Tying Student Loans to Graduates' Employment Records

Sam Petula suggests that if you explicitly tie student loans to how college graduates do in the employment market, you can put pressure on colleges to scale back or even eliminate certain academic programs:

Last week’s announcement of new rules to bear down on career colleges like the University of Phoenix, which offer degrees in programs like Health Administration and Criminal Justice Administration, weren’t designed to force those questions. These programs come under a different section in the Higher Education Act, excluding them from regulations for how much money their graduates make. But the new rules—the gainful employment rules, as they’re called—could push federal regulators to start peering under the hood of more traditional colleges majors, according to reporting by Inside Higher Ed.

I'm reminded of recent reports about the college degrees that pay the least, with the psychology major being held out as a prime example of a popular but low-paying major. I majored in psychology (although principally because I wanted to graduate - I could have graduated a semester later with a major in chemistry, general science or political science), so I can attest both that you won't find job ads seeking candidates with bachelor's degrees in psychology and that it doesn't matter, because a bachelor's degree in psychology is not designed to be a terminal degree. If you want to be a psychologist, you continue toward a Ph.D., and if you don't you get a graduate degree in whatever field you intend to pursue. The knowledge you gain from the study of psychology can be helpful in other fields, but does not qualify you to be a mental health professional.

To the extent that students entering college believe that "Chinese literature", "religious studies" or "women's studies" are terminal degrees, colleges should be educating them to the contrary. If a traditional college is being anywhere near as misleading toward people majoring in those fields as the for-profits often are in relation to the job opportunities and incomes they suggest can be achieved through their programs, those colleges deserve a similar consequence.

There's a degree of difficulty in comparing a two year certificate program from a private university, that does little to nothing for a graduate's job prospects, with a four year degree that is meant to be followed by a graduate education. The better comparison is to community colleges which typically offer similar degree or certification programs at a significantly lower cost, and without the false promises or exploitation of the federal student loans. It would have made no sense to tell me that I would not qualify for student loans based upon my major... well, first because I went to a then-inexpensive state college, worked a ridiculous number of hours, lived on a shoestring, and graduated from my undergraduate program with no student loan debt, but ignoring that for a moment... because I could have simply and very plausibly declared a different major in order to qualify for loans, and also because my plan was to continue to graduate school such that my nominal major didn't matter.

To the extent that the government's hand appears too heavy, it's not because the government is cracking down on private colleges to the extent truly necessary to correct abuses - most of the teeth have been pulled from the final regulations. I would rather the concept of colleges acquiring insurance for the student loan moneys that they distribute, such that they could do what they wanted but in the event that their graduates didn't find jobs would find the insurance coverage for their students' loans to become unavailable (or, if you prefer, increasingly expensive and, with no corrections, ultimately unaffordable). The "lack of value" in a particular non-terminal four-year degree would be mitigated by the fact that the majority of recipients would continue through graduate school, and thus should not play a significant role in a college's insurance premiums.