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Which US university graduates earn enough to repay their debt?

student loan debt
This new tool lets you know whether a programme's graduates enough to repay their debt. Source: Nesa by makers/Unsplash

A new tool lets parents and high school students see which US college programmes produce graduates who earn enough to repay their student loan debt.

The tool, created by Texas Public Policy Foundation, allows one to search 40,000 US college programmes and the median income and debt of each programme’s graduates one year out of college. It is based on the Obama administration’s gainful employment test, where institutions are assigned a status – “Pass” for programmes with low debt relative to earning, “Fail” for programmes with high debt relative to earnings and “Zone” which was basically a probationary rating.

Andrew Gillen, senior policy analyst in the foundation’s Center for Innovation in Education told Inside Higher Ed: “As a country, we’ve only really applied the accountability metrics once, during the Obama administration. What would happen if we applied the exact income and debt measures to other institutions?”

“What was shocking [was] how many programs are failing and how many students are attending those programmes,” he said.

According to the tool, 25,917 programmes passed, 5,678 failed and 9,098 are in “Zone” status.

Public institutions have more programmes that passed compared to private for-profits and non-profits. Seven out of 10 public institutions -14,234 of 20,216 – of which income and debt data were available, passed and only 1,463, or 7.2 percent, of the programmes failed. Another 22.3 percent or 4,519 are in the “Zone” or probationary status.

Private for-profit programmes fared the worst. Only 55.6 percent of private, for-profit programmes passed and 20 percent failed the standard. Another 24 percent would have been on probation.

As for private non-profits, their pass rate of 59 percent beats private for-profits but still falls behind public institutions’ pass rate. Another 18 percent failed and 22.7 percent are on probation.

Inside Higher Ed notes that it doesn’t cost as much to attend public institutions, hence why their graduates have less debt.

Helping students find the right programme with data

The tool is based on the Department of Education’s College Scorecard’s new earning and debt data for over 216,000 college programmes. It looks at universities, academic fields, level of degree, median and mean debt from Direct Subsidised and Unsubsidised Loans and Graduate Direct PLUS Loans, annual earnings one year after graduation for students who graduated between 2014 and 2016, monthly loan payment, debt to earning ratio and gainful employment equivalent status.

The tool makes this data accessible for parents and high school students to use in their college research process.

“This revolutionary tool will help students and their parents make informed decisions about post-secondary options and their long-term effects on their debt and earning potential,” said Gillen, in a press release.

“In addition to helping students and their families, this tool will assist college leadership in identifying programs at their schools that do not prepare students to exit their programme with solid financial potential. It will also assist policymakers in designing accountability systems to ensure that taxpayer funds are not being used to fund programmes that do not benefit students nor the economy.”

But how reliable is the tool?

One example involving Harvard University suggests the tool has its limitations.

Harvard is one of the world’s most prestigious higher education institutions. But the tool found that its dentistry programme failed the gainful employment test.

The Harvard School of Dental Medicine said in a statement: “Tools like this can be misleading when looking at gainful employment in the field of dentistry. It’s concerning that the data does not provide a comprehensive comparison of programmes or take into account the career paths of graduates.

“Harvard School of Dental Medicine graduates go on to highly successful careers and residencies in competitive dental specialty programs, achieving earnings well beyond gainful employment requirements.”

Another area of concern is the use of income and debt data one year out of college. This time frame is criticised as too soon to provide an appropriate snapshot of a programme’s return on investment for four-year degrees.

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