Vedder in Forbes: ‘Everyone is Mad’ about New Gainful Employment Rules

“The new gainful employment rules are out from the U.S. Department of Education and, predictably, nearly everyone is mad,” writes Dr. Richard Vedder, Director of the Center for College Affordability and Productivity and Professor Emeritus of Economics at Ohio University, in a Forbes article on “Gainful Employment Targets For-Profits; Not-For-Profits Free to Continue Failing.”

People on the left don’t think they go far enough in terms of putting for-profit higher education operators out of business, probably deep sixing “only” perhaps 20 percent of that sector’s customer base. The for-profits themselves are furious over the discriminatory treatment given them, and how the latest revisions in the rules were designed to accommodate the not-for-profit community colleges. They continue to lament that the rules are tailored so as not to importantly impact the not-for-profit industry, much of which has students whose post-higher education “gainful employment” experience leaves much to be desired. For example, four state universities in the Detroit metropolitan area have four-year college graduation rates of 15 percent or less, and they are not impacted by these rules. If few students graduate in the advertised four years, how can they not have a serious “gainful employment” problem? The New York Federal Reserve says nearly half of recent college graduates are “underemployed,” which sounds to be awfully close to being not “gainfully employed.” Most of those graduates attended traditional not-for-profit universities.

But the advocates for the proprietary schools often fail to mention two factors that I think motivates much of this hostility towards them and thus promotes rules such as those proposed by the Department of Education. First, many of those pushing for stringent gainful employment rules sincerely believe it is wrong or immoral to “profit” from education. They believe that education is a sacred entitlement that belongs to everyone, and one group of people (owners of for-profits) should not make material gains over something so noble and fundamental as providing the public with an essential human need. Paradoxically, however, these folks apparently think it is all right to profit from selling food to the poor like McDonald’s does, or clothing to the non-affluent like Walmart does, but not to sell knowledge and skills to them like the University of Phoenix or Bridgepoint Education does….