told BestColleges it might make more sense to set the earnings threshold to workers with only a bachelor's degree when analyzing graduate programs. Comparing graduate students to those with a high school or GED diploma may be insufficient.

Spreading the Word

If a tree falls in a forest and no one is around to hear it, does it make a sound?

That's how Dimino thinks about the next step after ED puts together this list. What use is this list if it doesn't help students make more informed decisions?

"We know that students are really unlikely to go and locate that file on the Department of Education's website," she said.

Third Way's comments offer many options ED could use to flag low-financial-value programs:

  • Include a disclaimer on the College Scorecard for programs that fail the GE test
  • Include a list of low-value programs on a student's Free Application for Federal Student Aid (FAFSA) form
  • Require students to sign a disclaimer when accepting financial aid that they are enrolling in a low-financial-value program

One issue with the FAFSA suggestion is that prospective students don't state which program they plan to enroll in when filling out the FAFSA. Instead, they just list the institution. ED may address this by stating all programs deemed low financial value for the student's college or university, wrote Third Way.

Career Education Colleges and Universities (CECU), which represents for-profit institutions, wrote in its comments that no matter how ED disseminates this information, it should give institutions a chance to challenge data before it becomes public. This would allow schools to correct any "erroneous data," CECU states.

"Being included on any name and shame list and characterized as low-value could result in reputational damage and give rise to scrutiny from recognized accreditors, states, or the public," the organization wrote.