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The Feds Want to Give You Money to Learn to Code. Here's Why That's a Problem

The Obama administration's latest attempt to fix higher education has some critics unimpressed.

Colleges aren't keeping up with changes in the workforce, leading to millions of underemployed graduates and what employers describe as a yawning gap between the number of openings they're looking to fill and the number of Americans fit to fill them. The combination of relentless tuition hikes, skyrocketing student debt loads, low graduation rates, and stagnant earnings suggests now is a good time to begin tinkering with possible solutions. On Tuesday, the U.S. Department of Education announced a small experiment to do just that. 

Up to 1,500 students would be able to use as much as $17 million in federal student loans and grants to pay for academic programs at eight traditional colleges developed and taught by noncolleges (such as coding schools) under a limited trial. Government regulations usually limit federal student aid to accredited colleges, which are prohibited from using that money to pay for programs mostly taught by other entities. In this case, the Education Department is using a provision in federal law to relax the rules in a bid to determine whether coding academies and low-cost education providers can teach Americans the skills they need to land high-paying jobs after graduation.

Details about the trial are scant. While the Education Department said the trial is geared toward low-income and nontraditional students who need the most help, it declined to provide details on how the programs would be evaluated, their costs, or how many schools applied to participate. Helping low-income students enroll in normally expensive coding academies is a major part of the experiment, considering the pay that coders typically receive after graduation. Education Department Undersecretary Ted Mitchell said some of the programs will offer refunds to students who don't get jobs. "The selection process was extremely rigorous," Mitchell said.

But there are a few problems with the administration's approach, some higher education experts said, from reliance on for-profit education providers to the design of the experiment itself, that raise questions about the wisdom of expanding the experiment beyond short-term coding schools.

Low Graduation Rates

The Obama administration has recently focused on increasing the nation's mediocre college graduation rate. Officials will have a "laserlike focus on outcomes" to ensure that students who sign up for experimental programs graduate and get good jobs afterward, Mitchell said. The department's own data suggest it'll be an uphill climb: Three of the eight colleges selected for the trial have below-average graduation rates.

At SUNY Empire State College, for example, just over a quarter of first-time, full-time students graduate with a bachelor's degree within six years of enrolling. The school's spokesman, David Henahan, said the figure doesn't accurately represent its success at graduating its students because the vast majority of them either transferred in or attend part-time. For example, close to 47 percent of all new undergraduates who enrolled in the fall of 2009 received a bachelor's degree by 2015, Henahan said, citing the school's internal data. Another 10 percent were still taking classes. Mitchell didn't respond to a request for comment.

"Let me get this straight: They're going to partner untested for-profit entities with institutions with a proven track record of doing poorly by their students, and the Department of Education is expecting excellent outcomes?" said Alexander Holt, policy analyst at Washington-based think tank New America.

New Skills?

While four of the eight programs in the trial are coding academies, some of the others are strikingly similar to educational programs already widely available at U.S. colleges. This raises a simple question: What skills would these programs teach that aren't already in abundant supply?

Schools in the Dallas County Community College District would work with StraighterLine, an online education provider that sells courses for a flat monthly fee, to offer associate degrees in business and criminal justice. While out-of-state students would pay less than half the price of a regular online class, StraighterLine courses would cost about double what in-county students pay to attend classes on campus, said Ann Hatch, the district's spokeswoman 1 The district expects about 600 students to enroll in the programs in its first year, Hatch said. One goal is to enroll nontraditional students from across the country, she said. The Education Department said the program is aimed at students in Dallas County. .

At Thomas Edison State University, which boasts that the only time most students visit the school's New Jersey campus "is to attend commencement," the trial programs are bachelor's degrees in business administration and liberal studies. Both are already available.

The coursework being offered through online videos from Study.com isn't the focus of the experiment, said Marc Singer, a vice provost at the school. Instead, it's the opportunity to have a third-party evaluate and publicly report how its students fare after they enroll. If students land good jobs, Singer said, "it'll show that there's more than one way to get a degree that leads to meaningful employment." The program, he suggested, could lead employers to focus less on where students learned and more on what they know.

Conflicts of Interest

Thomas Edison State is an example of the Obama administration's attempt to use the experiment to shake up the usually clubby world of college accreditation. Participating schools aren't using traditional accreditors to monitor student success. But in its experiment, the Education Department preliminarily approved two Washington-based organizations that effectively lobby on behalf of the schools they're supposed to be supervising. The American Council on Education (ACE) would be charged with overseeing member school Northeastern University, while the Council for Higher Education Accreditation (CHEA) would be responsible for overseeing the Dallas community colleges, one of which is a CHEA member 2 Eastfield College in Mesquite, Texas. .

The groups wouldn't face any consequences if they're inept, said Barmak Nassirian, a Washington policy expert for the American Association of State Colleges & Universities. Northeastern and ACE told Bloomberg there's a strict firewall between ACE's advocacy work and its oversight efforts. "There is no room for subjectivity or favoritism, period," said Deborah Seymour of ACE. Judith Eaton, CHEA's president, said her organization will focus on its member school's partner, StraighterLine, but she didn't provide any details on how it would manage conflicts of interest.

"If the grand innovation in higher education accountability is to provide more federal dollars to schools only held accountable by their own trade association, perhaps it’s time for the government to stop innovating," Holt said.

New For-Profits, Same as the Old For-Profits?

Past government attempts to foster innovation in higher education, such as removing restrictions on online programs, have had disastrous results, some analysts said. Hundreds of thousands of students flocked to online for-profit programs, only to be left with mountains of debt and credentials of questionable value. The Obama administration and state and federal regulators lay the blame at the feet of for-profit colleges, a charge the industry rejects. In an odd twist, much of this experiment revolves around online classes and for-profit education providers.

A flood of federal student aid money could transform the nascent coding-academy sector into something that critics say would resemble the for-profit college industry, or what Jake Schwartz, co-founder and chief executive officer of General Assembly, described as a "race to the bottom," where companies compete to provide the cheapest product to the most people.

"No one wants to repeat those mistakes," said Adam Enbar, co-founder of New York-based coding boot camp Flatiron School. Critics like Nassirian and Holt aren't persuaded. "I'm afraid that the feds … will end up opening a loophole for future waste, fraud, and abuse," Nassirian said. The Education Department has a spotty record when it comes to policing dodgy colleges, Holt added. Allowing new education providers to access federal student aid funds exacerbates existing gaps in oversight. "Why can't you get this accountability thing under control before you allow new entrants?" he asked.

—With additional reporting by Zara Kessler.

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