At this week's Department of Education ongoing public meeting to advance Betsy DeVos's plan to repeal and replace the Obama rules on for-profit colleges, owners and executives of those institutions repeat familiar themes, both during formal sessions and in hallway conversations.
Faced with evidence that many for-profit college students end up dropping out, or graduating but still failing to get ahead economically, the officials, as they have in prior years' sessions, often blame their own students for borrowing too much money and for failing to be diligent in their course work.
And, just as strikingly, they suggest, over and over, that if a Department of Education rule or proposed rule would force them or their fellow school operators to alter or close a particular education program -- whether in teaching, nursing, IT, or hairdressing -- there must be something wrong with the rule. They rarely suggest that there might, instead, be something wrong with the program -- such as being of low quality, or given to admitting many students that the program is not designed to adequately assist, or simply being overpriced.
This mind-set makes these for-profit college officials the most entitled group I've ever observed. Many for-profit colleges get 80 percent, 90 percent, and even more of their revenue directly from federal taxpayers through student grants and loans -- because so many of the students they enroll are low-income people eligible for federal student aid, or military troops and veterans who earn education benefits.
Collectively the industry has received as much as $32 billion in a single year from the federal government. One company, the operator of the University of Phoenix, has taken in as much as $2 billion in a year. For-profit colleges you've never heard of have been getting hundreds of millions more.
Sending all that money to this industry, taxpayers have a right to expect that the schools will avoid serious waste, fraud, and abuse. We have a right to demand good performance. Especially because bad performance will often leave our fellow citizens -- the ones whom this taxpayer money is supposed to assist -- worse off than when they started, deep in debt and without improved career prospects.
But what is the actual record of this industry?
More than half of the students who have enrolled in for-profit colleges — many of them veterans, single mothers and other low- and middle-income people seeking a better future — dropped out within about four months. The relentless drive to meet recruiting and revenue goals — to get “asses in classes” — has led many for-profit schools to enroll numerous students whom their programs are not strong enough to help. Although for-profit colleges often promise that their programs are affordable, the real cost can be nearly double that of Harvard or Stanford. But the quality and reputation of the programs are often weak, so even students who manage to graduate often struggle to find jobs beyond the Office Depot shifts they previously held.
The Department of Education has reported that 72 percent of the for-profit college programs it analyzed produced graduates who, on average, earned less than did high school dropouts. A May 2016 study published by the National Bureau of Economic Research concluded that for-profit college students, graduates and dropouts combined, earned less after leaving school than they did before they enrolled.
Today, 10 percent of all college students attend for-profit colleges, on campuses and online — but these institutions account for 40 percent of student loan defaults. For-profit schools are driving a national student debt crisis that has reached $1.4 trillion in borrowing. They absorb 20 percent of all federal student aid, diverting sums from often better, more affordable programs at nonprofit and public colleges.
And numerous for-profit colleges -- from giant companies like Bridgepoint, EDMC, Career Education Corp., and Kaplan, to smaller schools -- have been the subject of multiple federal and state law enforcement investigations and actions alleging fraud and deceptive practices -- for example, for misleading prospective students about matters like program costs, accreditation, transferability of credits, job placement rates, and likely starting salaries, and lying to government overseers about whether their students have even graduated from high school, about their financial aid status, and much more. The schools aggressively target the very high-risk students whom they complain about at these meetings.
When pro-student negotiators in this rule-making meeting try to discuss examples of abuses, the Department's designated meeting mediators repeatedly warn them that it's not collegial to name or describe particular schools. From experience at prior meetings, I know that this is the result of industry representatives complaining to Department officials. This limitation is absurd. Facts regarding school behavior are entirely relevant to addressing these issues. Being genteel regarding institutions is how we got into this mess.
The for-profit college industry has a dismal record -- one with many victims, and one that cries out for stronger rules and enforcement. Yet through eight years of the Obama administration the industry hired every expensive well-connected Democratic and Republican lobbyist and litigator it could find to fight against greater accountability -- to force taxpayers to continue to send millions and billions to even the worst actors in the industry. Under industry pressure, the Obama administration ended up weakening a pair of new rules -- gainful employment and borrower defense. In the end, these rules aren't strong enough to match all the industry's abuses. However, they could go a long way toward restraining the worst outrages.
But now that the head of Trump University is President of the United States, and Betsy DeVos is his Secretary of Education, and former for-profit college executives serve as top deputies in her department, the new administration has embarked on a course to defang or eliminate both rules. Federal regulations require that these rules be undone through the same laborious process by which they were created -- negotiated rule-making, where representatives of various interested parties, selected by the Secretary, gather around a table and try to craft regulations. If these negotiators cannot agree unanimously, then the Department will draft the regulations themselves, which is what happened in the Obama administration, and which surely will happen again under Trump and DeVos.
There are many career officials in the Department, and even some Trump appointees, who realize there remains a great deal of fraud, overcharging, and weak instruction in the for-profit college industry. But the sneering public remarks that DeVos has offered on the Obama rules, the one-sided "issue papers" that the Department has issued to guide the current meetings, and the inclusion on the panels of negotiators tied to predatory schools, strongly suggest where we're heading -- back to an era of near-impunity for bad actors.
My colleagues and I, by now, know personally many people who were misled, overcharged, and abused by for-profit colleges. Some came to the rule-making meetings last year to tell their stories. They're not here this time, and some of them say it's because they feel burned by the process. They made the effort to argue for greater accountability, and for cancelling the federal loan debt of defrauded and abused students. They haven't received such loan forgiveness, so many continue to pay down loans for worthless education programs, diverting money they need for rent, food, clothes for their kids. They can't afford to travel to DC and leave their jobs and family responsibilities even for a day.
Meanwhile, as always, the for-profit colleges have the money to stock the negotiator table and a room of observers with their high-priced lawyers and lobbyists. They have the money because we taxpayers continue to provide it.
The rule on the chopping block this week -- gainful employment -- would ultimately take away federal aid from career education and for-profit programs that, year after year, saddled students with more debt than their incomes would reasonably allow them to repay. The rule's requirements for school achievements are not overly demanding; the Department announced in January that about 800 programs failed the first round of the test — less than 10 percent of all relevant programs, in a sector rife with weak performers.
But many for-profit college representatives seem to insist that, because they see themselves as good people, and because they work hard, they don't want a rule that might force them to alter their programs, or spend additional money on compliance, or lower their prices. They don't want a rule even if many of the schools that will have to change or shut down are among the most shoddy operations in their industry. Apparently, if one "good" program might face adversity, it's unacceptable. It's almost as if the for-profit college owners think they can just raise their hands and get free money.
[UPDATE 12-06-17 10:20 am: This mind-set was just reflected in a comment by negotiator Jennifer Blum of for-profit Laureate Education. She posited a situation where a college has a teacher training program that is failing the gainful employment rule "through no fault of their own; it just has to do with the salaries that teachers make." But that's the point of the gainful employment. A school might not think that it's at "fault," but the ex-students are buried in debt from the high tuition.]
Some owners are good people. They are justifiably proud of their staffs, of student success stories. But if they work to undo these Obama accountability measures, they are bad citizens. Because the rules have the potential, over time, to protect millions of people from predatory educational programs that would ruin their financial futures. And that goal is worth some sacrifice, or, if necessary, the exit from the business, of some for-profit college owners, as a condition for the industry continuing to receive our tax dollars. (And let's be clear: Under the gainful employment rule, the government would never order any school to close. The federal government can only decide whether the school is eligible for taxpayer funds. For-profit operators remain free to run whatever schools or programs they want, if they can get state licensing. Many for-profit schools operate without federal aid, often at much lower prices for students.)
To emphasize: This is not the normal government policy trade-off between say, consumer protection, and the interest of banks in maximizing profit. Or environmental protection versus fossil fuel profits. The for-profit college industry is funded almost entirely with our taxpayer dollars. And the issue is whether the government, on behalf of taxpayers, should require some meaningful standards, enough good results for students, in exchange for those dollars, or whether, instead, the owners are permanently entitled to an open torrent of our money without serious regard to performance.
Every day that Betsy DeVos blocks the Obama gainful employment and borrower defense rules is another day that numerous additional Americans will be deceived into enrolling into programs that will bury them in debt, while enriching their deceivers -- all at taxpayer expense.
This is the situation facing the Secretary now. Can she learn from these rule-making sessions, and the long record of blatant abuses by the for-profit college industry, that it's at last time for the Department of Education to step up and start implementing genuine measures to protect students? Putting the two Obama rules into effect is, in fact, not enough, but it would be a strong start.
This article also appears on Republic Report.
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