Last week, regulators at the U.S. Department of Education released long-awaited new rules aimed at tightening up the use of federal aid dollars by for-profit colleges. The rules, which will require for-profit colleges to ensure a minimum proportion of their graduates can pay back their student loans, were hard-fought, with the for-profit education industry lobbying hard to limit their effect.
In the wake of the new rules, proponents of tighter regulation and cheerleaders of for-profit education are still hotly debating the role for-profit colleges have to play in educating America’s workforce. The New York Times, in its Room for Debate feature, is currently tapping into that discussion.
We’ve been keeping our eyes on this issue since my colleague Liam Dillon and I wrote back in March about Bridgepoint Education, a booming company based here in San Diego. Bridgepoint’s grown its student body and its profits exponentially in the last few years, but it’s also faced a barrage of criticism from regulators, state attorney generals and an Iowa senator for its low graduation rate and sales tactics. It’s become a major local employer and begun to become active in local politics and civic life.
Bridgepoint, which has two for-profit schools, Ashford University and the University of the Rockies, relies on federal financial aid funding for around 85 percent of its income. Like all for-profit colleges, under the new regulations Bridgepoint will have to ensure that its graduates meet benchmark criteria for their ability to make loan repayments and their ratio of debt-to-income or it will lose its eligibility to tap into federal student aid.
The new regulations impose restrictions on an industry that has exploded with growth primarily driven by students’ accessibility to federal loans. Because that growth has been so sudden, and so recent, and because the new rules won’t start having an effect until 2015, it’s impossible to tell what effect these rules will have on for-profit colleges.
But that hasn’t stopped the proponents and opponents of the new rules debating their fallout.
The Times feature contains five short statements from proponents and opponents of the new rules and invites readers to comment on each of the statements and to get an online debate going. There isn’t a whole lot of support for the for-profit education industry present in the debate currently, however.
Only one of the five short articles praises the efforts of the industry, and the comments so far have been full of vitriol against for-profit colleges, which are accused of making huge profits by duping unsuspecting students into their programs. The accusation that for-profit colleges care more about profits than about graduating students who can compete in the workforce has loomed in the background as the new regulations, known as the “Gainful Employment” rules, have been thrashed out.
Here’s a short snippet from the commentary of Osamudia R. James, an associate professor of law at the University of Miami, who argues that the rules don’t go far enough:
By civic and economic measures, for-profit higher education outcomes are disappointing. Compared with students of similar socioeconomic and academic profiles at nonprofit institutions, students at for-profit institutions have higher debt burdens, are less likely to graduate, account for disproportionately high numbers of student loan defaults (for which taxpayers are on the hook), reap weaker monetary returns on their education and are less likely to vote or participate in political activities.
These outcomes are most severe among marginalized groups, like veterans, the working poor and minorities, who enroll in for-profit programs in disproportionate numbers, sometimes persuaded to matriculate by recruiters who shame, coerce and lie in an effort to meet enrollment targets. These students, often the products of inadequate secondary educations, consider for-profit institutions because they are unprepared for, and feel out of place at, nonprofit institutions.
Here’s a snippet from the one comment in clear support of the industry, authored by Harry C. Alford, president of the National Black Chamber of Commerce, and Lanny J. Davis, a lawyer for the organization, who argue that for-profit colleges have been unfairly singled out:
[T]he gainful employment regulation is probably illegal. It is the result of a biased rule-making process essentially aimed at only one sector of post-secondary institutions, with senior officials stacking the deck against for-profit career colleges in favor of not-for-profit private colleges and public institutions in the negotiating committee (only two out of 32 members and alternatives were representatives from career colleges) as well as secret meetings with short-sellers who have a financial stake in harming these institutions. These short-seller meetings and communications were first discovered and reported widely in the news media after e-mails between short-sellers and senior Education Department officials were discovered through Freedom of Information Act requests.
Check out the debate, it’s heating up right now.
Please contact Will Carless directly at will.carless@voiceofsandiego.org or at 619.550.5670 and follow him on Twitter: twitter.com/willcarless.