Education and ROI
Should the government be in the business of maximizing its educational investment?
Last week, the Obama administration released its proposals for reforming the way the federal government does business with for-profit colleges. What’s at stake is millions of dollars of federally-backed loans. Data suggests that for-profit colleges have a comparatively poor track record of graduating students into jobs capable of supporting debt payment. In effect, many for-profit colleges run without significant downside risk, which is all held by the government. The proposed regulations call for a halt to government-backed loans to schools with less than 45% of their graduates able to make payments on the debt principle.
The underlying moral foundations of the administration’s move are debatable; is the concern that the government is making poor investments, or that the poor investments are going to fund predatory private interests?
If it’s the former, the proposed reforms are likely to be ineffective. Although educational resources are important, the brightest students will likely succeed whether at Harvard, State U, or University of Phoenix. Likewise, the least capable students are likely to fail at any institution. Admissions offices no doubt have years of data suggesting which students are likely to fail to graduate. This is not to say that universities have no role, but that the abilities of the student are probably better predictors of future success. If the government wanted to get the most out of its investment, it would do better to review applications individually, choosing the best-performing students.
If, in addition to wanting to maximize its investment the administration is also trying to clamp down on predatory practices, I’m not sure what it’s moral claim would be. Why should the government encourage the students who are least likely to succeed to attend State U rather than University of Phoenix? Perhaps the argument could be made that the government is just doing more of what it already does — funneling money to public universities. But if this is the goal, it can and should be done in a better way than putting the debt load on the backs of students who are unlikely to be able to pay it off.
Ultimately, the administration is avoiding the key issue — that, for thousands of students, investment in a BA is unlikely to pay off when it involves tens of thousands of debt. Other administration priorities, like reinvestment in community colleges, are likely to lead to better returns.
- John
Image courtesy Wikimedia commons.
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- The Life of the Mind, and other stories
- Reason and faith in higher education
- A classic education for the rest of us
- Education back on the table
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