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A prominent researcher says Betsy DeVos and the Department of Education misrepresented her work in attempting to justify elimination of an Obama-era student loan rule fiercely opposed by for-profit colleges.
The gainful-employment rule would cut off federal aid to vocational programs -- most of them at for-profits -- whose graduates consistently don’t earn enough to pay back their student loans.
The department earlier this month said it would rescind the rule, arguing in part that its debt-to-earnings standards were unreasonable. DeVos cited a 2008 paper from Urban Institute fellow Sandy Baum and Saul Schwartz, a professor at Carleton University in Ottawa, that was skeptical of one of those benchmarks. But Baum said in a post on Urban’s website Wednesday that their work if anything supported stronger gainful-employment standards, not elimination of the rule.
“To justify this change, the Department of Education has misrepresented my research, creating a misleading impression of evidence-based policymaking,” she wrote. “The department cites my work as evidence that the GE standard is based on an inappropriate metric, but the paper cited in fact presents evidence that would support making the GE rules stronger.”
Baum’s comments appear to discredit the only evidence offered by the department that research undermined the rule’s debt-to-earnings metrics. (It had also argued in rescinding the rule that disclosure requirements were overly burdensome for colleges and that outcomes for programs were affected by even small changes in the economy.)
“We welcome her comments during this open public comment period,” said Liz Hill, a department spokeswoman.
The Obama gainful-employment rule said that loan payments of a typical graduate from a career education program could not exceed 20 percent of discretionary income or 8 percent of total income in two out of three years.
The paper from Baum and Schwartz examined, rather than accountability rules, the appropriate way to devise an income-based repayment program for student borrowers. Although studies of student debt for years had identified the 8 percent a year as the most borrowers should devote to student loan payments, they found several shortcomings with that benchmark. They also said, however, that it was not an unreasonable number.
But the department fastened onto the shortcomings identified by the paper, saying they raised questions about “the reasonableness of the 8 percent threshold as a critical, high-stakes test of purported program performance.” The department also mentioned uncited research published after the rule’s promulgation that questioned whether access to student aid should be tied to debt-to-earnings metrics.
The gainful-employment rule applied to all non-degree-granting programs as well as all programs operated by for-profit institutions. The first set of data released in 2017 showed that the vast majority of programs that failed the standards were located at for-profit institutions. DeVos said last year she would overhaul the rule and later blocked other provisions from taking effect.
Rescinding the rule will mean colleges -- most of them for-profits -- will keep $5.3 billion in student aid that otherwise would have been cut off if the rule remained in place, according to the Education Department’s own analysis.
Baum said that the department officials appeared to have reached their conclusion about the gainful-employment rule and worked backward from there to find the appropriate evidence.
“There’s no way I can know whether they twisted this research purposely or whether they don’t get it,” she said in an interview. “I think they start from the perspective that their goal is to do away with this regulation.”
