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Gainful Employment Brings More Gainful Education

New Rule Pushes the Department of Education into a Role as Network Orchestrator

SOURCE: Flickr/pirate johnny

The new gainful employment rule requires for-profit institutions such as the University of Phoenix to prove that they prepare students for “gainful employment in a recognized occupation.” University of Phoenix offers online classes and has locations across the country, including this one in Minnesota.

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The U.S. Department of Education’s recently published gainful employment rule arose during the 2009-10 regulatory review process, and is an important tool for ensuring that for-profit schools—and potentially underperforming public and nonprofit schools—don’t take advantage of students. It requires these programs to prove that they prepare students for “gainful employment in a recognized occupation.” And the Department of Education has begun to take the initial steps toward enforcing this goal by wrestling with how to measure the quality and value of a college education.

This is a new role for the Education Department, outside of its traditional duties of funding college access through financial aid and regulating colleges through a series of certified regional accreditors. Funding access and once-removed regulation may have been sufficient when the pathway to college was essentially a straight “pipeline” from K-12 education. But education isn’t a pipeline anymore—it’s a complex web of possible pathways and service providers—and the gainful employment rule places the Education Department in the position of starting to orchestrate this decentralized system of higher education services providers.

Acting on this vision will require the Education Department to undertake each funding and regulatory action with a goal of reaching America’s national postsecondary attainment goals by promoting value for the public and private dollar. The Education Department’s evolution from a college education funder and regulator into a network orchestrator may very well be the key to maintaining our national competitiveness and providing economic opportunity to more Americans.

The Education Department’s primary role has historically been to essentially fund and regulate the education “pipeline,” ensuring that students flow effortlessly through the system with minimal public policy interventions other than providing design specifications (regulations) to ensure the pipe stays straight and lubrication (funding) to ensure constant flow.

But regulation and funding are no longer enough to keep the pipeline running. There are now more than 4,800 institutions offering two- and four-year degree programs in the United States. The institutions are organized as public, private not-for-profit, and for-profit entities. This diverse grouping is regulated in a decentralized fashion with states certifying who can operate within their borders and the federal government adding some regulation through the financial aid system. Quality control is maintained largely through a voluntary accreditation system whereby privately run accrediting agencies review member institutions’ qualifications.

Modern-day, college-going students are as diverse as the systems. Students are entering school with very different levels of academic preparedness; many are outside of the traditional age brackets and have attendant work and family responsibilities; there is an emerging trend of episodic college attendance; and all this is complicated by the high cost of tuition and complex financial assistance tools.

There is no longer a simple, linear success path to college completion, and this suggests a far more complex set of interactions between public policymakers, students, and institutions. The modern-day postsecondary education system requires a new conceptual framework.

Network theory is one potential framework. It arose as a way to describe how information and communication technologies have changed how business and social organizations orchestrate the use of resources to produce goods and services. Network orchestration emphasizes leveraging distributed production partners and supply chains to deliver performance, quality, and value given ever-evolving market demand and increased global competition for customers.

Network orchestration is used in the private sector by The Boeing Company to manufacture its jets in 19 countries with 400 suppliers using process software, communication technology, and new work organization to manage team-based production. The National Park Service uses it in the public sector to manage the Golden Gate National Recreation Area with a network of partners, concessionaires, contractors, cooperative associations, and volunteers to carry out park maintenance and services. This supply network makes up 82 percent of the GGNRA workforce.

Noted “governing by network” expert Steven Goldsmith of Harvard University posits that public policymakers and managers can deliver a complex service like postsecondary education by focusing on maximizing public value through setting the right, high-level goals and engaging networks to deliver service. Network orchestration simply provides a much more useful and nuanced mindset for developing policy given the complex ways students and institutions interrelate in the modern higher education delivery system. It can help us to re-imagine the role of federal policymakers away from that of program funder and regulator.

The federal government’s role as a network orchestrator would be to set the bar for high-level public value, and then manage the performance of suppliers in the network to achieve quality service delivery and scale innovations that enhance effectiveness. Public value in the case of postsecondary education is generated by graduating more students within the performance, quality, and value framework, where:

  • Performance = students complete their education
  • Quality = students demonstrate learning that is linked to career and life success
  • Value = performance and quality are delivered to students at a fair price in a competitive marketplace

Federal funding opportunities, regulation, and legislation within this framework are designed to optimize students’ abilities to customize learning experiences for value based on institutional performance and educational quality. The Department of Education’s primary mission as the network orchestrator is to achieve high performance by ensuring that students can move within institutions and across the network with minimum transaction costs and optimizing the return on public and private resources.

The gainful employment rule is at its core an emergent tool to begin measuring the value of a postsecondary education. And putting gainful employment in the context of the broader set of issues further develops the network orchestrator evolution. These issues include an attempt to re-define the credit hour and a fresh look at state authorization of institutions for Title IV funds. Each of these takes an additional step in trying define quality and value measures by changing the criteria for how we fund college education. The credit hour rule, for example is attempting to standardize the seat time that adds up to a college credit.

The Obama administration’s successful initiative to move to direct lending to students rather than depend on a publicly subsidized but privately run market for student loans is also a step in the network-orchestrator evolution. This places the Department of Education in a much more direct position to view the relationship between financing higher education and income as it analyzes loan repayment first hand. New perspectives on student success profiles will emerge from this experience that allow the federal government to formulate new policies for how to assess value and quality.

Another shift for the Education Department is the administration’s aggressive goals to retake the lead in postsecondary attainment among developed nations by 2020. President Obama’s charge to all Americans to get at least one year of postsecondary education combined with a numeric goal of 5 million additional college graduates will strain the limits of college and university productivity while maintaining quality and price. The federal government will have no choice but to become a real-time observer and influencer of the college experience, understanding the service delivery process at granular levels. This will allow the Department of Education to develop data and analysis tools that actually optimize performance, quality, and value.

Performance, quality, and value in higher education service delivery add up to a gainful education. And network orchestration provides the Department of Education with a new way to think about its role in achieving that gainful education. The department will have to process each action through the lens of optimizing the value produced across the network in order to successfully evolve from being a program funder and rulemaker to being a network orchestrator. But the resultant performance and quality improvements will keep us competitive with our peer nations in postsecondary attainment and once again make us a first among equals.

Louis Soares is Director of the Postsecondary Education Program at the Center for American Progress.

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