Students may now get a warning from the U.S. Education Department about the colleges they are considering when they apply for federal financial aid.

The department announced Monday that it will send students a notice of “lower earnings” for colleges where graduates earn less than a high-school graduate four years after completion.

Nearly one-fourth of the nation’s higher-education institutions — 1,365 — are tagged as “lower earnings,” according to the department’s data. Eighty-eight percent are for-profit institutions, and 80 percent don’t confer degrees, such as technical and beauty schools.

Secretary of Education Linda McMahon said the new program “will empower prospective students to make data-driven decisions before they are saddled with debt.”

“Families deserve a clearer picture of how postsecondary education connects to real-world earnings,” McMahon said in a news release, “and this new indicator will provide that transparency.”

Estimates of future earnings are already available to students on the federal College Scorecard website, including comparison to median earnings of undergraduates 10 years after entering college and the percentage of each college’s graduates who earn more than a high-school graduate six years after they enroll. But providing direct notice to students during the financial-aid process could make that information more useful, said Ben Cecil, deputy director of higher-education policy at ThirdWay, a center-left organization that has long called for more college accountability.

“The whole idea of a high-school-earnings threshold is a pretty low bar for an institution to clear,” he said in an interview.

The department’s own figures show that the vast majority of students, more than 97 percent, attend a college that meets that benchmark. Just 107 of the “lower earnings” colleges were private nonprofit colleges, and 52 were public institutions, almost all community or technical colleges. Institutional outcomes are compared either to high-school-graduate salaries in their state or nationally.

The earnings issue will continue to be debated in the coming months: Under a provision of the sweeping budget-reconciliation law that Congress passed last summer, degree programs and graduate certificates at public, private nonprofit, and for-profit colleges must boost students’ salaries above those of a high-school graduate. Programs that don’t meet the standard will lose access to federal financial aid. Meanwhile, a Biden-era regulation that remains on the books would apply a similar earnings test to undergraduate certificate programs, as well as criteria ensuring that graduates earn enough to pay off student debt.

While for-profit colleges are heavily represented in the department’s data, one association representing those institutions said it supports the effort, with some caveats. Career Education Colleges and Universities (CECU) said the data could be improved by accounting for regional differences, for example.

“We share the department’s commitment to transparency and will work with them to ensure that the most accurate disclosures are provided to help students select the school that best fits their needs and wishes,” Jason Altmire, president and chief executive of CECU, said in a news release reacting to the department’s announcement.

Marjorie Hass, president of the Council of Independent Colleges, which represents small private nonprofit colleges, said the new FAFSA notices are unlikely to sway the decision of most students, who typically attend a college within driving distance of home, and may not be considering a wide range of institutions.

Hass is also concerned that the department is highlighting the negative outcomes of some institutions but not informing the public that most college degrees do pay off over the course of a career.

Jon Fansmith, senior vice president for government relations and national engagement at the American Council on Education, said the department’s new effort “has enormous potential for creating misleading outcomes.”

The association represents some 1,600 colleges, across the private and public sectors, including proprietary colleges. Like other groups who spoke with The Chronicle, the association had no notice of the department’s announcement, let alone an opportunity to provide any input on it.

“Much more care, time, and attention should have gone into” the new notice, Fansmith said in an email, “and it would be all the better for it if ED had done that. Regardless of their motivations, there are good reasons to question the process and how useful it will actually be.”

Brian O’Leary, interactive news editor, contributed reporting.

https://www.chronicle.com/blogs/the-trump-agenda/nearly-one-fourth-of-colleges-will-come-with-a-warning-when-students-apply-for-financial-aid