Voices: Proposed federal rule threatens Texas Baptist universities

As the Baptist Standard reported on May 15, the U.S. Department of Education has proposed a new rule that could have a devastating effect on Texas Baptist and many other universities.

The rule is supposed to establish an “accountability framework” to evaluate an undergraduate and graduate degree program’s success or failure based on what these graduates earn in relation to high school graduates.

According to the notice from the Department of Education, “If the typical graduate of an undergraduate program does not earn as much as a high school graduate, the program will no longer be eligible for federal student loans. Graduate programs must similarly lead to earnings above those of an average bachelor’s degree holder.

“Programs that routinely fail to provide students with a reliable return on investment would lose access to federal student loans, and in certain cases, Pell Grants.”

Education, ministry, social work, and other college programs often produce graduates whose earnings could be considered “low earnings” by the metrics of this new rule.

This ruling will have an outsized impact on colleges and universities serving rural communities where many graduates follow God’s call to serve small communities, consciously accepting lower earnings. Since graduate earnings are compared to statewide or nationwide earnings levels, this puts rural institutions at a disadvantage.

If implemented, this rule will have a significant negative effect on universities throughout the United States, including Texas Baptist universities.

Effects on programs

The Department of Education uses a minimal cohort of 30 students for its evaluation. For small universities with fewer than 30 graduates per year in a major, the Department proposes a complicated process that includes prior years and/or similar fields to form a cohort.

The complexity of this process makes it difficult for universities to anticipate which students will be sampled by Department before releasing its annual evaluation.

Combining similar programs could result in a Texas Baptist school losing federal funding for an entire department or academic school in a single year. For example, Wayland Baptist University’s School of Christian Studies graduates fewer than 30 students a year, and they often take youth positions that earn less than someone with only a high school diploma.

A focus only on earnings does not calculate the value of service to a community, whether it is ministers, teachers, or other service professionals.

Big picture

For colleges and universities generally, not only Texas Baptist schools, there are several possible scenarios.

Best-case scenario

All the university’s programs pass the earnings test, but the university is forced to expend additional time, energy, and staff hours to report on a non-issue.

Worst-case scenario

Either half of the students are enrolled in “failing” programs, or more than half of the university’s revenue comes from “failing” programs.

At this point, the “failing” programs would lose all Title IV funding, denying the students access to financial assistance such as Pell Grants, Federal Work-Study funding, and Federal Loans. For example, 2027 ministry students would be denied financial assistance based on occupational choices made by 2023 graduates of the program.

Since most private institutions are tuition-driven, I do not see how most institutions in this situation would be able to salvage programs under this effect.

Likely scenario

Some programs do not pass the earnings test and result in some combinations of these outcomes.

1. Year One of Failure: New and current enrollment in “failing” programs drops because the university must publicize the earnings test failure to prospective and current students.

2. Year One of Failure: The university decides to “teach out” the program, which allows current students access to direct federal The program cannot accept new students and will lie dormant for at least two years after the last student is taught out. The program can only be restarted if the graduates begin passing the earnings test.

3. Year Two of Failure (if program is not in teach-out mode): Current and prospective students in that program lose access to direct federal

Downstream effects

In some cases, universities may be able to replace federal funds with scholarships or institutional loans, but this would be highly unlikely for most small universities.

Students would be required to take out non-Title IV loans, which have less advantageous terms for the student.

The student might change majors, which almost always involves taking additional coursework, which leads to higher costs and a longer path to graduation.

The student might leave the institution to pursue a similar major elsewhere, which would also increase their cost and time to graduation.

Supporting Texas Baptist schools

This is a proposed rule in that if higher education organizations make exactly the right kind and number of comments, however that looks, it may not be implemented in practice quite as the rule reads.

However, there has been a big outcry about many other changes that have been implemented by the U.S. Department of Education in the past couple of years, and the response leads me to believe legislation and executive orders will override any effort on the part of colleges and universities to blunt the serious blow this may deal them.

Many advocacy groups, such as the National Association of Independent Colleges and Universities, provide feedback to the Department of Education and encourage individual institutions to make comments before the May 20 deadline.

Donors and other supporters of Christian higher education may want to prepare for opportunities to support students with additional scholarship funds, especially in the critical fields such as social work, education, and Christian studies, which may be most impacted by this earnings test.

Donna Hedgepath is president of Wayland Baptist University.