Started From the Bottom—and Still Here

Across the different areas of work of New America’s Education Policy teams, some core beliefs unify our program. One is that education allows Americans to reach their highest intellectual potential, and another is that it strengthens American democracy and governance. Both aspirations are helped along by a third ideal quality of education: that it should help Americans and their families to be better off financially.

College-educated Americans overwhelmingly earn more money: In a lifetime, women with bachelor’s degrees earn about $630,000 more, and men $900,000 more, than their counterparts with only a high school diploma. New Mobility Report Cards published by Raj Chetty and his research team confirm the potential of American higher education to provide opportunities for socioeconomic mobility. But the data also reveal some of higher education’s most devastating failures: when going to college means going nowhere, or moving down rather than up.

The Report Cards combine public data about the higher education system with a trove of de-identified tax records from institutions, students, and their parents. Starting from the family financial backgrounds of individual students, this data pairing not only allows us to see what college-educated Americans earn once they hit their early 30s (when income growth for Americans tends to stabilize, whatever their education), but also how far they’ve come from the economic class of their birth. Building a sample of about 48.3 million Americans born between 1980 and 1991, and using tax and education records from 1996-2014, Chetty and his research team codify three simple and effective metrics for determining how well a school does by its poorer students:

1. Access - the percentage of a school’s students who came from the poorest 20 percent of Americans;
2. Success - the percentage of those students who made it to the top 20 percent; and
3. Mobility - the product of the two, or the percentage of an institution’s total students who started from the bottom 20 percent and made it to the top.

The report’s mobility superstars, such as the City University of New York and California State colleges, welcome a sizable proportion of poorer students and do well at boosting their earnings potential. Name-brand schools like Harvard and Yale that are “good” in the sense of their educational quality and prestige don’t necessarily score well in mobility, however: they score high in success, but get low marks in access - and so are strictly OK in terms of mobility. On the other hand, some schools with low mobility scores have very high access: these enroll a lot of poorer students, but those students don’t tend to move up, whether they graduate or not.

Though the report spends more time discussing the impressive mobility results of less-prestigious public institutions and the middling performance of the “Ivy Plus” elite private institutions, it can also teach us a lot about the worst of the worst. It’s these schools that we decided to focus on as we dug into Chetty’s data, supplementing it with other data that the U.S. Department of Education collects to pinpoint schools doing a disservice to the equalizing ideal of American higher education.

In our estimation, the worst schools are the ones that tend to indebt their students while also failing to move them up the earnings ladder. To reflect that, we developed a ranking system incorporating the net price of enrollment that colleges charge, student loan repayment rates, and Chetty’s mobility indicators. Beginning with Chetty’s primary data file (Online Data Table 1 of the resources page), we ranked each institution’s success and mobility rates from best to worst, and assigned them a positive point value based on their rank. We counted success and mobility for 30 percent each of the institution’s final rank.

The second two components of our rankings, net prices and three-year repayment rates, come from College Scorecard, a consumer web tool that the Education Department developed to help students and their families make better-informed decisions when choosing colleges. The three-year repayment rate, pooled from 2013-14 and 2014-15, is the proportion of student borrowers who have paid down at least a dollar of their loan balance and are not in default within three years of entering repayment. It’s a good measure of whether an institution’s graduates get on steady enough financial footing to pay down the debt they took out to study, and provides insight into how well an institution’s programs and credentials are valued in the labor market. Schools earned points for higher repayment rates but lost them for a higher net price, which is the institution’s cost of attendance minus any grant or scholarship aid a student receives. The net price data, measured for the 2013-14 academic year, approximates the amount students and their families actually pay, for tuition and living expenses, either out-of-pocket or through loans. These two ranks each made up 20 percent of an institution’s final score.

With the rankings compiled, we sorted out the Bottom 15 - schools that are doing a categorically bad job of helping students and charging them more than they can expect to be able to repay with the educational advantages gained from their program:

Although spread across the country, these schools have two things in common. First, they are all for-profit colleges, several being subsidiaries of the same parent company or networks unto themselves. And second, despite the “university” in some of their names, they’re all vocational schools, providing training in fields like culinary arts, criminology, cosmetology, massage therapy, medical assistance, and entrepreneurship.

Private, for-profit schools with occupationally-focused programs that promise to lead straight to a job are over-represented among schools that harm or fail to help students’ economic mobility. It’s no surprise that such schools abound, despite their abysmal records. The private, for-profit school sector has grown faster than any other over the past two decades, and apart from the unresponsive accreditation system and the now-endangered gainful employment regulations, there’s very little to keep such institutions or their programs accountable. And for the moment, American workers and employers have no practical alternative: Our higher education system is our workforce training system, and has been for at least 40 years.

If you were born in my grandparents’ generation, you might have trained for a job in the military, or the Civilian Conservation Corp, or at the mining company that built the town you lived in. Today, a company might offer professional development once you have the job, but almost all employers expect you to be trained before you get it. That will very likely take you through a higher education institution - two-year, four-year, or otherwise. Since 1978, job training has slipped from 40 percent to 6 percent of the federal education and training budget; with retraining demand as high as ever, higher education has taken up the slack, supported by a generous federal student loan program with few accountability strings attached. Sometimes it works out for students. Other times - much more often, according to sociologist Tressie McMillan Cottom - they end up holding an irresponsibly large bill for federal loans that made the program affordable.

The Report Cards provide an opening for the the U.S. to come to terms with its accountability deficits in the intersecting worlds of workforce development and higher education. Gainful employment regulations provide a powerful tool for identifying and penalizing ineffective career training programs - nine of the Bottom 15 had failing programs in 2015 - but only if those regulations survive a now-hostile political climate. More ambitiously, states could work to connect their independent public workforce data systems, particularly their eligible training provider lists. This would help ensure that work-training funds and CareerOneStop job centers do not serve as a gateways to harmful Title IV borrowing for career programs, whether the programs are run by small, local for-profits or by large, agile networks. And as for those for-profit networks, regulators and advocates will need to be wary of their moves to divert scrutiny by reorganizing into non-profit or public benefit corporations.

The U.S. needs musicians, veterinary care technicians, and loss-prevention specialists, but it doesn’t need legions of Americans with credentials in those fields stuck with $20,000 or $30,000 in debt for their program. Borrowers with that kind of debt don’t need it either. As long as higher education is the only game in town for career training, innovations like the Mobility Report Cards should augment its accountability processes to help students steer clear of costly bad options.

Methodology Notes

To reward institutions that selectively improved access among lower-income students in the net price component of the ranking, institutions were ranked by the product of:

(overall net price) * 1+(low-income net price/overall net price)

Where low-income net price represents the College Scorecard estimate of the average price paid by students from families earning $0 to $30,000 per year.

Coordination of the College Scorecard and Mobility Report Card datasets was accomplished using the research team's identifier crosswalks (Online Data Table 11 of the resources page), which allowed them to match individual campuses with the larger institutional groups sometimes used for financial reporting.

*Indicates a closed institution.  **Net price was not available for this institution through College Scorecard. The stated figure is the 2013-14 net price retrieved from College Navigator.