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California Association of Private Postsecondary Schools

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Higher Education for All. April 3, 2014.

Following the most recent release of the gainful employment regulation, the Department began to circulate a “statistic” that they claimed justified some of their actions. Their claim: 72 percent of private sector institution programs and 32 percent of public programs produce graduates with average annual earnings less than a high school dropout.

In order to make the facts fit the story that the U.S. Department of Education is spinning around its “gainful employment” regulation, they cooked the books on some simple math.

They are saying you will make more money if you drop out of high school and get a job, than if you graduate high school and go on to get a postsecondary education. A ridiculous statement and when you check their math, you see how misleading it is.

Here is how the Department created their fake statistic in three easy steps:

Step 1:

Exclude from the equation any high school dropout who is not earning income. This is over 7.8 million people and greater than 50 percent of all high school dropouts over the age of 25.

Step 2:

Include everyone who did not finish high school who is earning income, regardless of age or work experience.

This could be anybody:

  • 25-year-old working at a fast food restaurant;
  • 45-year-old factory shift supervisor;
  • 65-year-old who left school in 1965 to work on the family farm.

As you can see this criteria fails to take into account the realities of today vs. the realities of 45 plus years ago.

Step 3:

Compare this to the earnings for a group of people who just completed their postsecondary education – some of whom have only been in the workforce for four to six months.

And voila – you get a statistic that fits the story you want to tell.  You get an A in creative writing and F in statistics.

The correct calculation requires following two steps.

Step 1:

Using the same data set, the Department used, add back in all the high school dropouts who do not earn an income.

Step 2:

Only include the people that a reasonable person would compare to recent private sector graduates – those ages 25-32 (about 3.1 million people).

And the answer is… the median earnings are $7,000 a year for a person without a high school diploma, not the $24,000 the Department used to create their fake statistic.

  Private Sector Institutions Public Institutions
Department’s Creative Math 72% 32%
Correct Math 2.2% 1.8%

It’s no wonder so many stakeholders have questioned the rationale of “gainful employment” regulation when it is based on bad data. As any chef will tell you, if you use bad ingredients to make a dish, the end result will suffer.  The same rule applies to good public policy: bad data in = bad policy out.

We should expect higher standards from the federal agency that is proposing to take away educational opportunity from those who need it most.

Source: BLS, Department of Education