Federally-funded job training programs have a reputation problem in the United States, often serving as scapegoats for the very problems they are trying to alleviate – unemployment, skill gaps, and economic insecurity, to name a few. But they’ve never been held responsible for the student loan crisis. That is, until today, when the New York Times published a lengthy article blaming the public workforce system for historic levels of student indebtedness and the unscrupulous behavior of many for-profit colleges, neither of which fall under the purview of federal workforce development policy. The article, while pointing to some very real and urgent problems in our postsecondary education system, shows just how confusing our education and training policies can be, as higher education and job training programs are increasingly delivered by the same institutions. But, confusion aside, it's important to set the record straight.
Let’s start with what the article gets right, which is that our education policies are not doing enough to protect students from low quality providers. Specifically:
- For-profit colleges do provide a large share of programs we might typically think of as “job training”, though they are technically higher education programs under the Department of Education, not the Department of Labor, and result in the award of either an educational certificate or an associate or bachelor’s degree.
- For-profit colleges charge much higher tuition for these programs – often by factors of three or four times – than do their counterparts at public community and technical colleges. The average cost of an associate’s degree program at a for-profit college runs around $14,125, compared to an average of $2,918 at a community college.
- For-profit college and universities are not held accountable in any meaningful way for the employment and earnings outcomes, or debt levels, of their students. (Neither are public colleges or universities, or private non-profits – but that is a topic for another day).
- The Workforce Investment Act (WIA) is the premier federal employment and training program and it was reauthorized last month. The latest iteration of the law, renamed the Workforce Innovation and Opportunity Act (WIOA), includes changes to performance metrics and data collection methods that will support stronger alignment between programs and local labor markets.
Now let’s get into the problem areas:
- WIOA is not a federal loan program: The article strongly implies that the public workforce system leads people to take out loans to support their training. To the contrary, no one goes into debt solely because they participated in a WIOA-supported training program. Under Title I-B of WIOA, the government can provide modest grants (around $3,000) to students to cover tuition and expenses, usually for a short-term training program. Recipients do not have to pay back the money. Student loans, on the other hand, are issued under a completely different federal program – the William D. Ford Direct Loan Program administered under Title IV of the Higher Education Act of 1965 – and are designed to support a student’s participation in a postsecondary program of study leading to either a certificate or academic degree. The U.S. Department of Education authorizes a group of external accrediting agencies to determine whether or not an institution meets the quality standards necessary to participate in federal student grant and loan programs.
But the Times treats the federal student loan program and WIOA as one in the same, and then blames WIOA for problems that stem from the poor quality assurance system that governs access to federal student aid programs. While it is true that many people who are eligible for WIOA training funds are also eligible for programs administered under FSA, any debt a student incurs is a consequence of being enrolled in a federal student aid program, not WIOA.
- The Department of Labor does not accredit for-profit colleges. The article refers to “government-certified job training courses”. Presumably, the statement is a reference to the state’s “Eligible Training and Provider List” or ETPL. The ETPL is a list of education and training providers that the state workforce agency has determined offer programs of sufficient quality that they are eligible to receive WIOA training vouchers. Many states include on their ETPL any institution of higher education that has already been authorized to participate in title IV federal state aid programs. That is, the workforce system is presuming that their education partners who are responsible for ensuring the quality of education programs are doing their job. Perhaps they shouldn’t – but it’s important to note that the workforce agencies aren’t just handing out money to any college that asks for it. In fact, a number of federal programs designed to help people gain access to postsecondary education, including programs for veterans and workers dislocated by international trade, rely on the Department of Education’s accreditation system to ensure the quality of institutions. Fixing the accreditation system to make it work better for students seeking career education and workforce credentials should be a focus of future policy reform – of the Higher Education Act.
- According to the article, “Neither federal nor state agencies collect data on the number of people who finish job training or earn professional certificates”. That will come as an enormous surprise to state and local workforce agencies that are required to report the completion rates, job placement rates, and earnings of all WIA participants to the U.S. Department of Labor. Many states, like Florida and California, also maintain quite detailed outcomes data on WIA participants. The Department of Labor also collects credential attainment rates of WIA participants. In fact, in 2010, the Department issued a high priority performance goal of increasing by 10 percentage points the number of workforce program participants earning industry-recognized credentials.
Why does this matter?
The fact that the Times has confused our job training and higher education systems is actually not all that surprising – and it is certainly not alone. As postsecondary skills and credentials become a necessity for anyone seeking a semblance of economic security, enrollments in higher education have grown steadily. A large and increasing share of students in higher education seek skills and credentials to help them enter a specific occupation – which sounds a lot like job training. In fact, associate degrees and undergraduate certificates are the fastest growing credentials in higher education today, increasing from just 6 percent of all postsecondary awards in 1980 to more than 25 percent today.
While demand for postsecondary education and credentials has increased, students have very limited access to financial aid to support their education, a crucial point that the article glosses over. While WIOA is ostensibly the country’s premier employment and training program, it has a very small budget (a little over $3 billion), and the bulk of the resources support job search assistance activities, not direct training. Meanwhile, federal student aid programs under the Higher Education Act provide over $150 billion a year in federal grants, loans, and tax credits to students seeking postsecondary certificates and degrees. A large share of that money goes to support students earning associate’s degree and occupational certificates.
So while programs of study in welding, automotive maintenance, or paralegal studies might not come to mind when one thinks of higher education, they actually make up a large share of programs supported through our federal student aid program. And as the article points out, a distressingly large percentage of these programs are offered by for-profit colleges that charge very high tuition. In fact, for-profits award the majority of undergraduate certificates – postsecondary awards that can be earned in less than two-years and designed to support entry into a specific occupation. The worst of these institutions are benefiting from the fact that federal student aid programs are governed by a very weak accountability system. Recent efforts to hold the sector more responsible for student outcomes through the “gainful employment rule” hit a wall of fierce resistance from the for-profit sector, but they have at least generated irrefutable evidence of the very poor outcomes generated by some for-profit colleges.
Sometimes small misunderstandings reveal much larger problems, and this article does just that. Our job training system is in trouble and needs reform. Students need to be protected from predatory institutions making unsubstantiated claims about job placements and graduate earnings while loading students up with crushing levels of debt and helping themselves to taxpayer dollars. It is time to reform the Higher Education Act, particularly the quality assurance system that accredits for-profit, career colleges, to better protect both students and taxpayers. The recent WIA reauthorization could be a good model for the higher education community to follow, as it focused on strengthening data and accountability systems and improving alignment between training programs and local labor markets. In fact, maybe that’s a topic for the next article in this Times series.