In January, The Institute for College Access & Success (TICAS) introduced its Race and Economic Mobility (REM) analysis, capturing students’ economic outcomes by colleges’ shares of racially marginalized students. While our findings are correlational, rather than causal, the REM analysis underscores that we miss important trends and information when race is not a central component used in assessing the value of a college education.
Using data from the College Scorecard, TICAS found that students who attended colleges serving greater shares of racially marginalized students had lower median earnings than their peers from colleges with smaller shares of students of color. Additionally, ten years after entering repayment, students who attended colleges serving the largest proportion of Black students owed more in student loans than they originally borrowed.
Since publication of our original REM analysis, the U.S. Department of Education (ED) has proposed a new Gainful Employment (GE) rule, which would put in place a requirement for career-focused education programs to demonstrate they do not saddle students with overly burdensome loan debt and that they do prepare students for jobs that pay more than if they had not pursued postsecondary career preparation.
The new rule would put back a debt-to-earnings (DTE) ratio for program completers back in place, as well as add an earnings premium requirement. Under the second component (earnings premium, or EP), programs would need to show their graduates typically earn more than early-career working adults in their state whose highest level of educational attainment is a high school diploma or GED. As set by law, career programs failing either or both components two out of three years would stand to lose eligibility to participate in federal financial aid programs. The proposed GE rule thus sets a floor for what students can expect, at minimum, to get from their education. Programs outside the realm of specified career preparation that fail the debt-to-earnings metric would be placed on an online transparency website hosted by ED.
We now consider the recent GE proposal in the context of our REM metric, centering race in the conversation about postsecondary accountability. We compare GE metric pass/fail rates by programs’ racial composition and institutional sector. We also discuss the implication of our findings for future accountability policymaking.
Our findings were clear and alarming, if unsurprising. Programs serving the highest shares of students of color represented a higher proportion of the programs that failed the GE rule. Further, programs serving a larger share of students of color fared even worse than those serving a smaller share among the types of programs that most frequently fail GE.
The Potential Effect of Strong Gainful Employment Rule
As a long-time proponent of a strong and effective Gainful Employment (GE) rule, TICAS strongly supports ED’s proposal to restore the rule rescinded by former Secretary Betsy DeVos and add further protections for students and federally funded financial aid programs. As we noted in our public comments responding to the proposed rule, low-quality, high-cost programs are disproportionately concentrated in the for-profit college sector, and colleges offering those programs have a long track record of targeting students of color, first-generation students, students from low-income backgrounds, and student veterans with predatory and deceptive practices.
Restoring the GE rule is essential to guard against such practices, which exacerbate student debt and too often leave students worse off economically than they would have been had they never tried college at all. Restoring stronger regulations will also provide an incentive for colleges to assess and alter their programmatic offerings proactively before they run afoul of federal regulations.
Gainful Employment Metrics and Programs’ Racial Composition
Using REM, our analyses of postsecondary programs that are subject to the GE rule found that career programs that would fail the proposed rule served larger shares of students of color than those that would pass the rule, on average (Table 1). Programs that would fail the rule’s DTE metric, in particular, enrolled higher shares of Black students than passing programs or programs that failed the proposed EP alone, while programs that failed EP alone enrolled larger shares of Hispanic/Latino students.
| Table 1. Average Share of Students of Color by GE Pass/Fail Status | |||||
|---|---|---|---|---|---|
| On average, programs that would fail proposed GE metrics enroll larger shares of students of color. Programs that fail DTE enrolled larger shares of Black students, while programs that fail EP only enrolled larger shares of Hispanic/Latino students. | |||||
| Fail GE | Pass GE | ||||
| Fail DTE only | Fail EP only | Fail DTE and EP | Pass | Pass (no data2) | |
| Students of color | 60% | 58% | 56% | 50% | 40% |
| Black students | 26% | 19% | 25% | 18% | 13% |
| Hispanic/Latino students | 17% | 28% | 20% | 18% | 14% |
| Source: TICAS analysis of the U.S. Department of Education (ED), “2022 Program Performance Data.” See https://www2.ed.gov/policy/highered/reg/hearulemaking/2021/nprm-2022ppd-public-suppressed.xlsx. | |||||
Programs serving the highest share of students of color represented a higher proportion of the programs that failed GE (Table 2). While 9 percent of failing programs were in the lowest quartile of enrollment of students of color, 43 percent were in the highest quartile.
Programs serving larger shares of students of color also fared even worse in the types of programs that most frequently fail GE. For example, Allied Health and Medical Assisting Services programs represent only 11 percent of all failing programs. However, more than half (53 percent) of these failing programs enrolled the highest share of students of color, while just 7 percent enrolled the lowest share.
| Table 2. Failing Programs by Share of Students of Color | ||
|---|---|---|
| Programs serving the largest shares of students of color represented a higher proportion of the programs that failed GE. These disparities are even more extreme among program types that fail most frequently (e.g., Allied Health and Medical Assisting Services). | ||
| Proportion of Students of Color | Share of all failing programs | Share of failing Allied Health and Medical Assisting Services programs |
| 25th percentile | 9% | 7% |
| 50th percentile | 20% | 17% |
| 75th percentile | 28% | 24% |
| 100th percentile | 43% | 53% |
| Source: TICAS analysis of the U.S. Department of Education (ED), “2022 Program Performance Data.” See https://www2.ed.gov/policy/highered/reg/hearulemaking/2021/nprm-2022ppd-public-suppressed.xlsx. | ||
Black Students and For-Profit Higher Education
For-profit colleges enroll only 10 percent of students but account for half of all student loan defaults. High-cost, low-return programs at for-profits disproportionately affect students of color, who often must borrow more due to wealth disparities, and then face wage discrimination upon graduation.
This is especially true for Black students. The median net worth of Black households is just over $24,000 – less than 15 percent of the median net worth of white households. The median income of Black households is nearly $46,000, while white households’ median income was nearly $75,000. Resource disparities like the racial wealth gap exacerbate barriers in college affordability, and Black students face a higher burden to cover the bill. Recent data from the National Postsecondary Student Aid Study (NPSAS:20) show that, on average, Black students’ net price (remaining costs after applying grant and scholarship aid) represents more than half of their household incomes – and this figure jumps to 64 percent at for-profit colleges.
It is perhaps expected, then, that more Black students are forced to borrow – and borrow more — to pay for college. In every sector, Black students have the highest average cumulative debt, with Black students at for-profits borrowing the most overall. When these programs produce poor employment outcomes, Black students are left with high student loan balances and median earnings that make payments unmanageable.
This is particularly clear when looking at the DTE metric in the proposed GE rule. Among failing programs offered at for-profit colleges, the DTE metric reveals substantial inequities affecting Black students (Table 3). While only 13 percent of programs with the smallest share of Black students failed the DTE metric, nearly half (48 percent) of programs serving the largest share of Black students failed this metric.
| Table 3. DTE and EP Failure Rates Among Failing Programs, by Share of Black Students | ||
|---|---|---|
| Nearly half of programs serving the largest share of Black students fail the DTE metric, compared to just 13% of programs serving the smallest share. | ||
| Proportion of Black Students | Fail DTE* | Fail EP* |
| 25th percentile | 13% | 94% |
| 50th percentile | 27% | 91% |
| 75th percentile | 29% | 86% |
| 100th percentile | 48% | 75% |
| Note: *Includes programs that failed both metrics; will not sum to 100%. | ||
| Source: TICAS analysis of the U.S. Department of Education (ED), “2022 Program Performance Data.” See https://www2.ed.gov/policy/highered/reg/hearulemaking/2021/nprm-2022ppd-public-suppressed.xlsx. | ||
Conclusion
In our REM analyses, we found that, overall, students from for-profit colleges earned less and owed more on their loans than their peers at public and private non-profit institutions. In particular, students from four-year for-profit colleges serving the largest shares of students of color owed more than their original balance 10 years into repayment – nearly double what was owed (58%) by students at for-profits serving the smallest share of students of color. These findings provide additional evidence that students from for-profit colleges often experience less economic mobility compared to their peers who attended public and private non-profit colleges.
We encourage federal and state policymakers to consider our REM metric as they develop accountability measures to protect students. Centering race is critical to address longstanding racial inequities in higher education and to advancing a system that provides equitable opportunities for students from all walks of life to thrive before, during, and after college.
Policymakers must ensure that students from all sectors of higher education, particularly for-profit colleges, equitably benefit from a college degree. Reinstating a strong GE rule is one crucial step toward that goal.
Acknowledgements
The Institute for College Access & Success (TICAS) is a trusted source of research, design, and advocacy for student-centered public policies that promote affordability, accountability, and equity in higher education. To learn more about TICAS, visit ticas.org and follow us on Twitter and Instagram: @TICAS_org.
Ellie Bruecker, Ph.D. is the primary author of this blog.
The author would like to thank various internal staff for their content and copy reviews. All mistakes are our own.
The views expressed in this blog are solely those of TICAS and do not necessarily reflect the views of our funders or reviewers.
