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Biden-Harris Administration New Rule for Higher Education Funding: Gainful Employment

Updated: Feb 9


VP Kamala Harris and Pres. Joseph Biden
VP Kamala Harris and Pres. Joseph Biden

Many policymakers and advocates argue that funding for higher education should be tied to earnings outcomes, an extension beyond graduation outcomes. In Higher Education vernacular, this is often called "performance-based funding". What we know about performance-based funding so far is that there are advantages and disadvantages to implementation that would impact lower-resourced schools.


The Urban Institute has recently developed a comprehensive report on national scorecard data based upon the Biden-Harris Administration's new rule about gainful employment (Thank you, President Obama, for the National Scorecard). The rule seeks to provide higher education institutions funding based on their students' gainful employment median earnings after they complete their associate or bachelor's degree. The rule currently applies to specific credentials and institutions only. However, the rule can likely be broadened to all institutions in the future to ensure a return on the student's investment in higher education and continued institutional transparency.


"The thinking is correct in quantifying the return on the investment in higher education. However, perhaps the metrics of "earnings" could be more expansive to include other characteristics in addition to earnings, such as property ownership, quality of life and health, and civic engagement."

The comparison of exploration in the report looks at two groups: the completers (of a college credential) and the cohort, which would include all students, including the non-completers. The Urban Institute reports that the median earnings for a college student are higher when including the college completers only and lower when the median includes the non-completers in the average. This is consistently true for associate degrees and bachelor's degrees. What is most interesting, but not surprising, is that the median earnings among for-profit institution completers, combined with non-completers, are lower than those of non-profit colleges.


"What is most interesting, but not surprising, is that the median earnings among for-profit institution completers, combined with non-completers, are lower than those of non-profit colleges."

The Urban Institute also notes that a bill being sponsored by Senator John Cornyn (R-TX), the Streamlining Accountability and Value in Education for Students Act (S., 1971), would require all postsecondary programs to meet an earnings test to receive federal aid, which applies to entry cohorts of students, therefore measuring earnings for both completers and non-completers. According to the summary report, the earnings for public institutions have better returns on investments than private institutions for both completers and non-completers. Still, there could be drawbacks for institutions that depend on funding to retain students, which is essentially majority of institutions.


If this is the direction we are headed, funding from the federal government should continue for every institution. However, it should consider additional or bonus grants/funding toward institutions that demonstrate growth and improvement in retention, graduation rates, and earnings outcomes. My concern is that taking such a blanket approach in a context of higher education where pluralism abounds would yield more unintended adverse outcomes than anticipated. The thinking is correct in quantifying the return on the investment in higher education. However, perhaps the metrics of "earnings" could be more expansive to include other characteristics in addition to earnings, such as property ownership, quality of life and health, and civic engagement. Though these are all seemingly connected to earnings, perhaps the overall goal is tangible evidence of social mobility. We could then aggregate the data to include all facets of a student's outcomes after college.


(For the Higher Ed Heads who argue the Scorecard is not the best indicator... it is a start to quantifying earnings outcomes for completors and non-completors)


Report Recommendation:


Rebuttals are always welcome,

Jade M. Felder

@felderofficial - X

 

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