Student loan debt has burdened millions of students over the years. Now it’s also creating a problem for colleges.
Last week, the US Department of Education released its first wave of data analyzing whether the graduates of some 8,700 programs were earning enough to repay their loans. Under the Obama administration’s new “gainful employment” rule (which might become moot under Trump), programs fail the test if an average of at least 12% of graduates’ salaries or 30% of their discretionary income goes towards paying off loans. Programs that fail twice in three years or fall into the warning zone (where they are ineligible to receive Title IV student-aid funds) for four consecutive years may lose federal funding—for many programs, a potential death warrant.
What the analysis found: More than 800 programs failed the test while 1,200 others were in the warning zone. For-profit colleges are especially at risk (nearly 98% of the failing programs were from pro-profit colleges, though they made up only 60% of all programs that were evaluated), but even Harvard University was not immune. And as The New York Times suggests, if even the world’s richest university (that spends millions on financial aid every year) must re-evaluate its return on investment for students, then many other colleges must too.
Emsi is in a unique position to help. In early January, we released Alumni Insight: a powerful new dataset that provides unparalleled insight into the employment of college grads. Derived from an aggregate set of 65 million professional profiles, Alumni Insight helps colleges address issues concerning the gainful employment of their graduates, lending authoritative analysis for those seeking to demonstrate the real-world value of their programs. Instead of turning to surveys (which tend to be expensive, inefficient, and far from exhaustive), colleges can use Alumni Insight to quickly and conclusively measure their graduates’ success in the labor market.
Alumni Insight offers the following data points about a college’s alumni:
- Job title or occupation by O*NET
- Alma mater
A map showing the main clusters of where 38,000 UI/UX designers work in over 129,000 companies. Read more.
Specifically, colleges can now discover whether their graduates are using their hard-earned majors in their current occupations. How? While Alumni Insight doesn’t include students’ majors, colleges can submit their student records directly to Emsi and Emsi will match these majors with the data in Alumni Insight. The result is that colleges will know for certain whether their alumni are employed in areas related to their degrees.
Colleges like Montgomery, which is using Alumni Insight to track the employment outcomes of its bioscience graduates, can better advise students on exactly what they’re getting into. Think your popular MBA degree (which could cost as much as a house) will make you in high demand among employers? Think again. Whether it’s misunderstanding the true cost of education or the unforgiving nature of the labor market (or both), students too often take on unmanageable debt for degrees that don’t pay off. If this seemed like a student problem until now, the new gainful employment obligations prove otherwise: Colleges must act as if they have a stake in their students’ outcomes. Because they do.
For years, colleges and universities have asked if Emsi can help them visualize how graduates are using their college education in the real world. Now we can. And with higher ed institutions under greater scrutiny than ever, there’s not a moment to lose.