Last year, Education Secretary Betsy DeVos repealed the Gainful Employment (GE) rule, an Obama-era regulation that targeted mainly for-profit colleges where graduates owed high debts relative to their earnings. While this was a decent goal, the rule applied to so few academic programs that it protected only 16% of college students. Hence, DeVos aims to replace the rule with more detailed student outcomes data on all programs (an initiative still in the works). The catch is that under DeVos’ replacement, poorly-performing colleges will not face any penalties.
This sparked a debate in higher-education policy circles about whether transparency is enough to hold colleges accountable for student outcomes, or whether regulators also need to impose penalties on poor-quality schools. Though the Gainful Employment rule threatened educational programs with a loss of eligibility for federal student aid if they didn’t meet certain benchmarks, such accountability also required the collection and release of mountains of new data: a major step forward for transparency as well.
The Trump administration scrapped the GE rule before any of its penalties could take effect. But did the transparency aspect of GE—the mere release of data showing which programs are good investments and which ones are rip-offs—have any impact? In other words, did poorly-performing programs shut down in the wake of the data release? According to a new working paper by Robert Kelchen and Zhuoyao Liu of Seton Hall University, the answer is a resounding “yes.”