Marc Jerome, Monroe CollegeWe recently sat down with Marc M. Jerome, an APC Trustee and Monroe College Executive VP, to discuss the U.S. Department of Education’s proposed Gainful Employment rule. Jerome was one of 15 negotiators empaneled late last year to review and comment on the newly proposed regulation. Jerome was one of two people representing the proprietary sector.

Q: Can you summarize what the Gainful Employment regulation is about?

MJ: “Gainful Employment” is a statutory term used to describe certain programs that are eligible for federal Title IV financial aid funds. The term is applied to all certificate programs, regardless of sector, and all certificate and degree programs at proprietary institutions. Although the term goes back at least 50 years, it was never defined. The regulation proposes various metrics that attempt to define the term and measure which programs should remain eligible for federal funds. The concept started making headlines more recently when the Obama Administration, in response to the explosive growth of some proprietary institutions, proposed a regulation to address the concern that students at these institutions were being saddled with too much debt and were not getting an education that justified that debt.

Q: What are the Department’s goals with the regulation?

MJ: There is no guesswork here. The Department published its goals with the regulation, which are to:
1: Define what it means for a program to prepare a student for Gainful Employment in a recognized occupation;
2: Provide metrics for institutions to assess whether their programs prepare student for Gainful Employment and provide institutions the opportunity to improve their performance;
3: Protect students and tax payers by identifying Gainful Employment programs with poor students outcomes ending the support of federal funds to programs that do not prepare students for gainful employment; and
4: Increase transparency and information to students so they can make an informed decision.

I fully support all of the Department’s goals and I believe that all degree programs—for profit, non-profit and public—should protect students and taxpayers. By the end of the negotiating sessions, however, I believed that the proposed regulation did NOT meet the Department’s goals.

Q: What do you mean that the Department’s proposed regulation doesn’t meet its goals?

MJ: Programs with very bad student outcomes could pass the regulation. By focusing on debt rather than completion or placement, some questionable outcomes could occur. For example:

  • A program where NO students graduate can pass the metric for two reasons—not enough graduates or if less than half the students took a loan.
  • A program where NO graduates obtain employment can pass the metrics simply if less than half the students took a loan.
  • Programs where a higher percentage of student’s default on their student loans than graduate can pass the metric.

Q: Why would the Department propose a regulation that allowed poorly performing programs to pass?

MJ: It just doesn’t make sense. Perhaps graduation rates are a very tricky subject for the Department to regulate given how low graduation rates are for many community colleges. Their tuition is very low and they are open admission, so they face some unique challenges.

Q: How low are graduation rates?

MJ: There are some community colleges in our area that have on-time graduation rates below one percent. Monroe College’s graduation rates are significantly better.

Q: Do you think the regulation identifies programs with value and those without?

MJ: One of my biggest concerns with the regulation is that it measures earnings of graduates as soon as 18 months after graduation. If you ask 100 parents if they measure the value of their investment in their children’s college education by what they earned less than two years after graduation, almost 100% will answer “NO.”

Q: Monroe College has been in existence for over 80 years in New York. We have heard you say that the Department’s approach to Gainful Employment is a real departure from the guidance and direction you have been receiving for many years. What do you mean?

MJ: One of the challenges with the Department’s approach is that it is ignoring 50 years of history where the phrase “gainful employment” was never interpreted by the federal government, and what our State and our regional accreditor have required of us during that time. If the Department had said to us at any time over the last three decades that our programs would be judged on the salaries of our students 1 to 3 years after graduation, we would have built the college and our programs very differently.

Many years ago we become accredited by Middle States and regulated by the New York Board of Regents. Both organizations require us to have a breadth and depth of liberal arts in our curricula and both organizations – especially the Regents – require us to be part of higher education, not vocationally oriented. To abruptly demand we reverse course from the direction we’ve been moving the past 30 years toward higher education doesn’t feel fair, especially given that our programs have been performing very well.

It’s worth noting that our programs were recently recognized twice by U.S. News & World Report, once for affordability and value and once for having graduation rates that exceeded their predicted rates based on student demographics.

Q: I understand that you proposed a change to the regulation?

MJ: Again, I viewed my “job” as a negotiator to help the Department produce a regulation that met its published goals. The proposed regulation was too punitive, and offered very little opportunity for institutions to help students if they discovered that their programs had too much debt relative to the students’ earnings. I countered with a proposed loan reduction plan. Under that plan, if an institution found that students were borrowing too much for the income they were earning, the college could voluntarily attempt to lower the actual debt for every student

In my mind, this is exactly the goal of the Department; to collect and share the data, and then provide institutions the means to do the right thing for students. The Department seemed to like the proposal and it was incorporated in the proposed regulation.

Q: I have heard you talk passionately about student demographics.

MJ: I have no doubt, and I think the data will show, that outcomes on cohort default rates and debt-to-earnings metrics may reflect student demographics rather than the quality of the program. Not surprising, poorer students have to take out more loans to go to College, make less money upon graduation, and have a harder time paying their student loan debt, compared to those from affluent backgrounds.

Q: Was there anything that you would have liked to see from the Department that you did not?

MJ: Relevant data. The Department did not provide adequate supporting data, despite multiple requests for the opportunity to analyze the consequences of the regulation.

For example, the Department proposed a metric where any program with more than 8% debt-to-earnings ratio would eventually be closed. Yet they showed no data justifying why 8% is the correct threshold. I just interviewed a woman with a graduate degree from a non-GE school now working in student counseling. Her debt is $90,000 and she earns $60,000 per year. That’s an 18% debt-to-earnings rate. Her scenario is incredibly common among people who graduate from any college, including non-profit colleges. Whether that is an acceptable level of debt or not, it seems irrational to start with 8% when the national average is probably closer to 13%.

Q: So what type of data were you interested in?

MJ: The data I was especially interested in was: 1) evidence supporting that an 8% debt-to-earnings ratio is a fair metric, and 2) Information on how this regulation will impact institutions that serve lower-income students, especially programs that serve a high percentage of students receiving Pell grants. As I stated, the regulation does not focus on graduation rates or placements. Instead, the proposed regulation is fiscally focused, measuring a student’s earnings and ability to pay back debt. Lacking any data, the very real question arises as to whether the regulation is simply penalizing institutions just for serving lower-income students.

Q: What did you find the most rewarding part of participation?

MJ: Having the opportunity to impact Federal Educational Policy was very rewarding. A specific example is the definition of graduation rates. This has been a contentious issue in higher education for many years. The current definition only looks at first-time, full-time students. However, many colleges primarily enroll part-time adult and transfer students. The Department originally proposed a graduation rate that was not that logical because it lumped part-time and full-time students together. I proposed the need to have two rates: one for part-time students, one for full-time students. The rates should include every person who starts that program, regardless of whether they are a first-time, full-time student or not. The Department accepted that proposal. Ideally, it’s the first step in changing the way graduation rates are calculated across all of post-secondary education.

Q: Other final thoughts?

MJ: I am disappointed that, after three sessions, we did not reach consensus and ultimately ended with a regulation that I don’t believe meets the Department’s goals. I want to thank my fellow negotiators for being respectful and constructive. I also want to thank the Department, particularly John Kolotos and Steve Finley, for listening, even when it was difficult, and for being gracious hosts during the sessions.