ECONOMIC REPORT OF THE PRESIDENT

prior, the early FAFSA reform helps eliminate the barrier presented to individuals
who have not yet filed their taxes. This not only simplifies the aid
application process for students and their families and reduces the burden
on institutions, it also improves the accuracy of the information used in the
determination of students’ aid eligibility.
With this change, about 4 million more students and families can use
this IRS Data Retrieval Tool from the start, eliminating the need to send
tax information to the government twice. This enhancement can ensure
that hundreds of thousands more families receive the aid for which they
are eligible, that students and families save well over half a million hours
in paperwork, and that schools can transfer 3 million hours from verifying
information to advising students and making financial aid awards.
Protecting Students from Low-Quality Programs and Encouraging
Schools to Improve
As described in the previous section, better information can help students
to choose higher-quality institutions, and Administration efforts have
significantly improved the information available to students. However, some
colleges fail to meet baseline levels of college quality, and this Administration
has targeted its more rigorous accountability efforts on those schools in
order to protect students and taxpayers. In particular, it has strengthened
accountability efforts in higher education by setting standards for career
training programs, including many programs offered in the for-profit sector
where high costs and poor outcomes are more highly concentrated.
Descriptive analysis comparing students who attended for-profit colleges
to those who attended community colleges or non-selective four-year
schools shows that those who attend for-profits have lower earnings on
average, and hold larger amounts of debt. These students are also more likely
to be unemployed, to default on their loans, and to say that their education
was not worth the cost (Deming, Goldin, and Katz 2012, 2013). Loan default
data presented in Figure 5-22 also show similar patterns, especially when
disaggregated by completion status.
Additionally, research that compares earnings of the same students
before and after attending college—including a recent analysis using individual-level
administrative and tax data for Federal student aid recipients
enrolled in Gainful Employment programs (Cellini and Turner 2016)—finds
that for-profit colleges offer lower returns than the returns that have been
estimated for other sectors (Cellini and Chaudhary 2013; Liu and Belfield
2014).12 These lower returns are especially concerning in light of evidence
12 However, one study, which focuses on the returns to for-profit colleges in the State of Ohio,
finds more positive results (Jepsen, Mueser, and Jeon 2016).
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