While the Department of Education has done plenty to anger those concerned with college costs, the national debt, and the relevancy of college to later life, its prior moves have given the higher education establishment a lot to like. The Department’s Gainful Employment rule generally only covers for-profit colleges and universities, and the Borrower Defense rule has primarily been used against only those institutions. Loan forgiveness and the numerous other policies whose cost may eventually rise into the trillions have been a boon to public and non-profit institutions, which enjoy massive subsidies with shockingly few strings attached.

However, for-profit institutions may obtain a small concession as the new wave of constricting regulations washes over them. During the Gainful Employment negotiated rulemaking, the Department rejected out of hand any alternative regulatory proposal that might ensure accountability for institutions serving all title IV-eligible students in favor of accountability for for-profit institutions, which serve only about 10% of students.

Despite poor performers in each sector, Congress still has not given the Department of Education the power to enact any meaningful accountability regime for such institutions. Therefore, this discrete provision of the Higher Education Act that requires mostly for-profit postsecondary programs to prepare students for “gainful employment” is the best the Department can muster in order to realize this power for itself and use it against a group of institutions it generally disfavors anyway. That said, although they may have the authority to do so, the Department has so far refused to even consider such a plan.

So, what will the Department actually propose for low-quality programs at public and nonprofit institutions, which serve about 90% of students? For these, the Department will resort to a lesser penalty: a list of shame. Despite making clear that “this effort is separate from any ongoing regulatory work,” the Department claims to seek an understanding of “what program-level data and metrics would be most helpful to understand whether public investments in the program are worthwhile.”

It’s a good question to ask, but it puts both the institutions and the Department itself in awkward positions. The Department has been pushing since at least the Obama Administration to shut down many for-profit programs on the assumption that it is abundantly clear that tax dollars for certain programs are not “worthwhile.” The higher education establishment has generally gone along with this idea, which is at the core of the Gainful Employment rule. Meanwhile, the Department claims that it lacks the understanding necessary to even publish similar (or even identical) information about public and nonprofit institutions.

Even this cautious approach, however, is generating an incensed response from public and nonprofit institutions and the groups that represent them. The American Council on Education (ACE) pointed to the diversity of programs in higher education and declared that “it would be almost impossible to establish criteria that work equally well in evaluating each program.” And ACE is correct that there are “fundamental flaws” with this type of top-down approach; teachers will generally make less than engineers, and program graduates across the board will have worse earnings and other outcomes in a bad economy versus a good one. The Biden Administration has already failed to learn from the Obama Administration, which tried a similar rankings list and abandoned it due to similar pushback. Now they will have to consider whether it is more justifiable to publish different metrics for public and nonprofit programs or to publish the same metrics for all programs but only do something about the for-profit ones that fail to perform.

On the other hand, in an odd alliance, progressives and for-profit institutions might like to see a Gainful Employment-like accountability system for all institutions (although the for-profits would truly rather just drop the whole thing). This would be a mistake for the reasons that ACE points out and represent yet another example of the Department overreaching its authority.

If the Department is looking to enact meaningful accountability tied to metrics like debt and earnings, it should simply create a market-based solution that requires all institutions to cosign student loans, pay the government back first, and then design financial products and repayment systems (plus career services and other steps to actually improve outcomes) that make sense for their students.

Colleges and universities are not raising costs because a federal agency is failing to generate sufficient moral outage. Instead, they are doing so because the same federal agency is directly encouraging them to do so. The Obama-Biden loan and repayment policies have failed so spectacularly in just over a decade that their only answer now is just to forgive as many loans as possible. Their further subsidies through various forgiveness efforts will drive up prices even more. Market forces can fix that. Government lists of shame cannot.

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