How the U.S. Department of Education could further shrink the pipeline
February 19, 2024 | Guest Author
Guest blog author: Dr. Eric Grube, CPA, Concordia University, St. Paul
As CPAs, we solve problems for a living. We engage with difficult issues and we find solutions. Yet, with an ever-declining number of accounting graduates unfolding over several years, there still isn’t a comprehensive strategy to tackle this problem.
The accounting graduate pipeline issue wasn’t caused by a single event. Rather, it occurred through a confluence of events, such as emerging new technology jobs, the rapidly increasing cost of higher education, smaller numbers of high school graduates earning a bachelor’s degree and the reluctance of the profession’s national organizations — the AICPA and NASBA — to acknowledge how the 150-hour rule has become a structural barrier disincentivizing students from joining the profession.
To compound an already critical accounting graduate issue, a federal Department of Education regulation will make the pathway to earn the 30 additional credits more expensive for accounting students desiring to earn a CPA credential.
A higher education perspective
As chair of the accounting program at Concordia University, Saint Paul, I’ve struggled to maintain my program’s enrollment numbers. Excellent students continue to graduate from my program each year, but the challenge has been encouraging students to join my accounting program in the first place when equally lucrative business careers are available without the time and cost to earn the 30 additional credits needed for licensure.
To compound matters, I’ll describe how a federal Department of Education Title IV financial aid regulation will eliminate a common, cost-effective pathway that students have used at Concordia and other institutions to earn additional credits toward the 150-hour rule while graduating with a bachelor's degree. For those who need a refresher, I’ll explain some basics of higher education.
A bachelor’s degree at most institutions requires 120 credit hours. Within those 120 credit hours, institutions require students to successfully complete courses within their major(s), complete courses cataloged as general education and select from a variety of courses that are elective.
At most institutions, a typical degree plan will schedule students to graduate in four years.
When considering accounting programs, there is a high degree of standardization among Minnesota institutions. This is due to the Minnesota Board of Accountancy’s (BOA) requirements to sit for the CPA exam, but there is some differentiation that relates to how students earn the additional 30 credits for licensure.
Making it work: How students achieve the additional credits
Many larger institutions offer accounting students the option to earn enough credits through a mix of undergraduate and graduate courses to earn the 30 additional credits needed for licensure. Students in these programs will graduate in five to six years with a master’s degree (e.g., accountancy, taxation or business administration).
The profession doesn’t require advanced degrees for entry-level public accounting jobs, but coupling an advanced degree to a bachelor’s degree is one solution some institutions offer students to earn the additional 30 credits. Students bear the cost and higher education is happy to sell an additional 30 credits. This is the world students live in due to the 150-credit hour rule.
Liberal arts colleges and smaller institutions provide accounting students with the required accounting courses and 120 credits to sit for the CPA exam in Minnesota, but most do not offer the additional 30 credits in the student’s degree plan needed for licensure.
A good question to ask is, “Our firm has been hiring from smaller universities and liberal arts institutions for years. How have students been able to reach the 150-hour requirement at those institutions with a graduation requirement of 120 credits?” Great question. At these institutions, after an accounting student has registered for their semester’s required classes, the accounting professor and student will have this conversation:
“Let me look at your schedule. In your Monday/Wednesday/Friday schedule, you have 9:15 a.m. and 12:50 p.m. open. Let’s fill one or both of those times with a class.”
Note to reader: The professor is overloading the student’s schedule with an additional class or two.
In what may be the greatest unpublicized value in higher education, many institutions allow full-time students to add credits to their schedule without incurring additional cost under their tuition structure.
This means that accounting students at Concordia and other similar institutions can get close to earning an additional 30 credits within a four-year timeframe without incurring additional tuition cost. Institutions also allow students to declare a second major without additional cost, but considering many students are athletes or working part time, a second major isn’t feasible for most. As a result, most of my accounting students graduate with a single major.
Consequently, the majority of additional credits added to my student’s schedules are just filler classes, added because they fit a gap in their schedule, not necessarily because they enhance their understanding of accounting. I think we can all agree that this wasn’t the intent of the 150-hour rule.
Up until now, it’s benefited not only accounting graduates from these institutions, but also the profession, all while masking the additional cost of the 150-hour rule.
Unfortunately, this practice is coming to an end with a DoE Title IV federal financial aid regulation called Course Program of Study (CPoS).
The broad impact of Course Program of Study (CPoS)
For institutions to continue to receive federal financial aid under Title IV — including Pell grants, Direct Loans, federal veterans’ benefits and Perkin’s loans — all classes in a student’s schedule must be part of their degree plan. Meaning all classes must be part of the student’s major, a required general education course or an elective course.
Any other classes will be disallowed. CPoS will also impact accounting internships. Internships will only qualify for credit if the student has enough elective credits remaining in their degree plan. Consequently, my current class of first-year accounting students will not be able to overload their schedules to earn the additional 30 credits. Their transcripts will likely show 120-125 credits opposed to 148-152, which is typical for my current senior class.
Concordia will implement CPoS in 2024. Many large institutions already have CPoS in place. Other institutions will be required to implement CPoS soon. Because this is a federal DoE regulation, it will impact all institutions in the United States that receive Title IV financial aid, not just Minnesota institutions.
Because so many institutions and their students receive Title IV financial funding, CPoS has the potential to further drain enrollment at accounting programs across the country.
Considering the rising cost of higher education today, every institution knows the most challenging obstacle between the student and graduation is the financial hurdle.
Students and their parents consider overall cost a primary factor when considering higher education. Telling parents that an institution has a top-notch accounting program with proven job outcomes, but that a CPA license requires paying for an additional 30 credits beyond a bachelor’s degree will persuade students to choose other business programs.
For most students and their parents who take out a federal loan to pay for education, the 150-hour rule will fail the cost-benefit test.
We live in a fast-paced, changing employment environment, where many employers are dropping the requirement that candidates have a bachelor’s degree. For those with a bachelor’s degree, a standard 120 credits in finance, business management, data analytics or computer science can come with wages equivalent to an entry level public accounting job.
When students put all this in the balance, accounting programs will continue to lose enrollment.
Planning for the future of the profession
Looking ahead a few years, if the 150-hour rule remains the requirement for licensure, I can see an employment landscape where firms aggressively compete for a shrinking pool of accounting graduates.
Smaller and midsized firms will be squeezed out of the hiring market for accounting graduates as larger regional, national and global firms with deeper financial resources increase starting salaries and begin reimbursing their employees for 30 credits of expensive higher education credits.
It is time for the profession to answer the question of whether the 150-hour rule is serving the profession in the way it was intended. Many of us came into the profession with a two-year job experience requirement and a 120-credit bachelor’s degree. The profession thrived.
Had the 120-credit, two-year experience requirement remained the law, the accounting profession would have stayed on equivalent credit footing with other degrees and professions. I doubt we’d be in the situation we are in today.
As a profession, we need to engage to solve this problem. The pipeline problem will not solve itself as long as the 150-hour requirement remains as the sole pathway for licensure.
The time has come to communicate with the AICPA, NASBA, as well as the BOA and our Minnesota legislators that the clock has run out on the 150-hour rule.
Dr. Eric Grube, CPA is an associate professor and chair of the accounting program at Concordia University, St. Paul.
Learn more about this CPA pathways initiative
Do you want to learn more about this effort? You can keep up with the evolving conversation by visiting the MNCPA’s webpage about the broadening pathways to CPA licensure initiative.
VISIT CPA PATHWAYS PAGE
Topics: Professional Certification, Recruitment & Retention, Education
Guest Author
The MNCPA occasionally requests people in or connected to the accounting profession to provide their insights for MNCPA Perspectives.
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