Too Much Regulation or Not Enough? A Conversation with Sameer Gadkaree & Bob Shireman

This episode continues a series of conversations about the February 2023 changes to the definition of a Third-Party Servicer and changes to the guidance and language limiting revenue-share agreements and restricting the activities of OPMs. In this episode I talk with Sameer Gadkaree, President of The Institute for College Access and Success (TICAS) and Bob Shireman, Senior Fellow at The Century Foundation.

Transcript

0:00

Hi this is the lawyer. T's oakley welcome Back to the rant And this episode we pull back the curtain On the department of education. Education's recent. Recent move To expand the definition One of third-party servicer And to tighten the News on revenue share agreements and opm i will focus on What prompted The department To propose New language. The impact to innovation That these changes will have and whether or not The department Should go after predatory marketing And recruitment practices and if so why Today i get to speak to To very well-known guests To people who are very familiar with the federal higher education Landscape Bob sharp. senior fellow And director of higher education excellence at. at The century foundation and Samir got president of the institute for college access and success Otherwise known as Tecos. Bob and samir are No strangers to this topic In our discussion. is Uh, Great primmer on The challenges that confront the department If you liked this episode hit the like button leave At Your comments I subscribed to this channel and follow us on your favorite podcast Platform So let's jump right into the interview

Eloy: 1:27

Hi, I'm Ilo Ortiz Oakley, and welcome back to the Rant, the podcast where we get behind the curtain and break down the people, the policies, and the politics of our higher education. In this episode, we will dive into the recent Department of Education changes to the Dear Colleague Letter, addressing revenue share agreements and online program management companies, otherwise known as OPMs, as well as get into the expanded definition of a third party servicer. I'm joined by two good friends and leaders in higher education, Samir Geck. President of the Institute for Higher Education, access and Success of Wise Tikis and Bob Charman, senior Fellow and Director of Higher Education Excellence at the Century Foundation. Welcome to the podcast, Samir and Bob.

Sameer: 2:20

Thank you for having us.

Bob: 2:21

thank you. Wonderful to be here.

eloy-ortiz-oakley_1_03-14-2023_083833: 2:23

All right, well, let's jump right into some of these issues. For all of the policy wants, who are gonna tune into. Here's a question that I'd like to throw out to both of you You have been involved with national policy, as we watch this current department of education take on some pretty difficult policy issues. In your experience, how challenging. Is it to draft federal policy, particularly in this current political environment? And how well do you feel the team over at Ed is doing thus far? Let's start with you, Bob.

Bob: 2:54

Yeah, well, it is definitely a, a, a difficult time for policy. Policy is never easy. But fortunately the people who go into policy usually have a sense of what some of the challenges are. Almost any topic. There are, there are supporters, opponents, there are opponents or supporters with a lot of money who can hire influential people. And and you have to have to be prepared for all of that. And, and it also means that you need to be somewhat selective in what you take on when you take things on. I, I think this administration is is doing a commendable job. They have taken on a lot in terms of, of announcing plans to, to consider changes to regulations. And it takes an enormous amount. Work. I'd love to see, I'd, I'd love to see them do more and I will continue to ask them to do more than, than they are doing. I think sometimes they're a bit too afraid of of possible reactions from institutions when they, you know, raise concerns. About what's going on, and, and they should, should be more bold, but I think they're doing a good job o overall given the, the enormous array of things that need to be done.

eloy-ortiz-oakley_1_03-14-2023_083833: 4:13

Right. Well, especially after the previous four years of undoing everything that was done the four years before

Bob: 4:18

Abso ab. Absolutely. Absolutely.

eloy-ortiz-oakley_1_03-14-2023_083833: 4:22

Samir, what do you think?

Sameer: 4:24

Yeah, I just think it's worth dwelling for a moment and how much they've been getting done on the broad sweep of problems confronting higher education. We've seen in increases to the Pell Grant. We've seen over a million borrowers get long overdue relief for fraud and abuse they face. We've seen the first implementation of a post-secondary success grant program to support college completion programs. Just today they announced. A secret shopper program despite having flat funding for fsa to make sure that students are not seeing misrepresentations and you know, we know that there's a lot more coming that they've been working on for the better part of a year, and some cases more than a year around gainful employment around we've seen the action on debt cancellation. So we've just seen a very wide array of actions from this depart. And they've been doing it while digging themselves out of the hole that they had inherited from the Trump administration. So, you know, there's certainly a lot more to do and we'll be talking about some of the work that lies ahead. But it's, it's really impressive what the department has accomplished

eloy-ortiz-oakley_1_03-14-2023_083833: 5:37

I have to agree with that. Especially since, I had spent a little bit of time brief period in the department at the beginning of the administration and at the height of Covid. So it was amazing to me how stripped down the department was when I walked in there and how difficult it was to get appointees confirmed. I mean, look how long it took the undersecretary to get. And so they started off well behind right from the beginning. And it's just amazing to me how quickly they've come to this place, given how far behind they were at the beginning of the administration and how handicapped they were and still are in many ways given the, the lack of support that they have in, the Department of Education. Bob, let me turn to you. You have a long history. With the many hats that you've worn, targeting predatory practices, this was a hallmark of yours. During the Obama administration, you targeted predatory practices of the for-profit and some non-profit companies and organizations in the higher education space. And while many of the for-profit colleges that you took on during the Obama administration have since either closed, certainly become much smaller. The University of Phoenix is a shadow of what it was at the height of their rain. Do you see similar predatory practices today? And if so what do they look like today

Bob: 7:03

yeah, well, this the problem of predatory institutions, predatory practices by institutions, which, which is disproportionately a for-profit problem. They tend to come in waves. Often associated with either loosening of the federal purse strings or loosening of regulations. Happened in with the first GI bill. It happened again in the seventies, happened again in the eighties, happened again you know, a dozen years ago or so in the early two thousands. And I, I'd say it is less prominent than it has been at the peak of some of those waves. But we still see some of the typical for-profit colleges that are particularly aggressive in their, in their recruiting attempts. And then we've seen a lot of what I suppose might be called burrowing in to nonprofit and public institutions where nonprofit and public institutions, which. Do not tend to be as predatory in their own actions, but when they bring on a partner the word they like to use is partner or they bring on a contractor to help them bring in money. Too often that partner brings the same kinds of incentives that, that, that bring predatory practices at the ground level. We're seeing that with some of the, the OPMs where in enrolling people in master's programs. They're loading, they're, they're charging too much, loading them up with a lot of debt, not really putting the money into the instruction and student support in the program. And encouraging people to enroll who will not really benefit. You also have things that are, that are a bit harder to monitor. I it, a, an OPM is going to promote expansion of the programs that cost the least to deliver and therefore probably do the least for the students in terms of their, you know, they're not gonna promote greater enrollment in in chemistry and biology programs because they're expensive to deliver. They. Promote greater enrollment in programs that basically can just be online, online instruction and automatically graded quizzes and things like that, and you don't get as good learning from that. It's not necessarily easy to analyze.

eloy-ortiz-oakley_1_03-14-2023_083833: 9:27

We certainly have a great example of the graduate program challenges here in Southern California. Unfortunately so Mayor, let me ask you a little bit different version of that question. Your, your organization has done a lot of work to, to monitor state investment in particularly public higher education. Do you think some of the disinvestment in higher education, particularly in the publics, has, has caused some of this partnering to happen? Caused institutions to, to have to go out and look for. Other organizations that help it manage what would normally be handled by the institution itself.

Sameer: 10:09

You know, I think that's an interesting question. I'll, I'll offer just by way of context that I think we're at a moment where we're seeing growing worries about the value of post-secondary education. We're seeing. different value for different students. I think we have to demonstrate that post-secondary can work for a lot of students. I certainly think that we also see some worrying data about online higher ed driving gaps in terms of who gets a college degree in terms of differential value for different. And to Bob's point, we see one of the drivers of that in terms of money that's directed more towards marketing and recruitment instead of instruction academic services and student services. Getting back to your question, Eloy in public higher ed I think that we tend to see. Institutions that are more diligent for the most part about spending money on instruction, about spending money on student services, on academic services that'll help students graduate. And so it's certainly been worrisome to see some of the partnerships that have been moted, although oftentimes they don't actually end up coming to fruition between public systems and some of the OPMs and for-profit. Entities. You know, but I think that on the whole we've seen public higher ed be more diligent in the for-profit sector, which has generated a disproportionate chair of complaints to fsa. I think, you know, despite being 13% of eight volume, they generated 38% of the complaints that FSA was monitoring.

eloy-ortiz-oakley_1_03-14-2023_083833: 11:50

I have this conversation with my colleagues across the country all the time, particularly those who are in the non-profit space or in the for-profit space. They sometimes question, why, why we consider ourselves a little different in the public sector. There's one key element that I've certainly experienced, and that is I have to report exactly what I'm doing every month to somebody. And there's usually a teams of auditors folks from the legislature folks from the community coming to board meetings, asking a lot of questions all the time. So there's a pull toward keeping a closer. On exactly what you're doing, who you're contracting with. That doesn't mean that we in the public sector don't sometimes go astray. There's clear examples of some of my colleagues going in the wrong direction, but we're constantly forced to have a level of transparency, which I think would be good for some. Non-profit and for-profit colleagues. Samir, your organization focuses a lot of time and attention on underrepresented learners particularly those who have not had great experiences in in education. How, how do you. this concern over and revenue share agreements, do you, do you feel that that's had an impact on underserved, learners that Ticos advocates for?

Sameer: 13:16

Absolutely. So, you know, at the, at the highest level, we see worrisome differences for particularly black students but also Latino students and students of color generally, as well as students from economically disadvantaged backgrounds In terms, The the amount of debt that they end up taking on their ability to service that debt and how much of an earnings gain they, they get from post-secondary education. So we need to address that problem and make sure that higher education and post-secondary education pay off for learners from all backgrounds. As we've talked about here. And as you alluded to earlier, including one famous program in social work, we see programs that are generating tons of debt and not generating a sufficient payoff in terms of earnings, and they're disproportionately focused in the for-profit sector. And what's been worrisome about the O P M conversation? You know, I think there's, there's a couple of things, but I'll start with for many decades there's been a need to, a fight to police aggressive recruiting, selling students false streams. We know that it's hard for students, even the most sophisticated students, to know exactly what the future holds for them. and it's all too easy to deceive students about where a college program might leave them. That's why this FSA secret shopper program is so important. But that's also why it's really important to keep a close eye on creating malign incentives in the higher education sector for recruiting students and treating them like dollar signs and what we've seen in recent years. A subversion of both congressional intent and what the department has tried to do around trying to make sure that there's not a strong push to treat students purely like dollar signs to go out and recruit them. And and then to pull them into programs that don't have a lot of oversight. And so the GAO did a, a report last year. Basically telling the department what Bob and other of our colleagues have been saying for a long time, which is that in recent years we see recruitment style activities, aggressive recruitment style activities, using the bundled services loophole to to do that. With little oversight. We, we see colleges not necessarily giving the department the information they need to be able to keep an eye on this activity. And we see relatively little transparency in, in OPMs generally. And so I think that all drives the need from an equity standpoint to. For the department to keep an eye on these OPMs and the many agreements they have across the higher education sector.

eloy-ortiz-oakley_1_03-14-2023_083833: 16:23

Right. So let me turn to you, Bob. you've read the, the new language, you've read, the expand definition of third party servicer. You're very familiar with these these issues. And the history of these dear colleague letters. Do you feel that these changes have gone too far or do you feel that they haven't gone far enough?

Bob: 16:48

Well, I think the Department of Education needs to rescind its bundled services, guidance, the guidance that allows colleges to to contract with recruiting to entities that are doing recruiting for them. The incentives just don't work. OPM companies and, and predatory colleges are smart enough to not outright. Lie to students for the most part. They've got checklists to make sure that they don't do things like that. Even they sometimes don't realize is that doesn't mean that it's not predatory at that point. The predatory college, that's a smart predatory college that doesn't want to get, get in trouble from you know, the authorities we'll figure out how they can much more subtly mislead students which is harder to harder to enforce for, for the Department of Education and, and, and other folks. For, for example you can imply. that something will lead to a good job. You can fail to tell students that there might be a cheaper program available or that they might be a more successful students in person. You know, when, at a, at a good college, at the community colleges that you ran, student comes in. And if the advisor has the sense that. That the program they're thinking about isn't really right for them. They'll make other kinds of suggestions to them. But at the, at, at predatory colleges and with, with the these incentive, these, these recruiters who are paid on a bounty type system. They are really sales agents. They're looking for, how can I turn whatever this student is saying in a way that that, that, that pushes them toward signing up for this particular program. The problematic incentives are, are that, that. Unlimited profit that they can get by just enrolling more and more students in the program. So they need to rescind the bundled services guidance. The third party servicer Language does need to be expanded to make sure that OPMs and similar kinds of companies are included. That they are on the hook, they are liable for damages if they if they engage in certain kinds of practices and we're able to get access to see what kinds of contracts they have with schools. It probably from, from the draft that the. Released initially, there probably needs to be some adjustments to make sure that it doesn't that there's not some, you know, collateral damage on legitimate nonprofit college access organization. So, thanks. Some adjustments on that need to be made.

eloy-ortiz-oakley_1_03-14-2023_083833: 19:28

So let me dig into your answer a little bit because I think part, part of your answer is the heart of some of the arguments that I hear, which are. One. You mean, is it possible for Publix to participate in the marketplace with for-profit institutions to better serve students? And one of the arguments is, and I have some empathy for this argument, is that institutions today, particularly Publix don't have the core capacities necessary to keep up with the changes that students are demanding think about how to deliver education technology so there's a search for a happy medium so that institutions, particularly publics go out to build that capacity or to acquire that capacity. Do you think? It's possible to have a marketplace where you have for-profit and nonprofit and public actors working together.

Bob: 20:24

Well, I think it's absolutely appropriate for non-profit and public institutions to contract with, with service providers that are for-profit service, providers. They do it with their learning management systems. Without any particular problems. As far as I can tell work it works just fine. A lot of their, you know, most of their tech is tech that is provided by, by for-profit companies. And we've heard from a number of schools concerned that that without the guidance, they wouldn't be able to have a company come in and finance the development, the upfront development of a new online program. But even without the guidance, they absolutely can contract with a company to do that, and they can pay them as a percentage of revenue from the enrollment in that program. Going forward, as long as that company is not involved in the recruitment of the students, and it's, it's really important to recognize how different the, you know, developing an online program, getting the technology is a completely different role than recruiting people into the program. They can recruit, they can. Even pay outside companies to do recruitment through the way that they do now, which is fee for service kinds of contracts. And they can have the OPM or other company develop the program and do it, you know, financially risk free by paying from, from future enrollment. So they absolutely can, Build those programs, make use of for-profit companies if those companies are providing them with the services that they need and and, and pay for it through revenue sharing as long as they keep recruiting out of that package.

eloy-ortiz-oakley_1_03-14-2023_083833: 22:12

Right. So, Mayor, let me ask you a similar question. Do you feel that the department's effort. need to go further, or do you think they've gone too far? Well,

Sameer: 22:22

No, I, I, think that the department is doing the right thing. In looking hard at the recruitment practices in, in OPMs, and I agree with Bob. You know, I think that I would add that what. Is appropriate from a public standpoint. What, what we would not wanna lose from a public higher ed standpoint is what's been so compelling about public higher ed, which is the focus on serving students well. The focus on instruction, the focus on the students support services. As you said, reporting back to your board about all of those things and the financials as opposed to just the financials and just how much money can, can you get from an individual student when it comes to your question, it could, it could become a double-edged sword, right? If, public higher education institutions were to act very much like, or veer completely the institutions that are treating students predominantly as a source of revenue, you know, I think that we would lose what makes public higher ed special, and by the way, boards would be worried. Rightly so. I think that as Bob said, there's some, I think the department is going to be working to not only gather comments and clarify exactly what is included in the remit of the third party servicers but also to make sure that it has a close. On what could be worrisome that worsen equity gaps, worsen student experience, worsen student value from post-secondary, and and I think that's appropriate.

eloy-ortiz-oakley_1_03-14-2023_083833: 23:59

Bob, let me ask you a question that comes up quite a bit in, in the circles that I'm in, particularly the last month or so, which is this argument that institutions are trying to adapt to the l. Trying to adapt to all the changes happening, trying to adapt to enrollment, decline, changing attitudes of students, changing value propositions, and they're having to deal with wide swings every time a new administration comes in. And I think there was certainly a wide swing between the last administration, current administration. Then if you go back to the Obama administration, it sort of swung one way back, the other way. Now again. what what do you say to institutional leaders who, who argue that, we need a smoother runway in order to, get the work done?

Bob: 24:50

it, it used to be that there was bipartisan concern about predatory. Practices. And you know, we, we've seen, we've seen a change in over the past 20 years or so where certain Republican leaders decide, decided that the way to win for them and their political power was to take, an. anti stance against against those who were who were in, in the administration at the time. And they, you know, they did that to President Obama. They decided that anything and everything President Obama did was gonna be portrayed as, as socialism and evil, and it was nowhere close. You know, he, he proposed a healthcare plan that was the Republican plan. He was a moderate and got portrayed by the Republicans as a radical. And and I, you know, I don't see any reason to cater to that by saying we should now somehow move to that side and, and become that. it was wrong. It is wrong. And and, and we, we need. We need to do the right thing and do what we can to make sure that the American people see that it is the right thing I will say also we need leaders in higher education to engage in. in the political realm, in the policy realm educating the public about these these types of topics and lifting above their, their singular institutional role

eloy-ortiz-oakley_1_03-14-2023_083833: 26:23

Right.

Bob: 26:23

broader public role and recognizing that they need to raise concerns. they, they. The direction of higher education. They need to raise concerns about some of their colleagues in higher education if they are blind to the way that that some of the policies can impact and the practices can impact individual students.

eloy-ortiz-oakley_1_03-14-2023_083833: 26:43

Samir how how do you respond to. institutions or, or leaders who say that these changes that we're talking about today are, are just going to undermine innovation and hurt underserved students at the end of the day.

Sameer: 27:00

I think that this gets back to what we were talking about much earlier on, that online higher education can be a tool to serve student parents. It can be a tool to serve working adults. It can be a, a tool to serve students in the communities don't have much access to higher educat. but oftentimes it's not. And so I think the question becomes innovation in eight of what I think that certainly it, it is natural, it's appropriate for public community colleges HBCUs other msi all to be seeking to understand how can they be. Competitors how can they enroll students, get them what they need, get them the support and instruction that will help them graduate in this new world. And I as Bob said earlier, it's appropriate for them to contract with service providers who have expertise in building online programs. And there are ways to do that. What I think the innovation that I think would. Worthwhile helpful that we've seen in pockets is how to deliver high quality online instruction spending money on student supports and instruction and helping students get across the finish line. Where I think we've unfortunately also seen innovation is in terms of how can we Get students enrolled and how much are they willing to pay? And that's a kind of innovation that I, I think it's right for policy makers to be attentive to and to try to create the overarching policy set and incentives that push us towards the world in which online higher ed and other modalities of higher education are reaching all students and helping them get the services they need with flexibility that helps them. Get across the finish line. So I think, these changes that we're talking about here are really focused on recruitment practice and aggressive recruitment practices So we need to see innovation in the sector, but we need to see innovation that's helping more students complete and derive value from their higher ed experience.

eloy-ortiz-oakley_1_03-14-2023_083833: 29:13

Well, I may need to have you guys back at some point to talk about low value programs and gainful employment since we're talking about value for students. But that'll be a different episode. Bob, if. if some of my colleagues in the, the for-profit and non-profit sector who are feeling the pain of some of this language decided to pick up the phone and call you and ask for your advice, what advice would you have for them?

Bob: 29:44

Boy, you know, it's so hard because the incentives, like I, I've, I mean, one thing I would tell them is I've seen plenty of good for-profit institutions. And the problem is that once a for-profit institution gets a good reputation, there's this hunger to capitalize on it. An investors try to figure out, well, what can we do with that? And you know, a public institution kind of continues and might grow, but at the for-profit institu, so often that turns out to be the kind of the, the end of, of what was quality. The art institutes used to be quality. ITT T Tech used to be Quality. University of Phoenix used to be quality, and they all got undermined by by that, that hunger to you know, a hunger that, that, that does work in. Sectors, you know, it works when you're, when you're making phones to figure out how can I make a better phone? How can I make more money by making a better phone? Like, it, it's just a different kind of thing. And, and so I guess what I would tell them is they have, they cannot transfer their thinking about how the profit, incentive, profit motive works in other sectors and assume that it. in higher education in anywhere close to the, to the same way. You know, there have been some leaders of, for-profit institutions have said they've had to resist investors who

eloy-ortiz-oakley_1_03-14-2023_083833: 31:17

Right.

Bob: 31:17

certain things. And and CEOs have to do that now. It can also

eloy-ortiz-oakley_1_03-14-2023_083833: 31:23

undermine

Bob: 31:24

because investors can have them fired cuz they're not earning enough

eloy-ortiz-oakley_1_03-14-2023_083833: 31:27

that.

Bob: 31:28

They can see ways to make more money, but figuring out how to do that on, on a long-term basis. Can be hard and I don't know, I don't know what the long term solution is to something like that because I think it, it, it sort of inevitably goes the wrong way eventually.

eloy-ortiz-oakley_1_03-14-2023_083833: 31:45

we even see this in the non-profit and public sector. I mean, this drive for enrollment today, We talk all the time about enrollment decline, and we should, but I think sometimes we talk about it for all the wrong reasons. And so we push push leaders of institutions to grow enrollment. So I'm hopeful, hopeful that we can turn this corner and focus on quality, focus on options, focus on what the students, the learners are telling us about what they want. So, so we wrap up. I'm gonna give you Samir the, the final word. If if you got the same call that Bob gets what, what advice would you have to, to folks in the field about how they navigate the changes that are.

Sameer: 32:30

Well, I think that the, the two biggest things are continuing to focus on the student experience, on providing instruction and supports. And I think that that ultimately will be a differentiator, a a way. Continue to not only not run a foul of any new guidance that we see, but also ultimately a way to demonstrate enduring value for institutions of higher education. On top of that you know, I think that there are Ways to achieve the ends that colleges may have that are not problematic from a standpoint of the department's guidance and problematic from a standpoint of recruitment and problematic from a standpoint of generating a lot of debt with limited gain and earnings. And so, I think those are the places to focus if you're a college leader. And that ultimately is both good institutional practice and good public policy. I think that that's where the focus should be.

eloy-ortiz-oakley_1_03-14-2023_083833: 33:31

All right, well, we could literally talk all day and I may have you guys back to talk some more, I really appreciate you both taking time outta your busy schedules to join me and really appreciate you joining me here on the rant.

Bob: 33:45

Thank you so much for having us.

Sameer: 33:47

you.

eloy-ortiz-oakley_1_03-14-2023_083833: 33:48

If you enjoyed this conversation as much as I did, hit the like button and leave me your comments and to hear more episodes, subscribe to this channel and follow us on your favorite podcast platform. Thanks for joining me on the rant, and take care everybody. We'll see you soon.