Posts Tagged ‘college’

The U.S. Department of Education is trying to create a clear financial picture for students with a recently developed, not yet implemented regulation called “Gainful Employment.” The Gainful Employment regulation along with many other new regulations are set to be put into action sometime in 2011. These new regulations have been conceived in response to the growing pressure over for-profit education’s questionable recruitment practices.

What the U.S.D.E. hopes to accomplish with these new policies is to make students more informed about the financials of their degree programs. Simply defined, the regulation will “apply a formula to programs in career-oriented majors, like healthcare, business and education to decide which ones lead to ‘gainful employment.’ Those that do not would be eliminated. Students would also get concrete information about graduation rates, employment rates, potential salaries in their chosen field, loan debt info and the like before they choose their school. This information should help students analyze their risk/reward scenario.”

The U.S.D.E. has defined “gainful employment” as employment that provides students with the income they need to successfully re-pay their education debts.

Randy Proto, CEO of the American Institutes school group which operates healthcare-based career schools in a number of states, says that the disclosure agreement found in the “gainful employment” regulation is an “excellent idea.” But, for the regulation to be effective, Proto suggests that the formulas established to decipher the “gainful employment” statistics must “account for differences in: student populations served, programmatic goals, national economic conditions and many other factors.”

As it is envisioned now, the “gainful employment” regulations would only apply to for-profit education institutions and a minute percentage of students in non-degree programs at ground schools. So, Proto asks, what about the “7.5 million additional students enrolled in career-oriented degree majors at public and private universities? Why leave any students and programs out of its reach? If the proposed regulation is a good idea and provides the anticipated benefits and protections, it should be broadly applied.”

Proto, clearly a proponent of for-profit education, supports the “gainful employment” measure, but would also like to see regulations emplaced across the board to ensure equality, not just at for-profit online schools or career training institutions.

Proto seems to be on the right track. “Gainful employment” regulations are a good idea but shouldn’t be enforced only at for-profit schools. All students should be able to benefit from the information “gainful employment” statistics will provide. Says Proto, “this is a real opportunity for higher education. But only if it is ‘Gainful Employment’ for all students.”

 

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By: Mark Hyman at http://www.thelandofthefree.net/conservativeopinion/2010/10/10/assault-on-career-colleges/

The U.S. Department of Education recently conducted a Notice of Proposed Rulemaking (NPRM) that suggests the Dept of Ed will severely restrict access to various federal loan and grant programs to students attending career colleges. Unlike state-owned public institutions and private, not-for-profit colleges, career colleges operate on a for-profit basis.

There are approximately 1,000 career colleges such as the University of Phoenix, Strayer University, DeVry Institute and Westwood College that offer Associate, Bachelor or Master’s degrees. About 1.2 million students were enrolled in these colleges in 2007-08, according to Dept of Ed statistics. Another 1,800 for-profit post-secondary schools offer certificate, continuing professional education or occupation-specific education such as golf academies and culinary, technical and cosmetology schools.
In contrast, there are more than 3,300 public institutions and private, not-for-profit colleges that offer Associate or higher degrees. In 2007-08, about 17 million students were enrolled in these schools.

Career colleges have grown dramatically in the past several years. They primarily market themselves as providing degree and certificate programs that meet local market employment shortfalls and cater to the hectic schedules of a student body that is already in the workforce. Career colleges also provide opportunities to students who are denied admission to public universities and private colleges.

The typical career college student is already employed, 25 years of age or older, minority, female, single and often with dependent children, has lower income, cannot rely on family resources to finance college, and comes from a family without a college degree.
Because of these demographics, career colleges tend to have a much higher percentage of students who rely on federal student financial aid that is doled out under Title IV of the Higher Education Act of 1965 (federally insured loans, Pell Grants, etc.) than do students at public universities and private colleges.

This federal funding totaled $105 billion during the 2008-09 school year. About $24 billion of that amount went to students who attended career colleges.

According to Senator Tom Harkin (D-IA), chairman of the Senate Committee on Health, Education, Labor and Pensions, which has jurisdiction, federal student aid will balloon over the next decade. The U.S. will spend as much as $350 billion just on Pell Grants over the next 10 years. In 2009, $24 billion was spent on Pell Grants; in 2011, the U.S. will hand-out $30.6 billion.
The Dept of Ed has several criticisms of career colleges. The department alleges students attending career colleges default on federally backed student loans at a significantly higher rate than do students at public universities and private colleges. Career colleges dispute this allegation and respond with two points.

First, the demographic of the typical career college student is more prone to defaulting on loans, in general, and this accounts for a slightly higher student loan default rate. This demographic claim is borne out by the high loan default rate of students attending historically black colleges and universities.

Second, career colleges accuse the Dept of Ed of using different accounting techniques when analyzing student loan repayments by career college students. Older students already in the workforce are more likely to consolidate student loans into consumer debt refinance plans. The Dept of Ed, career colleges assert, improperly identify student loans in such situations as “in default” when they are, in fact, being repaid on time or are in approved interest-only payment programs.

The Obama Administration’s first attack on higher education financing occurred when the government conducted a takeover of private student loans. Observers allege the proposed rule change underscores the anti-corporate bias of the Obama Administration.
The Dept of Ed also complains that career colleges create “labor oversupplies” by graduating too many qualified workers for a specific profession causing unemployment and depressing salaries. Of note, the Ed Dept is silent on the thousands of lawyers graduated each year by law schools.

Occupation-specific training programs, argues the Dept of Ed, “that lacked a general education component made graduates of for-profit institutions less versatile and limited their opportunities for employment outside their field.” Career colleges dispute this.
Speaking on background, one career college official stated that graduating students who cannot get employed will cause students to attend school elsewhere. “We are marketplace-driven. We have a strong incentive to ensure our graduates get jobs. And they do,” he said.

According to the NPRM, the Dept of Ed is “determining whether certain postsecondary educational programs lead to gainful employment in recognized occupations.” It further indicates an intent to cut off federal student aid to “educational programs of little or no value.”

One can easily draw the conclusion there is elitism at play. What exactly constitutes a program of “no value”?

Certificate programs leading to jobs in cosmetology, police forensics, and computer repair may not pass muster with the Education Department as having “value” unlike some of the following courses offered in the Fall 2010 at these elite colleges and universities:
• Oberlin College: “Queering the Reel” (RHET 104) – Examining sexual orientation and gender in film.
• Yale: “Gypsies, Tramps and Thieves” (PLSC 154) – Study of “groups who have shown to live outside, or on the margins of, society” including hoboes and 18th century pirates.
• Harvard: “Akkadian Language and Literature” (AKKAD 300) — Study of the extinct Akkadian language that died-out more than 2,100 years ago.
• Columbia: “Transnational Transgender Social Formation” (W3918) — Merely one course offering among the university’s vast human rights curricula.
• Occidental College: “Stupidity” (CTSJ 180) — A Critical Theory and Social Justice offering to prove “[s]tupidity is neither ignorance nor organicity [sic], but rather, a corollary of knowing and an element of normalcy, the double of intelligence rather than its opposite.” Huh?

If the Dept of Ed truly wants “to protect taxpayers against wasteful spending on educational programs of little or no value” then perhaps it ought to prohibit the recipient of any federally-backed student aid from taking classes similar to these or banning tax dollars altogether from going to any school that even offers such nonsense.

Public university officials have been especially critical of career colleges. Students enrolled in career colleges not only attend classes in typical bricks and mortar classrooms but, have also been taking classes online. Public universities have been losing financial aid dollars to students attending career college programs.

GIVEN OLD ACADEMIA’S heavy political support of Democrats, this may be the real motive behind the Obama Administration’s effort to cut-off federal aid to colleges that have profit motives. Adding insult to injury, enrollment at career colleges has steadily increased while enrollment has flat-lined at public institutions and private colleges.

Last year, California denied community college admission to about 140,000 students due to the state’s dire financial predicament. Career colleges have picked up the slack. Today, the University of Phoenix has more than 443,000 students. Only the State University of New York system has a larger enrollment (463,000).

A Government Accountability Office report released in August 2010 (GAO-10-948T) alleges deceptive marketing practices at 15 career colleges and accuses 4 of those schools of conducting fraudulent practices.

The Association of Private Sector Colleges and Universities (APSCU), the industry trade association, has condemned deceptive marketing practices and offers training seminars for financial aid administrators.

There are unconfirmed reports that more than 200 schools were surveyed for the report but, that the GAO cherry-picked only the 15 schools accused of deceptive or fraudulent marketing practices. They are also unconfirmed reports that the Dept of Ed was specifically targeting the University of Phoenix in response to complaints made by public universities. Both of these claims are plausible.

At a June 2010 Congressional hearing, criticism was leveled at career colleges for using “TV advertisements, billboards, phone solicitation, [and] web marketing” to promote their institutions. According to Senator Harkin, “[advertising] spending by a for-profit school system radically [sets it] apart from other [not-for-profit] colleges.”

Career colleges counter that they do not have the monopoly inherent in being a state university nor do they enjoy the free marketing available from the promotion of big-time athletic programs such as football and basketball that are resident in public universities and private colleges.

The NPRM focused on a two-part test to ascertain an institution’s future eligibility for federal student aid. These are student debt-to-income ratios and loan repayment rates. Schools not meeting the minimum thresholds of the two tests would be deemed as not having adequately prepared students for “gainful employment” and would be cut-off from receiving federal student aid dollars.
This proposed rule to determine federal aid eligibility would apply only to career colleges. Career colleges utilizing federal student aid “benefit from billions of dollars in subsidies from taxpayers,” argues Education Secretary Arne Duncan and therefore ought to meet additional burdens not borne by public universities and private colleges.

The APSCU observes that if the same rule were applied to public universities and private colleges then it would severely restrict aid to medical school students. Students attending dental and law schools and other schools with high enrollment costs would also be affected.

According to the APSCU, 9% of nurses and 54% of allied health workers who graduated in 2009 attended career colleges. The trade association argues that drastically cutting back federal aid opportunities to these schools could exacerbate acute health care worker shortages.

There is a related matter that dramatically differentiates for-profit and not-for-profit colleges. Each state pours hundreds of millions of dollars into its public institutions. Additionally, public institutions and private, not-for-profit schools operate on a tax-exempt basis. In contrast, career colleges do not receive direct government subsidies and instead, pay millions of dollars of taxes into federal, state and local governments.

An analysis prepared by Professor Bradford Cornell of the California Institute of Technology on behalf of an advocacy group representing career colleges compared the costs borne by taxpayers by students attending for-profit and not-for-profit colleges.
According to Cornell’s report, “where only direct costs to taxpayers are considered, for-profit 2-year institutions produce graduates at a cost to taxpayers that is $25,546 lower on a per student basis than the public 2-year institutions [emphasis added].” The difference is more dramatic when one factors in tax revenues paid by for-profit schools and the absence of tax revenue from not-for-profit schools.

This assault on career colleges has pit influential groups and 80 members of Congress of both political parties against the Obama Administration. They note that career college students are heavily female and minority and changes to financial aid rules would disproportionately disadvantage them.

According to the Imagine America Foundation, 43% of students at career colleges are minority and 65% are female. Also, thirty-nine percent of degrees awarded at career colleges went to minorities, which is twice the rate at public institutions (20%) and more than double the rate at private colleges (17%).

Reducing access to federal student aid to those who enroll in career colleges would harm an important political Democrat constituency. In a letter addressed to Harkin, one liberal group of politicians urged the Iowa Senator to abandon his “imbalanced” approach to restricting federal aid to career colleges.

The Department of Education is expected to issue new federal student aid rules on November 1 that would take effect next year.

Student Success Stories Ignored

WASHINGTON, DC (September 29, 2010) – In advance of a new round of expected criticisms of career colleges by Iowa Democratic Senator Tom Harkin at a planned Thursday hearing, more prominent Democrats and progressive advocates are asking for fairness for students of private sector colleges and universities.

In a letter sent today to Harkin, Coalition for Educational Success spokesperson and former Clinton Administration Special Counsel Lanny J. Davis said that the Senator’s overly broad criticisms of career colleges along with proposed U.S. Department of Education rules, would likely have a disproportionate negative effect on disadvantaged students’ access to higher education, especially the lower income and minority students who predominantly attend these colleges.

Davis, a long-time supporter of Senator Harkin’s, asked the Senator to try for more balance and fairness in the planned presentations at Thursday’s hearings.  “I hope that you will not, in fairness, ignore the millions of private sector college student and graduate success stories and not allow one witness with unproven allegations to testify without permitting another witness at the same table at the same time to provide a contemporaneous factual rebuttal.  I respectfully suggest that to do otherwise would be unfair–and inconsistent with all I have observed in your public service over the years,” said Davis in the letter to Senator Harkin.

Davis joins more than 80 members of Congress, including dozens of prominent Democrats, who have voiced their concern over proposed Education Department rules heavily promoted by Harkin, which would limit college access and choice for minority and poor students.  Just this week, progressive Democratic Senators Roland Burris, Herb Kohl and Bill Nelson asked for reconsideration of the proposal.  Leading groups in the African-American and Latino community have also added to the growing chorus of opposition.

More than 2 million students will enroll in career colleges this year, seeking a direct path into the job market by expanding their skills and knowledge.  The overwhelming majority are non-traditional students – full time workers, working parents, minorities, workforce returners and veterans.

Forty-three percent of students at career colleges are minorities and sixty-five percent are women.  The schools graduate nearly double the proportion of minority students when compared to other institutions.

“In the worst economy in a generation, we need more minority and underprivileged kids in college, yet some in Congress and the Obama Administration are considering new regulations that will create obstacles instead of opportunities,” said Davis.  “Underserved students, more than any others, depend on private-sector colleges.  Proposals being discussed will have dramatic consequences by denying choice and access to students, impeding skills training to fill open jobs in the workforce and choking innovation in higher education.”

From http://ed-success.org/press-release-concern-over-criticism-on-private-sector-higher-education.php

BANGALORE (Reuters) – U.S. for-profit colleges, widely criticized for saddling students with big debts and not fully preparing them for the workplace, are kicking back as they garner public support.

Having seen their stock prices slump by a third since April as their business model has come under sustained attack from the Obama administration, education companies such as Apollo Group and Corinthian Colleges have begun a counterattack.

Corinthian has run a marketing campaign to raise awareness of the “unintended consequences” of the proposed rules, and has urged Washington to reconsider them.

Student unions, Republican senators and even some Democrats are lining up behind these schools in opposing the proposals that are seen crimping colleges’ growth and tightening enrollment policies.

The new rules would limit schools and the amount of help students could get, according to Dawn Connor, president of Students for Academic Choice, a student group that opposes the regulations.

“Default rates are up all over the place, that’s because the economy is down. I don’t think it should all be blamed on for-profit schools,” said Connor, who this week organized a student rally on Capitol Hill to protest the proposals.

The tough rules framed by the Department of Education could see fewer courses on offer and more students excluded from post-secondary education at a time when high unemployment and a slow recovery are bringing more people back to schools.

The department last week delayed releasing a final rule on the most controversial reform, citing the large number of critical comments, some 100,000, it had received.

The ‘gainful employment’ rule says the government would stop lending to college programs if more than 65 percent of ex-students fail to pay the principal on federal loans.

In August, the department released loan repayment rates of for-profit schools that showed most did not meet the required threshold to qualify for federal aid.

Morningstar analyst Todd Young said companies and industry groups were waiting to see the detail of the gainful employment proposals before firing back in earnest. These are now expected early next year.

“As the public comment period came to an end in September, the industry finally started its counterattack,” Young said.

Republicans also voiced their opposition to the proposed rules at a Senate hearing on Thursday.

“It’s naive to think these problems are limited to just the for-profit sector,” said Republican Sen. Michael Enzi, noting large debts owed by many law school graduates. “We’re just looking at this in a vacuum and that’s not fair.”

Democrats face the threat of losing control of one or both chambers of Congress in November mid-term elections amid voter anxiety over jobs and the slow pace of economic recovery.

The proposals could prompt 400,000 students out of post-secondary education each year, and trigger 90,000-100,000 job losses, according to a study by Parthenon Group — as schools will have to trim programs that don’t offer students solid job prospects.

“The government needs to think about access to education, how they can help students who want to get education but can’t afford loans and certainly can’t afford to get themselves into a lot of college-loan debt,” said Steve Loflin, executive director of The National Society of Collegiate Scholars, which provides scholarships to high-ranking students.

Some for-profit schools argue their default rates are high as they primarily serve some of society’s weaker elements.

“The biggest effect I see is the underserved population are going to be turned out again. I don’t think that’s a great result because those are the folks that are likely to need public assistance,” said Signal Hill analyst Trace Urdan.

STILL TAKING FLAK

But the schools are still coming under fire for charging high fees and running loose admission policies.

Rich Williams, higher education advocate at U.S. Public Interest Research Group, said for-profit colleges were still being irresponsible in their recruiting, and noted that they charge $15,000 for certification for programs like massage therapy — that costs about $520 at community colleges.

“If anything, these high-risk students should not be going to for-profit colleges,” said Williams, one of a 13-member team that helped the education department draft the new regulations.

Sara Fuller, a student at Apollo’s University of Phoenix, said she was never asked if she had a job or could repay loans before being enrolled on an associate degree in criminal justice.

“I called the university and was enrolled in classes on the same day,” said Fuller, who is pushing for tougher regulation as, even after investing over $12,000 in her degree, she’s not sure of getting a job.

Former Clinton aide and current for-profit higher education lobbyist Lanny Davis–whose other clients include Equatorial Guinea President Teodoro Obiang Nguema Mbasogo, a man who Foreign Policy ranked as the 14th-worst dictator in the world after he “amassed a fortune exceeding $600 million while the masses are left in desperate poverty”–has dutifully published an anti-”gainful employment regulation” article on behalf of his paymasters that doesn’t even try to be truthful or make sense. For example:

Liberals supporting these proposed regulations rightly complain about marketing and other abuses. But the fact is, such abuses occur at non-profits and public institutions as well as at for-profits and, in any event, the gainful employment regulation doesn’t even address the issue of these abuses

So we should be against regulations that prevent some abuses in the for-profit sector because they ignore other abuses in the for-profit sector? This is a defense? Also, I’m pretty sure that non-profits and public institutions don’t actually engage in boiler-room style recruiting tactics. Davis continues:

Liberals who cite the excess “cost” of student loan defaults among the lower income and minority students ignore two inconvenient, indisputable facts: first, billions of dollars of taxpayer subsidies that go to non-profits and public colleges are not available to for-profits; and for-profits cost taxpayers substantially less per-student each year than non-profits and public colleges.

Liberals (and everyone else) who cite the cost of student loans are most concerned about the cost to students, not the taxpayer, since students are the ones who get stuck with unmanageable, undischargable loans that metastacize with fees and penalties over time.  Davis then says:

According to the Department of Education’s own data released last month, its proposed “gainful employment” regulations are so poorly crafted that if applied to non-profits too (which they currently are not), Harvard Medical School, D.C.’s famous minority school, Howard University, and 93 of 100 Historic Black Colleges in the U.S. would all fail the so called loan repayment test.

Presumably the fact that the regulations would catch Harvard Medical School et al are the main reason that, as Davis notes, they don’t apply to Harvard Medical School et al. Lurching  for the finish line, Davis says:

The third explanation appears a classic example of ideology trumping facts: the instinctive negative reaction of many liberals to the word “profit” when associated with providing education. This seems uncomfortably similar to opposition by most liberals to private “charter” schools within urban public school districts…

That makes perfect sense, except for the fact that charter schools are public, not private, and don’t make any profits. Otherwise, a wonderful analogy.

Generally when Exxon / Mobil or the American Federation of Teachers or whomever want to publish opinion pieces expressing their views in journalistic publications, they pay for space that is clearly demarcated as such. Why does the Huffington Post allow lobbyist shills to use its space this way?

From: http://www.quickanded.com/2010/10/what-do-for-profit-colleges-and-the-worlds-worst-dictators-have-in-common.html

Hi, my name is Amy and I am a misfit. I’ve always been an outsider. I was different than the other kids in school, different than the other employees I’ve ever worked with, am different than the other moms at the PTA; I’ve always been “different”. Honestly I like it. I like that I see the world in ways that others do not or can’t; I like that my perspective is sometimes strange or colorful, that my understanding is often skewed from the norm. I am a misfit. Too, I was the kid that sat in the high school principal’s office anywhere from two to four days a week, labeled as the one who either “did it or knew who did it”, so I was always the first to be questioned. Looking back as an adult on my teen years, I was bored at school. I was brighter than most of my teachers and vocal about it, which of course they didn’t appreciate; leading to my principal telling me that he was going to put my name on his office door because I spent more time in his office than he did. Of course that was when I showed up, I missed some fifty odd days my senior year. I didn’t want to be there and they didn’t really want me there. Hi, my name is Amy and I am a misfit and trouble maker.

It is ironic that I’ve worked in education for the past 12 years. Something that I once fled from is now my passion in life. My joy comes from seeing students and graduates succeed, seeing them fulfill their dreams and reach their highest potential. I worked in the public college sector for over six years and guess what? My name is Amy and I am a misfit and trouble maker. I didn’t fit in. I tried, I really did. I bought the suits and tied scarves around my neck, found the perfect briefcase, smoozed the right people and worked myself into an anxiety ridden, panic attacked life. But my trouble maker self didn’t care about the suits or the scarves, she cared about the students and their needs, their goals and I was vocal about it. I took action. I took risks. And at one point in time was told to “slow down because I was making other employees look bad”.

?.

My trouble-making misfit self thought it was about the student and service to the public I represented (it still does); however my perspective was clearly different than that of my leadership who just wanted to maintain the status quo. So after six years of fighting the good fight, I headed out to find my island, which perhaps I might “fit in” on. The old adage about fitting a square into a hole meant for a circle is true. I was the square with ideas too big for their little circle.

For the past five years and 28 days I’ve worked in the private sector (for-profit) at a small private university. I am still a misfit of sorts and occasionally a trouble maker; but they (I’ll say loosely) like it. Sometimes when I think I am going to get yelled at, I get smiled at; sometimes it is a stern voice with half a crooked smile. The people working in the private sector have an entrepreneurial spirit, they are pioneers and not stuck in the “that’s the way we’ve always done it” mud. Ingenuity and creativeness is welcomed and rewarded; all squares are welcomed. We work with business and industry to make sure what we do is pertinent, we hold students accountable yet create an environment where they can flourish and we treat everyone like they are members of an extended family that crosses every imagined boundary. In the world of top ten universities, state funded schools and 100 year old institutions of higher learning the private sector schools are misfits. We like who we are and our graduates are proud of their alma mater, but the rest of the world doesn’t quite know what to think of us and looking from the outside in, can’t understand our passion or drive. The proposed Gainful Employment regulation before the DOE has further labeled us as misfits and trouble-makers when it couldn’t be further from the truth. Just because our financial/tax structure isn’t like everyone else (our colleges actually pay taxes too) does not lessen our passion to educate and mission to provide the workforce with trained workers for the present and future. In fact my university is family held and that family environment extends into our students lives and way past graduation.

When I look in the mirror I see our students. For the past five years I have worked a full time and a part time job, raised three kids as a single mom and have gone to school full time earning a BSBA and an MBA. This is not my sob story but it is a reflection of who our students are. Single parents, working adults, underserved populations, high school misfits, those who are afraid of college, people who have failed at other institutions and people who hit the age of 30 and realized that in order to build a brighter future you have to get off your @$$ and create the change you want to see in your life. Those who have never thought that they would ever be “college material”, never had anyone believe in them, or anyone to encourage them. Those that took that bold first step to enroll into college to build a future. Now I am not labeling our students and alumni as “misfits” but in many cases they are unique and different in comparison to the traditional college student at the traditional university.

I am angry. Not that anyone that can do anything about it cares, but I am angry. This gainful employment regulation is discrimination at its finest and it affects some of the people I care about most, the students and graduates I’ve watched flourish over the past five years and see great potential in for next millennium. It is going to further limit opportunities for sections of the population that already have limited opportunities. As a teacher and administrator I have supported students through cancer and illness, homelessness, abusive relationships, deaths, deployments to Iraq and Afghanistan and twists and turns that I could never imagine my life taking and many have made it through to the other side and declared “I am the first college graduate in my family”, they have set the bar for the people around them and reached that first rung in their career ladder story. With this gainful employment proposal we would not have had the opportunity to support many of them because our paths would have not crossed if the federal government told them they could not have the monetary support to support an education for a career they envision themselves in at the college of their choice.

The Gainful Employment proposal compares ratios of new graduate’s income to their school debt to see if the employment obtained is “gainful” within a certain time period. My thoughts about this are that no one starts their career where they want to see themselves. There is no magic job wand that makes dreams come true, it comes with hard work, networking and leveraging opportunities; education is the foundation. I’ll never forget the day a grad called to tell me that she had landed a job and had more than doubled her salary. My first thought was “WOW” doubled your salary that is incredible. After talking to her I found out that she is in Tennessee where the minimum wage at the time was $5.85 an hour and indeed landing a job at $12 and hour was more than doubling her salary; a door opened by her education and a huge success for her. She has since has found further success and has gone well beyond that first rung of her career ladder. I have to ask, “Would she have passed the gainful test?” That would depend on who you asked; the graduate would say yes. She would say that education changed her life.

My other issue with the GE proposal is that they are picking on only one sector of education. I am not going to into the statistics; there are a million blogs and reports you can gather those from. But rather I’ll tell you a story that proves my point. I was at a job fair when a man walked up the table and said, “I went to college and it didn’t do me any good”. So I asked him, “What degree did you earn? His reply was “General Education Associate Degree”. I will not name the school, but I ask you, how many of you have ever seen a job posting looking for someone with an associate degree in general education? This man’s state funded alma mater did him a great disservice in having him spend his money and time on a degree that is so non-specific that it led to no outcome whatsoever. On the other hand for-profit college’s educations teach specific skills that lead to specific careers in specific industries. Why isn’t the public sector, non-profits being held to the same standards? Why are we even entertaining this proposal that not only discriminates against a sector of education that does lead to employment but more importantly several demographic pools of citizens?

Hi, my name is Amy and I am a misfit and trouble maker who works for misfits who employ misfits who service unique learners on our little island that changes lives. I am angry. I am a career college graduate. I am a mom. I am a volunteer. I am a teacher. I am a voter. I am a supporter. I am blogger. I am an occasional troublemaker. I work in an industry that isn’t perfect but also isn’t bad. I am asking you, whoever you are, to oppose the gainful employment proposal. Write to your congress member and ask them to oppose it and ask them to approach it in a different way, a way that is fair and equal. The regulation needs to be postponed, rethought and then reapplied to the entire higher education industry.

I close with a quote from a fellow “trouble maker” and possible misfit, Dr. Martin Luther King, Jr. “Faith is taking the first step even when you don’t see the whole staircase.” Whether we are talking about the staircase of life, the career ladder or stepping foot into a college classroom for the first time, faith in ourselves, a higher power, another person is what guides us. Right now my faith is on roughly 7000 students that my private sector, family owned university serves and I simply ask that gainful employment be revisited so that we can continue fostering success stories. The futures of future college graduates depend on it.

In your service,

Amy

From: http://herzingonline.wordpress.com/2010/09/23/private-sector-education-and-gainful-employment-welcome-to-the-island-of-misfits/

The period for comments to the DOE has passed, but we cannot stop the dialog just yet. We still need to reach out to our members of congress, especially those who are supporting this rule against career colleges and universities. I am putting together a portfolio to hand deliver to members of congress and would like you to share your voice. It’ll only take a couple of minutes. Too, if you are an employed graduate and your employer would consider writing a letter please, please, please let me know by emailing: gainfulemploy@gmail.com ! Thank you all 🙂

Click here to have your voice heard!

Under attack for high student default rates, the for-profit sector is fighting back with a  report (pdf) by the Nexus Research and Policy Center that hits proposed Education Department regulations that would limit recruiting and student loan eligibility.

Jorge Klor de Alva, former president of the University of Phoenix and now president of Nexus, calls the attack on for-profits a “witch hunt” in a guest post on The College Puzzle.

For-profit colleges and universities, the fastest growing segment of American higher education, are being accused by the media, the Department of Education, Wall Street’s short sellers, and Congress of deception, greed and a failure to comply with regulations. These accusations rest on only the barest of evidence, relying primarily on anecdotes. In fact, two Government Accountability Office studies this year, one covering thousands of schools since 1998, found only 37 for-profit institutions in violation of Departmental regulations.

The “gainful employment” rule would exclude hundreds of thousands of teaching, nursing, and public safety students, Klor de Alva writes. Applied to the public and nonprofit private colleges, it would “remove so many programs from eligibility for federal financial aid that it could lead to the possible closure of 40% of community colleges, 90% of Historically Black Colleges and Universities, and 45% of campuses where Hispanic students constitute more than 25% of the students.”

Only the for-profit higher education sector “can grow sufficiently to accommodate the millions of students the nation must educate to remain globally competitive,” Klor de Alva argues. Furthermore, this comes at “no cost to taxpayers” because the for-profit educators’ taxes and the interest students pay on their federal loans exceeds the dollar value of the Pell Grants and other government subsidies received by students and institutions.

Without a robust for-profit sector, it would cost nearly a trillion dollars to reach President Obama’s goal of being the first in the world in degree attainment by 2020, the Nexus report estimates.

All institutions of higher education should measure the learning outcomes of their students and publish those results, Klor de Alva writes. “Then at last taxpayers would have the data needed to distinguish good from bad performers, making for the efficient disbursement of local, state and federal education subsidies.”

I’d love to see an objective study of subsidies going to public, nonprofit private and for-profit colleges and universities. Which sector costs taxpayers the most? What kind of return are taxpayers getting on the investment?

Objective is the key word. Nexus is funded by the University of Phoenix and the John G. Sperling Foundation, reports Washington Monthly’s College Guide. John Sperling is the executive chairman of the Apollo Group, which owns the University of Phoenix.

By Ronald L. Holt, Esq., Partner

The author is an attorney practicing in the Higher Education practice at the firm of Dunn & Davison, LLC.

On July 26, 2010, the U.S. Department of Education (“DOE”) issued a notice of proposed rulemaking (the “GE NPRM”) that proposes a two-part ‘gainful employment’ test (the “GE Standards”) intended to be used to measure Title IV eligibility of the following academic programs:

(1) ALL Title IV eligible academic degree and non-degree programs offered by for profit institutions (excluding any liberal arts baccalaureate degree program); and

(2) All Title IV eligible non-degree programs offered by any nonprofit and public institutions (mostly community colleges).

Assuming the final version of the GE regulations is published by November 1, 2010, the regulation would become effective as of July 1, 2011. By its current terms, however, it will not apply to most programs until July 1, 2012 but on July 1, 2011 it will be applied to the lowest 5th percentile in performance of each kind of program (as explained in Part H below on page 11). The GE NPRM is published at 75 Federal Register 43615-43708 (July 26, 2010); it can be accessed at

http://www.ifap.ed.gov/fregisters/FR072610ProgramIntegrity.html

A separate NPRM, which was issued on June 18, 2010 and which covers a wide range of proposed new ‘integrity’ regulations, establishes new requirements for colleges to make disclosures to students and the DOE about various components of the GE Standards. For each program, the institution must annually report its CIP code (Classification of Instructional Programs), the SOC codes (standard occupational code) of occupations for which the program provides training, the graduates in the institution’s last fiscal year and the federal and private debt of those graduates. The institution also must disclose to all students: the cost of each program, the on-time graduation rate of each program, the median debt load for each program (as defined in the GE Standards), and the placement rate for each program beginning by June 30, 2013.
Click here to read entire article.
Email Ron at rholt@dunndavison.com.

David Mahan, a 29-year-old student studying digital design, says an angry Sen. Dick Durbin noticed him wearing a T-shirt for his college — Illinois Institute of Art, Schaumburg (ILIS) — while protesting outside an education hearing Durbin was holding at the Dirksen building last Tuesday. Mahan (a veteran who served in Iraq, Kuwait and Afghanistan) tells me that after some back-and-forth, Durbin said: “I don’t give a tick s— about ILIS.”

A Durbin spokesman denied the Democratic senator made that particular remark, but Matt Reams, another ILIS student who witnessed the encounter, insists that he did.

One might wonder why a college student would take such umbrage at criticism of his school, but Mahan tells me he has invested himself so much in ILIS that he feels an attack on it is tantamount to an attack on him.

There’s more to the story, of course. Durbin has called for more oversight of for-profit colleges such as the one Mahan attends. The hearing was intended to look at complaints that such colleges entice students to take on massive debt while failing to deliver on their promise of jobs that pay enough for graduates to pay back what they owe.

A proposal by the Department of Education would require for-profit educational institutions to demonstrate that their graduates are repaying student loans (and that they do not have a high debt-to-income ratio) before qualifying for additional loans. There have also been proposals that for-profit colleges should bear a percentage of the risk if their students default. (For-profits received more than $24 billion in federal grants and loans last year.)

Studies show that students who attend for-profit schools like Strayer, Devry, and The University of Phoenix, for example, currently have a lower rate of repayment than students who attend other schools.

These proposed changes, of course, could have a major impact on for-profits. Earlier this year, as part of the health care reform bill, the Obama administration pushed most private lenders out of the student loan game (they can still manage the loans) in favor of having the government almost exclusively make direct loans to students. As such, withholding government loans is a serious stick to wield over for-profit schools.

Critics charge that when it comes to picking winners and losers in higher education, as might be expected with the Obama administration, for-profits are now at risk — even though, on average, for-profit institutions charge less than private non-profits, according to the College Board (and less that public non-profits, once taxpayer subsidies of public schools are taken into consideration).

Nevertheless, a proposed “gainful employment rule,” which ostensibly seeks to ensure that graduates of an institution are able to find work after graduation — may well end up favoring traditional non-profit schools over for-profits. This, of course, has for-profit institutions worried.

For example, ITT Technical institute ran a full-page open letter to President Obama in Sunday’s Washington Post about it.

To be sure, there are some bad actors — colleges that run TV ads promising the moon to students, but then failing to deliver — but these schools are the minority. One school that could be hurt by the changes is ILIS, which is accredited by The Higher Learning Commission.
In a June letter to the editor, ILIS campus president David W. Ray wrote, “The proposed rule, cleverly termed ‘Gainful Employment,’ will remove student choice and deny access to programs and degrees for many. The result is that entire programs now available under Title IV federal financial aid could be ineligible if they don’t meet the Education Department’s unrealistic ‘one-size-fits-all’ debt-service-to-income ratio test. Career-focused education is at particular risk.”
(According to ILIS: “Of all 2008 graduates of The Illinois Institute of Art — Schaumburg available for employment, 88.1% were working in a field related to their program of study within six months of graduation, at an average starting salary of $31,722.”)

These for-profit schools serve a lot of non-traditional students like Mahan. Many are older students who often work part time, making one wonder if government skepticism may be at least partially due to how different these students are from the people making the rules. Ken Blackwell, a conservative columnist who also taught at Xavier University, thinks the proposed rules reflect elitism, noting that, “A college or university that primarily serves working-class adults is, apparently, somehow illegitimate to these liberals.”

Such criticism, however, is not merely coming from the right. Many of the students attending these schools come from poorer families than those attending traditional colleges. As The Washington Post recently editorialized: “The government is right to fashion reasonable regulation to discourage fraud or misleading practices, but it would be wrong to impose rules that remove an option that is especially useful for poor and working students.”

http://www.careercollegecentral.com/news/Dick_Durbin_Allegedly_Insults_Student_as_For-Profit_College_Debate+Unfolds

Tell Dick what YOU think – http://durbin.senate.gov/contact.cfm

I just skimmed the report, “For-Profit Colleges and Universities: America’s Least Cost and Most Efficient System of Higher Education,” from Nexus Research. I see significant praise for the University of Phoenix and other for-profit colleges. There is a great deal of data presented to respond to the current initiatives in Congress. I know that UOP sponsored this research group in or around 2008. This report should have listed the people that served on the “independent, nonpartisan research institute” so that the general public wouldn’t assume the research was biased by UOP.

The full report is available here: http://nexusresearch.org/1/NexusStudy8-31-10.pdf.

I’m going to make a plug for my employer, The College of St. Scholastica. The leadership here does an outstanding job of managing the operations associated with education. We actually had significant surplus of revenues last year when most public universities were struggling financially. We are efficient! This goes against the examples being used in the Nexus Report.

What did you think after reading the report?
Kurt

http://blog.kurtlinbergblog.com/

WASHINGTON, Sept. 1 /PRNewswire-USNewswire/ — The National Hispanic Caucus of State Legislators (NHCSL), today launched its web-based center on Higher Education. NHCSL’s creation of this initiative was fueled by its desire to closely follow for the Department of Education’s proposed gainful employment rule, a rule that NHCSL believes should be re-examined for unintended consequences before implementation. The website, meant to provide a central platform for updates on current issues surrounding access to higher education, will act as a portal for information, news and other resources.

“The Department of Education’s gainful employment rule and its impact on our student’s ability to continue to pursue higher education is concerning. Out of this concern, we have created an online center, where concerned individuals can learn more about the proposed rule and its potential impacts,” Illinois State Senator Iris Y. Martinez said. “It is our hope that the Department of Education will re-examine the rule and the impact it may have on the Hispanic community.”

NHCSL’s Initiative on Higher Education website explains the importance of access for Hispanic students and weighs in on various higher education issues that affect the Hispanic community.  Additionally, the website asks visitors to “speak out” and tell the Department of Education how they feel about the proposed gainful employment rule by filing a comment in the public docket.

“We are not alone in our concern about the proposed rule. Many groups and individuals have already made their voices heard and we encourage more to do the same. NHCSL believes that the Department of Education’s rule may be overbroad, a one-size-fits-all solution to the student debt issue that may harm already vulnerable students,” Senator Martinez said. “We hope that our comments will encourage the Department of Education to take another look and further study the rule for unintended consequences.”

To learn more about NHCSL’s Higher Education Initiative, visit http://higheredu.nhcsl.org/.

About NHCSL

The NHCSL is the premier national association of Hispanic state legislators working to design and implement policies and procedures that will improve the quality of life for Hispanics throughout the country. NHCSL was founded in 1989 as a nonpartisan, nonprofit 501(c)3 with the mission to be the most effective voice for the more than 300 Hispanic legislators. For more information visit www.nhcsl.org.

SOURCE National Hispanic Caucus of State Legislators

It has been over two weeks since the gavel came down at the U.S. Senate hearing examining for-profits and deceptive recruitment/financial aid tactics. The highlight was the release of videos of congressional investigators catching the largest for-profit schools “in the act.” While the hearing was little more than a forum for politicians to pontificate, it had a devastating impact. The secret-shopper scenes could not be defended and ever since, the media has been full of highly critical articles of how for-profit schools are taking gross advantage of students and taxpayers.

Over the past week, much of the chatter has turned to the implementation of so-called Gainful Employment regulations that would in effect establish price controls and eliminate certain occupational programs. These career programs are some of the most popular and profitable offerings for companies such as Kaplan, EDMC, and Corinthian Colleges. While the proposed regulations would apply to all institutions, the impact would mostly be felt by for-profit entities. Ironically, many of the schools that were highlighted by the secret-shopper videos are schools that would be most impacted by Gainful Employment.

Many of the larger for-profit education corporations have warned investors that regulatory changes and most specifically Gainful Employment could have a materially adverse impact on their businesses. These warnings coupled with all the negative press out there are not only hammering stock prices but also leaving many of the for-profits with questions on what to do next and what may happen next. Conversely, many non-profit institutions are trying to determine how they might be able to benefit from all of this.

STRATEGIES FOR FOR-PROFITS

Let’s start with ideas for the for-profits. The largest obstacles for having students obtain “gainful employment” so that they are in a position to benefit from their education and repay their student loans are a) making sure students actually persist until completion and b) securing appropriate employment opportunities for students. For-profits that have found ways to address these two issues (and there are ones that have) have a significant advantage.

For-profits should consider implementing proactive retention strategies as well as career placement solutions. This starts with providing each and every student with a caring, dedicated Retention or Reenrollment Counselor. The focus of this counselor should be to get to know each and every student as well as their unique needs. Furthermore, this counselor should make consistent contact with the student to check-in, motivate, and mentor. Whether it is providing a bridge to student services, social services, academic advisors, or financial aid; this counselor should be trained and empowered to help remove any and all obstacles that might prevent a student from completing a specific program. In essence, a counselor should act as a student’s advocate and be just as passionate about seeing a student graduate as an Enrollment Counselor might be to matriculate a prospective student.

Retention Counseling should be supplemented by professional Career & Education Advisors who not only help students write a resume or show them how to login to Monster.com but can prepare students for interviews, build confidence, and work as each student’s partner in securing employment. These advisors should be available to students not only before graduation but long afterward.

Another key strategy is administering a simple online personality assessment to all new students that measures student strengths and weaknesses in 15 key areas. The assessment provides counselors, career advisors, and faculty with a proactive glimpse of how each individual needs to be motivated, mentored, or coached.

These solutions seem costly and complex. The reality is they are, however, the ROI is substantial. Clients of ours that utilize these solutions see on average a 26% improvement in graduation rates and a 39% improvement in career placement even in today’s challenging economy. Not only do these solutions allow schools to better serve their students while providing better outcomes but they also help schools with their bottom line. Finally, schools that promote the existence of these services will recruit more students – especially in the current press climate!

For-profits also need to ensure their programs are at the cutting edge of employment demand – ensuring that students have a better chance to secure employment and maximize earning potential. The cumulative effect of all these strategies is to enhance enrollment revenue and profitability, possibly enabling schools to lower prices without reducing their margins which is so important to Wall Street.

HOW CAN NON-PROFITS BENEFIT

There is no way to sugar coat it. With each passing day, the for-profits are gaining a worse reputation than BP and the common cold combined! This provides non-profits with a unique opportunity to benefit at least in the short-term. While I prefer strategies that allow for long-term gains, a short-term advantage can help many non-profits generate more momentum that can produce long-term results. So what are the 3 key steps that every tuition dependent non-profit that loses student enrollments to for-profit schools should consider taking?

First, an applicable institution (schools that are not highly selective and cater to non-traditional students) must come to the realization that even though they may not compare themselves to a for-profit school, they may be losing students and relevance at the hands of for-profits. Stakeholders must decide to change and act with time of the essence so that they may effectively compete. Part of this decision involves taking risks and thinking outside of the box. There are many resources out there to help schools do just this. Further, institutions do not need to sacrifice their values or educational quality but they should realize that whether they like it or not for-profits will and (in the long-term) probably continue to be a growing competitive force that will draw students.

Next, schools must reevaluate their offerings. If non-traditional students are being served, fully online options should be available. Online programs should be of the highest quality, interactive, accelerated, and applicable to today’s most relevant career opportunities. In some cases, this may mean that institutions may need to look to offer new programs. In other cases, existing programs may need to be modified or reinvented. By way of example, an MBA with a concentration in Accounting that was popular 5 years ago may need to be retooled into a Masters of Accounting program that has much greater career relevancy today.

Finally, non-profits should not only focus on their strengths such as history, having traditional campuses, reputation, full-time faculty, and distinct missions but also on areas that have been traditional benefits offered by the for-profits – acceleration, career-focused programs, flexibility, and in many cases technology. Providing special support services including the type of proactive retention and career counseling mentioned earlier is also key – as it is a competitive advantage compared to most for-profits and non-profits alike.

Do you have other ideas? We would like to hear them!

John Hall
Greenwood & Hall
jhall@greenwoodhall.com

http://greenwoodhall.com/blog/2010/08/gainful-employment-into-gainful-advantage-how-non-profits-for-profits-can-turn-the-tables/

WASHINGTON — A long recession and a wavering job market have brought for-profit higher education institutions into the public eye as never before. Big advertising budgets have given them name recognition. Dramatic enrollment growth (fueled by increasing amounts of federal financial aid) and assurances to students that a degree or certificate is the path to a comfortable job in a specific field have brought them scrutiny.

Many newspapers, websites and TV networks have told the tale of programs at for-profit institutions that don’t prepare students for the jobs they’ve been all but promised — and plunge them into debt in the process. While the anecdotes are often true, they’re only part of the story; some for-profit colleges (the institutions themselves prefer the term “private sector” or “market funded”) do prepare students for good jobs and don’t sink them in an overwhelming pool of post-graduation debt.

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Title IV of the Higher Education Act of 1965 requires all for-profit offerings other than those clearly designated as “liberal arts,” and non-degree vocational programs at nonprofit institutions, to show that they prepare students for “gainful employment in a recognized occupation.” If they don’t, they’re not supposed to be eligible for federal financial aid dollars.

No one, the U.S. Department of Education has contended, seems to have a satisfactory way of determining which programs meet that standard. “It’s illuminating for us that when we ask institutions how they’re complying with this current law, we have not received adequate answers,” says Bob Shireman, deputy undersecretary of education. “And this is the law.”

Through a process of negotiated rule making that began last year after passage of the Higher Education Opportunity Act in 2008, the department has sought to develop a formulaic solution to the dilemma, in the form of regulations that define “gainful employment” using data on incomes and debt loads, as well as completion, job placement and loan repayment rates.

In essence, this is a crude mechanism to assess the quality and value of vocational programs. The “good” programs that help students get jobs without saddling them with debt could continue to exist and deliver Pell Grants and subsidized loans to their students. The “bad” programs — the ones found to lead graduates to jobs they could’ve gotten without the educational experience or that don’t pay well enough for borrowers to repay their loans — would be identified and put under closer scrutiny.

Representatives of the for-profit sector have aggressively fought such an approach, but most analyses so far suggest that the proposed regulations are unlikely to be a sector killer. The department has acknowledged the need for nonprofit and for-profit vocational programs, and has estimated that just 6 to 8 percent of programs that qualify for Title IV under gainful employment would potentially need to change under the proposed rules.

In research that’s been circulated but not yet publicly released, the Career College Association, the trade group that represents for-profit colleges and universities, has less-conservatively estimated that close to 20 percent of career college programs and a third of the colleges’ students would be affected. In what the department would consider a positive outcome, some of the “bad” programs would shut down, while others would lower prices or work to improve their completion and job placement rates.

Though some observers have suggested that rewriting federal financial aid policy would be a better way to address these problems, the Obama administration’s Education Department is seizing on the opportunity it has now, with Democratic majorities in both houses of Congress, to effect change. The revision of the gainful employment rules could be a once-in-an-administration (if not once-in-a-career) chance for Shireman — who has advocated for reform and increased protections for borrowers since serving in the Clinton White House — and his staff to tackle what they consider to be a major source of student debt.

Shireman himself does not put it that way. “We have to do everything we can in the regulatory process, as well as in the legislative process, to protect taxpayers and students,” he says. “We have these regulatory opportunities so we have to take them.”

He does acknowledge that he is unwilling to wait for the next renewal of the Higher Education Act, in 2013, when lawmakers would be most likely to make major changes in the law. “We’re not going to wait for a reauthorization to ensure that federal funds are being used appropriately.”

The department sent a version of the regulations to the White House Office of Management and Budget this month, and, though it’s still being revised, a final draft will be published by mid-June. Over the summer, there will be one last chance for public input and, by Nov. 1, the regulations will be printed in the Federal Register, to go into effect on July 1, 2011.

Defining Gainful Employment

The Education Department was slow to formulate a proposed definition of gainful employment. In November and December, during the first two week-long rule making sessions, the discussion among negotiators focused on whether the department had the statutory authority to establish a formulaic definition of gainful employment.

Many negotiators saw the department’s suggestions — particularly one that sought to determine the value a credential would add to a recent graduate’s earning power, and to use that to determine an acceptable maximum tuition — as price controls. The most vocal opponent was the lone negotiator representing for-profit institutions, Elaine Neely, senior vice president of regulatory affairs at Kaplan Higher Education. In December, Neely said she was “flabbergasted that [the department] would impose price controls when clearly Congress itself has not been able to come to the decision to do that on higher education.” By warning of a “slippery slope” toward price controls throughout higher education, Neely was able to get many representatives of nonprofit institutions on board in opposition to the proposal.

An idea that took up much less of the panel’s time was the department’s proposal to determine whether the starting salary in the field for which a program prepared students was sufficient to pay the average annual debt obligation of the program’s graduates. If the average debt load for a program’s graduates was $9,000 on a 10-year loan with a 6.5 percent interest rate, students would have loan obligations of $1,250. With a debt-service-to-income ratio of 5 percent, the starting income in that field would have to be at least $25,000 to be considered “gainful employment.”

By mid-January, as the department and negotiators prepared for the third and final round of rule making, this debt-service ratio had become the department’s preferred regulatory path. Based on a partial reading of a 2006 paper by Sandy Baum, of the College Board, and Saul Schwartz, of Ontario’s Carleton University, the department’s ratio became 8 percent. (While Baum and Schwartz’s paper discusses 8 percent as a generally accepted standard, most likely derived from mortgage underwriting standards, the authors suggest that a ratio as high as 18 percent could be appropriate for single people earning $150,000 annually.)

Under the proposal made in January, which remains the only complete definition made public by the department, vocational programs would be eligible for Title IV funds if their graduates’ median annual payments on a 10-year loan were no more than 8 percent of the Bureau of Labor Statistics’ 25th percentile of annual earnings for people in occupations for which a given program prepared students.

Programs that exceed 8 percent could still be eligible for Title IV funds by producing what the department considers good outcomes: by showing that its graduates’ annual earnings are higher than the BLS’s 25th percentile and keep the debt-income ratio below 8 percent; by documenting that students have at least a 75 percent repayment rate on federal loans; or by demonstrating a program completion rate of at least 70 percent and an in-field employment rate of at least 70 percent.

In the third round of negotiations, debate was contentious and without resolution. Terry W. Hartle, senior vice president for government and public affairs at the American Council on Education, said he worried about cost, privacy and the potential for “unintended consequences.” A former Bush administration Education Department official, Todd Jones, president and general counsel of the Association of Independent Colleges and Universities of Ohio, said he saw the proposal as ripe for lawsuits.

Department officials were unwilling to reconsider the approach entirely, though they were open to constructive feedback. “We put things on the table partly because we think they’re a good idea and partly to get input,” Shireman says.

The department started with its most extreme — but politically viable idea — and was ready to negotiate, but many negotiators seemed too intent on persuading officials to obliterate the proposals to make good, constructive suggestions.

And, since the third round of negotiations ended in late January, the department has continued to discuss the proposals with stakeholders and to get feedback. “We recognize that some people felt – even we felt – that there was not enough discussion at negotiated rule making for whatever reasons,” Shireman says. “So we continue to hear from associations and institutions, getting input from them that continues to be helpful, to continue to hear what suggestions they have about what the term gainful employment should mean.”

Who Would Be Hit

In broad terms, the Department of Education’s goal is to determine which programs really are preparing students for gainful employment and not sinking graduates into chasms of debt.

“There’s a tremendous number of students graduating with incredibly high levels of debt,” says Rich Williams, higher education associate at the U.S. Public Interest Research Group, who represented students on the negotiated rule making panel. “And in some cases they’re unable to enter the fields they studied at the levels they thought they’d be qualified for.”

Pauline Abernathy, vice president of the Institute for College Access and Success, anticipates the regulations “will lead to programs that are currently leaving students in terrible debt either having to change the quality of their programs or their cost structure.” Before Shireman joined the Obama administration, he was TICAS’s president.

But it’s unclear whether the department’s proposed rules would really weed out those programs and would do so in a way that kept all good programs up and running. “I don’t think you can draw a line that separates the wheat from the chaff perfectly,” says Mark Kantrowitz, publisher of Finaid.org. “The choices are tough — you either throw out the baby with the bathwater or, because you want to keep the baby no matter what, you’re going to get some bathwater too. I think that’s a reality that everyone needs to come to terms with.”

When applied to the existing landscape of vocational programs, the department’s approach would seem to favor programs at public institutions over private ones (either for-profit or nonprofit), those that required fewer credits earned over more credits, and those in higher-paid fields like nursing and information technology over lower-paid careers in the arts.

Because the rules would apply only to certificate programs at community colleges, state universities and private, nonprofit institutions, they’re less likely to force any real change at nonprofits. Tuition on these programs at public institutions is so low that it’s relatively rare for students to take out loans. If they do, they’re likely to be small. Even at private nonprofits, where tuition is likely to be of a similar magnitude as at for-profit colleges, the fact that the rules apply only to non-degree programs will keep many programs out of regulatory reach.

Shireman and other department officials have insisted in many instances that the department is not “out to get” for-profit colleges and that it is not the department’s intention to regulate the sector out of existence. “We have made it quite clear that we are interested in improvement and outcomes all across the spectrum, all across the sectors,” he says.

Nonetheless, it seems clear that the gainful employment regulations will force the most change on for-profit institutions, which will have to choose between lowering tuition, improving student outcomes or shutting down programs that don’t align with the rules. In the short run, at least, all of these options would hurt the institutions’ bottom lines.

Even if some programs end, says Abernathy, of TICAS, “there will be plenty of other for-profit programs that will be very eager and capable of being able to meet that need, but that do so in a way where students and taxpayers are better off.”

For a field in which a for-profit institution offers multiple certificate and degree options, the ones that cost the least — and often require the fewest credits — are the ones least likely to be regulated out of existence. If an institution offered certificates, associate degrees and bachelor’s degrees in, for example, culinary arts, that all led to the same Labor Department-classified jobs and the same Bureau of Labor Statistics-reported 25th percentile of income, it’s logical that the 8 percent rule would make the preferred outcome a certificate and not a bachelor’s degree.

Kantrowitz, of Finaid.org, says that though the department’s existing proposals “really didn’t consider the impact on bachelor’s and graduate degrees,” he thinks the next draft of regulations will because the department hasn’t shown any indication of wanting to discourage students from pursuing longer programs. “Take an associate’s degree versus a bachelor’s degree. Students are in school twice as long, paying twice the tuition, but they don’t have twice the income.”

Though programs would have the option of collecting their own salary data rather than relying on the BLS numbers, institutions often find it difficult to collect this information. As of now, observers say, few institutions have a comprehensive view of their graduates’ incomes.

Kantrowitz and others have suggested that the department use different labor data — in his own calculations, Kantrowitz used federal Census data, which details age group and educational attainment but not field of employment — but the ideal data set does not exist.

Apollo Group, which owns the University of Phoenix and other institutions, said in a March 30 earnings call that it has begun the process of analyzing its programs. But, “given the number and range of disciplines offered by our universities as well as the uncertainty regarding the implementation process of the draft proposal, our analysis is both extensive and complex.”

In mid-March, analysts at Morgan Stanley said they thought that Education Management Corp. (which runs the Art Institutes and Argosy University, among others) and ITT Educational Services would need to undergo the most widespread change to meet the regulations because of high tuition rates and, at Education Management, an enrollment that leans heavily toward low-paying arts fields.

Two companies that would have very few endangered programs, according to Morgan Stanley: American Public Education, Inc., which focuses on serving members of the military and public servants, who are less likely to take out student loans; and Capella Education Company, whose programs have very low loan default rates and would be able to qualify for Title IV funds under one of the alternative definitions of gainful employment.

Gregory W. Thom, Capella’s vice president of government affairs and general counsel, agrees that his company would probably have to make few changes to abide by the gainful employment regulation. “Capella is viewed by folks within the department as a high quality institution,” he says. “We have a degree of comfort that however this plays out, Capella would be fine and Capella would be in good shape.”

And yet, until the final regulations go into place and the institution can collect and calculate all the appropriate data, Capella can’t be sure that it’s out of the woods. “There are so many moving parts,” Thom says. “It’s premature to engage in speculation on how this is going to play out … at Capella on a program-by-program basis.”

A leader at another for-profit institution with low cohort default rates said he also thought his programs would meet at least one of the gainful employment rules, but still worried that they might not. Insufficient data and a still-unclear sense of the precise regulations the department will decide upon has left him feeling a bit uneasy about the outcomes.

The Feedback

At every hint that the Department of Education is backing down from proposed regulations that would force some programs offered at for-profit colleges to lower their prices, improve their outcomes or shut down, Wall Street analysts and the for-profit institutions breathe a sigh of relief.

When Secretary of Education Arne Duncan testified before the House of Representatives’ Education and Labor Committee on March 3, and was questioned on the gainful employment regulations, his comments that the department was “by no means wedded to any one direction” and “[didn’t] want to be overly heavy-handed” were perceived by for-profit boosters as signs that the department was open to scaling back the regulations.

Before and since, the Career College Association and lobbyists for for-profit institutions have pounded the halls of Congress trying to get members to put pressure on the department. Some members of the Congressional Black Caucus sent a letter to Duncan charging that the rules are discriminatory because for-profit institutions disproportionately serve minority students. A bipartisan group of 18 House members wrote to Duncan asking that he pull the plug on the department’s approach altogether.

Last week, when a report from Credit Suisse cited someone “close” to the Office of Management and Budget as saying that the department had seemingly decided to soften one of the alternative methods of qualifying for Title IV, higher education stocks soared as the rumor spread. The source told the bank that the option to demonstrate a program completion rate of at least 70 percent and an in-field employment rate of at least 70 percent had become a 50 percent completion rate and a 70 percent employment rate.

Though it is one of the possibilities the department is considering, the switch to a 50 percent completion rate is not final. Officials submitted a draft to the OMB to begin the process leading to the publication of rules and the public comment process, but are said to be continuing to analyze data and listen to feedback.

The for-profit institutions tout these small bits of news and others as indications that the department may be backing away from its tough-line approach, but it is unclear whether any perceived motion on the department’s part will actually materialize as dramatic changes to the next draft of regulations.

Teddy Downey, of Washington Research Group, says he doubts the department would take any steps that would dramatically lessen the reach of the regulations. In an e-mail message last week after the Credit Suisse rumor circulated, he said he anticipates “a very low chance that this change will amount to a truly significant loophole.”

In an interview, he went further. “I don’t think the department would do anything it doesn’t think will have the desired effect. I think they have the data to support whatever they choose to do.”

Kantrowitz, of Finaid.org, is skeptical of whether the department has the data, but he agrees that the department isn’t backing down on gainful employment. “They’re not going to do anything that doesn’t have teeth in it,” he says. “It may just be some kind of educated guess, but it’s going to have teeth.”



By Kelly Field

Washington

Warning that a proposed limit on student borrowing would force thousands of programs serving low-income students to close, the Career College Association on Thursday released an alternative that would require for-profit programs to provide prospective students with more information about their graduates’ debt levels and salaries.

The move comes as the Education Department is finalizing a rule that would withhold federal aid from for-profit programs whose graduates are likely to carry high debt-to-income loads. An early version of the “gainful employment” rule, released during a negotiated rule-making session that ended in January, put the cap on loan payments at 8 percent of graduates’ expected earnings, based on a 10-year repayment plan and Bureau of Labor Statistics. Programs could escape penalty by showing that their graduates’ true earnings were higher than the government averages or that 90 percent of all graduates repaid their loans. (Existing law requires for-profit colleges to show that they are preparing their graduates for “gainful employment,” but the Department of Education says the term hasn’t been well defined.)

The association, which represents for-profit colleges, says the department’s proposal lacks an empirical basis and appears to be driven by stories of students who took on large debt loads to finance worthless degrees. The department recently rejected the association’s Freedom of Information Act request seeking the data behind the 8-percent limit.

“The department is basing this on anecdotes, not systematic research,” said Harris N. Miller, president of the for-profit college association.

To bolster the case for its alternative, the association released a study of more than 10,000 for-profit college programs estimating that a fifth of those programs would exceed the 8-percent cap and be eliminated. The study, which was conducted by a professor at the University of Chicago, also predicted that more than 300,000 students would be displaced by the proposed rule. However, the study did not consider how many programs would be exempt from the rule because their graduates earned more than average or repaid their loans.

Rule Due Out Soon

The department is expected to release its rule by mid-June. Last week, analysts at Credit Suisse reported that the department is weighing another exemption to the rule, for institutions with a completion rate of at least 50 percent and a job-placement rate of at least 70 percent. The first draft of the rules had set both rates at 70 percent, but the exemption was removed from later drafts.

In addition to expanding disclosures to prospective students, the association’s plan would require programs to prove that they prepare students for employment by vetting them with employers in the field and making sure they pass licensure and certification exams.

Asked about the association’s study and alternative proposal, the department issued a statement saying it was “pleased that many participants in the program community have expressed views and presented information in this important area.

“We look forward to considering their comments as they react to what we will propose in our notice of proposed rule making,” it continued.

Congress weighed in on the controversy in March, sending a letter to the Education Department that raised “serious concerns” about the department’s plan and urged its officials to consider “other means to address overborrowing that would not create additional barriers to service for at-risk students.” The letter, which asked the department “why your goals for this proposal cannot be met simply through expanding disclosures,” was signed by 15 Democratic and Republican lawmakers.



By mschnittman

In Senator Harkin’s opening remarks during the recent congressional hearings on higher education, he stated, “We have a responsibility to ensure that taxpayer dollars are being spent wisely, and that for-profit colleges are serving students, not just shareholders.” As the CEO of TopSchool and previously serving as the president of eCollege, I understand the need to serve shareholders. However, I couldn’t agree more that the ultimate goal of those of us in education is to serve the student.

For-profit colleges have a huge opportunity to move education forward, and at a great value to taxpayers. They have already made great strides in driving access, innovation and a trained workforce.

ACCESS:
For-profit colleges make education possibilities a reality for the underserved, non-traditional student population. The Department of Education states that the Student Aid Objective is “to ensure that low and middle income students have the same access as high income students do.”

The for-profit education industry delivers an attractive alternative to students who are lower income, minority, older and/or more financially independent. Roughly 76% of for-profit college students are financially independent compared to 50% at public schools, and 45% of for-profit college dependent students come from families in the lowest income quartile compared to 24% at public and 22% at private non-profits.1 These for-profit college students are not choosing between paying their own way or getting federal financial aid – rather they are choosing between not getting educated and federal financial aid.

In fact, according to the U.S. Department of Education, the average Estimated Family Contribution for a student attending a four-year, non-profit school is almost $17,000, which is 123% greater than the $7,500 average for a student attending a four-year, for-profit school. Ironically, this is almost exactly the same ratio of the federal aid required by a student attending a for-profit school compared to a non-profit school.

INNOVATION:
For-profit colleges sit on the forefront of innovation when it comes to flexible delivery and schedules, giving more students the chance to succeed.

When you consider that 60% of for-profit college enrollments occur on a rolling basis, 2 meaning frequent intervals during the year, flexibility is key. For-profit colleges invest significantly in meeting the complex needs of their non-traditional students through online education, night and weekend offerings, and smaller suburban/satellite campuses. This consistent drive to satisfy their students has resulted in 65% of for-profit college students attaining a degree within six years after enrollment, slightly higher than students attending four-year, non-profit schools.3

SKILLED WORKFORCE:
For-profit colleges also focus on aligning their programs with the fields and jobs that are most in demand. According to Imagine America Foundation, for-profit colleges currently enroll more students (44%) in high demand fields than do public (18%) and private, not-for-profit (13%) institutions.2 In fact, 17 of the 20 fastest-growing occupations are in the key focus areas of for-profit schools, including the healthcare and computer/data processing industries, with an estimated 1.8 million jobs being created in these fields through 2016.2 These are positions that graduates of for-profit colleges can fill.

Not only are for-profit colleges training students, but they are getting them placed in the workforce. Consider the percentage of students who are employed within six months of graduation – in 2009, DeVry University reported a 90% placement rate for these students, while larger universities such as UCLA and Johns Hopkins reported only a 45% rate.4 And overall, 76% of for-profit college students who completed an award in 2005 were employed directly following graduation.2

WHAT DOES THIS MEAN FOR TAXPAYERS?
Before we jump into the numbers, I think it important to point out that both for-profit and non-profit models work effectively. For-profit institutions are similar to state systems of higher education in that graduates of both models step out into a demanding job market after earning such degrees as an Associate’s in Accounting, a Bachelor’s in Finance or Computer Engineering Technology, a Master’s in Business Administration or Education – and the list goes on and on.

That said, what do taxpayers invest in students at for-profit schools? And to round out the equation, what is the taxpayer investment to support students at non-profit schools as well?

For-profits
Let’s start on the for-profit side. I analyzed four large, publicly traded for-profit institutions – DeVry, ITT, Strayer and Corinthian Colleges. Using the data available in their most recent annual reports, I wanted to determine the taxpayer investment required to educate one student for one year. I calculated a “net taxpayer investment” by taking the annual Title IV revenue received for all four schools, in this case $3.5 billion, and subtracting the annual taxes provisioned by the institutions, in this case $377 million. As noted in the table below, this number, divided by the student population served, which was around 313,000, resulted in the net cost to taxpayers of roughly $10,000 to educate a student for one year at one of these for-profit schools.

Non-Profits
Keeping that equation in mind, let’s take a look at the non-profit side. In addition to federal financial aid, students enrolled in public, non-profit institutions reap the benefits of state funding for education. You’ll notice that no federal taxes are provisioned for these non-profits as they don’t pay them.

Since I reside in Colorado, I’ve used publicly available information about our own higher education system. According to the Colorado Department of Higher Education, in the Fall Term 2009, the state enrolled just over 240,000 students in its 28 two-year and four-year institutions. During that same year, the Department was allocated almost $2.8 billion in state funds and received over $1.2 billion in federal student financial aid. The table below shows that the net cost to taxpayers to educate a student in the Colorado Department of Higher Education in 2009 was almost $17,000, which is 66% greater than at the for-profit institutions.

Federal Loans
Of course, if we are looking at a net investment to taxpayers, we need to remember that much of the federal subsidies for higher education come in the form of loans. For a variety of reasons, students default on their loans. According to an analysis by the Chronicle of Higher Education, the 15 year loan default rate for for-profit students enrolled in four-year programs is 30%, as compared to 15.1% for non-profit students.5

Using the example from the Colorado Department of Higher Education, when you account for the percentage of education subsidies that are loans (compared to grants or state appropriations) and the difference in default rates, the adjusted taxpayer investment per student at a for-profit school is roughly $4,100, compared to $13,200 at a non-profit school, driving the State of Colorado non-profit education to a 224% premium over for-profits.

THE VALUE TO STUDENTS AND TAXPAYERS ALIKE:
Both for-profit and non-profit institutions play valuable roles in our country’s need to educate the masses. All aspects of our society benefit the more educated we become. The fact is that we need both choices to effectively serve our country’s diverse population.

We can’t deny that the high growth, for-profit college industry should be held accountable for its recent issues, including the misguided information given to students by admissions representatives, higher default rates and so on. However, we also can’t ignore the tremendous value these schools provide to students. I believe the overall value to taxpayers is well worth the growing pains.

The critical factor in both the for-profit and non-profit models should always be the students. Students need accurate and credible information to make an educated choice in determining their path. At the same time, schools need to use data to better understand the type of student who is a good fit for their program and the ways in which they can ensure the success of that student.

In my career in the education market, I’ve learned the importance of data in providing a quality educational experience, both in the way education is delivered and the way it is managed. This principle guides everything we do at TopSchool, as we have built a next generation student information system – and that is exactly what the leaders of both for-profit and non-profit schools like about our model.  The majority of the data and information that Senator Harkin and others want to provide to prospective students can be accessed through a system like ours. We believe the key is making it accessible and available to the right audiences.  In addition to the many uses for prospective students, access to data can also guide college and university leaders to better understand their students and drive stronger learning outcomes, student satisfaction and retention.

Regardless if the school fits the for-profit or non-profit model, those schools that rely on data to make decisions that benefit their students will deliver a tremendous value not only to their students, but also a high return to us as taxpayers, to our workforce, and to the future of our country.

TAXPAYER INVESTMENT IN HIGHER EDUCATION:

Taxpayer Investment in Higher Education

Last week, I spent a few days in Pennsylvania and have returned to Denver energized for things to come. Along the way, I was stuck behind a number of major traffic accidents and was re-routed extensively. It gave me an opportunity to see much of the PA country side and was worth the detour.

A colleague and I had a great meeting with a business college in the region. They have significant growth plans and are looking to utilize a student management system to increase operational efficiencies. We all look forward to further discussions with them.

I was honored to be invited to speak at the Pennsylvania Association of Private School Administrators Annual Conference.  I welcomed the opportunity to discuss the power of Software as a Service (SaaS) solutions to the attendees. SaaS solutions are flexible, low maintenance and can help schools focus on recruitment, retention and placement, rather than IT. It was great to see schools embrace the concept of SaaS.

In addition, I was excited about Mike Artim’s presentation, and he didn’t disappoint. Mike is the Executive Director of Cambria-Rowe Business College. Cambria-Rowe has been talking with employers in the region to better understand the skills and competencies they are looking for to fill positions. The school is evolving its program curriculum to adapt to the changing needs of the employers. Mike also discussed how Cambria- Rowe is leveraging technology in the classroom through the use of digital content, iPads and other vehicles.

Thanks to the efforts of the group at PAPSA for an enlightening career college conference, I look forward to participating next year.

I’m always looking for feedback, how is your school leveraging technology to create efficiencies?

Sources:

1U.S. Department of Education, National Center for Education Statistics, “National Postsecondary Student Aid Study 2003-2004 (NPSAS: 2004).”
2Imagine America Foundation, “Economic Impact of America’s Career Colleges (2007).”
3U.S. Department of Education, National Center for Education Statistics, “1995-96 Beginning Postsecondary Students Longitudinal Study, Second Follow-up (BPS: 96/01).”
4Daniel Hamburger, DeVry University, “The Vital Role of the Private Sector Higher Education,” 2010, (data originally pulled from institutional websites, May 2009).
5 The Chronicle of Higher Education, “Government Vastly Undercounts Defaults” July 11, 2010.

By Richard Vedder

I have read and heard some commentators say that the Obama Administration is at war with for-profit private higher education. While in general agreeing with that I would amend that statement to say that the Obama administration has had several battles with the for-profits as part of a bigger war against capitalism. In my view, basically the president is a socialist, a person who craves for collectivist, government solutions to problems, and is deeply distrustful of private enterprise. Thus the government has taken control of iconic private automobile and financial service companies, has viciously attacked Wall Street greed, has tried to manipulate more than ever the private use of money and credit, is favoring a huge increase in taxes on capital gains, etc. I am among those who believe that the current anemic recovery directly reflects the fear that businesses have of Obama, and their corresponding unwillingness to hire workers and invest. Gold prices are soaring, and stock prices are stagnant, a classic indication of poor investor confidence.

For- profit companies are merely part of the capitalistic Evil Empire that Obama despises. Apollo Corporation, Corinthian Colleges, Bridgepoint Education, Kaplan University — these companies are bad mainly because they are in the business of trying to create wealth for private investors. The current bashing of the for-profits by both the administration and Congress needs to be put it that context.

That said, there ARE abuses that the for-profits have committed. No doubt there are recruiters who have misled persons as to the potentialities of a for-profit education, putting them into debt. And abusive practices should not be subsidized by the taxpayer. That said, however, the beating up on the for-profits is largely ideologically based and manifestly unfair. A large portion –indeed probably a sizable majority–of the educational malpractice going on in American higher education is occurring at the not-for-profit schools so richly subsidized by the taxpayers –and they are being given a pass as Congress considers hearings.

It is a fact that the four year graduation rate at the University of Texas at El Paso is about four percent –only 1 out of 25 graduate in a timely manner. Where are federal hearings about that? A smaller proportion of students graduate from UT El Paso than from Corinthian Colleges, but why is Corinthian being threatened by tough new legislation and UT El Paso is not? The loan default rate at Central State University in Ohio is vastly higher than at Kaplan University –why is no one investigating Central State, at either the state or federal level, while Kaplan is scurrying to meet probable new federal mandates? By many indicators students fare more poorly at Chicago State or Denver’s Metro State than at Strayer University, a major for profit. Why are we not talking about legislation curtailing Chicago or Metro State? Why is the government talking about limiting the percentage of graduates of schools like the ITT Institutes or DeVry who pay more than eight percent of their income in student loan interest payments, when almost certainly the problem is probably as bad at Grambling State or Northwestern State University?

In taking on the for-profits, the President and Congress are attacking the very schools that have contributed importantly to reaching an Obama goal –vastly increasing the proportion of high school graduates with exposure to higher education. Some 38 percent of the increase in student head count between 2008 and 2009 occurred at for profit schools –more than at not-for-profit four year public schools (27 percent) or two year public community colleges (32 percent). Many traditional universities don’t want to recruit ghetto and inner city children, or teach in the evenings and Saturday mornings, or do other things distasteful to the life style of the academic elite.

The People (as in “government of the people, by the people, and for the people”) like for-profits, but what Scott Rasmussen calls the Political Class, does not. This is just another example of the huge divide, unprecedented in modern history, between the Political Class and the general public and our political leaders. Our nation is out of political equilibrium, and that means big changes are coming politically, probably starting at the polls this November.

I would note that this huge brouhaha would not have occurred if we had not embarked on a disastrous expansion in federal loans for students beginning four decades ago. Bottom line, too many people are going to college. Too many people are ill-equipped for the rigors of higher learning, manifested in some watering down of standards and high dropout and loan default rates. There are too many students going to too many colleges and paying too much money and getting too few good jobs. Until we wake up to that reality, we will not have truly efficient and worthwhile higher education reform in this country.

And the comments:

Comments

1. haohtt – August 31, 2010 at 08:16 am

The answer to the article’s question is, emphatically, yes. The Obama Administration is filled with traditional academics and career politicians–people who have never produced wealth or profit themselves, but always lived off the taxes and tuition of others. While unscrupulous actions by certain for-profits deserve to be exposed and dealt with, my Vedder is correct that similar actions by non-profits should not be ignored. The irony and blatant hypocrisy of an administration and congress that attacks any business that dares to run effectively and efficiently enough to make a profit, while they themselves are unable to run their own operations without sinking ever farther into the red, is the real scandal that needs investigation and action. What occurs at Phoenix and Kaplan are small potatoes compared to what occurs in Washington DC.

2. dank48 – August 31, 2010 at 09:26 am

Precisely. The question of for-profit or not-for-profit is a red herring. The real question is whether schools are in fact functioning as they should. Too many aren’t.

3. 11180655 – August 31, 2010 at 09:30 am

Take a look at http://www.ccweek.com ‘Top 100’ link and review the listings of associate degree producers in areas such as Computer Science, Engineering Technologies, African-Americans, and on and on, and you will see the tremendous successes these colleges have had in graduating the highest employer demand skills areas, including success with minorities. Look at much larger community college systems that have graduated a handful of minorities with computer science degrees, while there are smaller for-profit colleges graduating many times that of their local community college counterpart.

This administration has deservedly given non-traditional students year-round Pell Grants, increased loan limits, and an excellent military benefits program….but shame on these for-profit colleges for providing these students the programs and services they desire. This administration thinks these students are making poor decisions, but they deserve more credit than that. The majority of adult students pick the program and institution that provides them the most efficient and effective path to their career goals. Don’t take that away from them.

4. kolds – August 31, 2010 at 09:36 am

This article is full vitriol and gross generalizations (about viewpoints and categories of people). What I find amazing, in this needed debate about for-profit higher ed (and how it is and should be regulated), is that you rarely find constructive enagement with the issues and options. As a foreigner living in the US I know people like to debate, but the tone of the debate, as exemplified in the tone of this piece, is really rather sad. More ideological warfare, more heat vs light.

5. giana711 – August 31, 2010 at 09:40 am

Obama comes from the education field as he himself was a professor for many years and knows firsthand the long term damage that FP’s do to their students. While his administration has made some mistakes, he is NOT a socialist and he was born in Hawaii.

The main difference between Obama and the rest of the past few presidents is that he gets it when it comes from higher education. Obama understands that Community College plays a vital role and knows about the bad FP apples. He advocates for one and fights the other.

Fear mongering,partisan politics should have no place higher education. FP’s growth should be limited and wee need to seriously look into our accreditating agencies and regulating them or eliminating them for one strickly regulated national agency funded by congress to eliminate conflict of interest.

a bit dissapointed that the chronicle even went ahead with this opinion piece…

6. hms3683 – August 31, 2010 at 10:14 am

Poor Obama! Stand up against the right to turn a good deal into a rip-off and you become a socialist. The business model of the FP guarantees that more money will be spent on less educational service than the NFP – while ever-growing profit is returned to the stockholder.
The records of UTEP and Chicago State appear abysmal in terms of what they offer for the time and money students invest. But the tax dollars flowing into these institutions could ultimately be subjected to the scrutiny of public oversight. If they reach a bad enough point, the public will demand that they revise their services and priorities. In theory, barring coruption and dealmaking, UTEP and CS should be seeing greater oversight of their accreditation. FPs can operate without accreditation. In the FPs, there is no accountability. The worse the deal to the student, the greater the profit to the ownership.

7. cwinton – August 31, 2010 at 10:20 am

It’s always a nice diversion to excuse misbehavior by citing the misbehavior of others. Without question the federal student loan program has drawn a lot of bad actors, including the financial middlemen who quietly profit while others are left holding the bag. Apparently Mr. Vedder has no problem with the kind of business plan that characterizes many for-profits, namely one based almost exclusively on tapping taxpayer backed resources, in this case student loan money. Well, if you live off taxpayer money in my estimation that makes you in effect a government agency and so subject to government regulation. The for-profits are on the hot seat because they are the new kids on the block. Whatever happens with them will inevitably, Mr. Vedder notwithstanding, come down on misbehaving not-for-profits. Interestingly, Mr. Vedder is one of those traditional academics haohtt (#1) is so quick to criticize.

Since Mr. Vedder chose to stray off into areas unrelated to his thesis (e.g., his feeble attempt to link Obama and socialism), I might as well do so as well, the point being that a major role of government is to provide a sound monetary system, which means that for any market based on the monetary system (i.e., the financial sector), it is incumbent on the government to insure it is run in a manner that will not endanger the stability of the monetary system. We don’t have to look any further back than 2008 to see what lax regulation of financial markets leads to. Tightening the screws on Wall Street and banks is not socialism, it’s sound government practice. As for the rest, massive spending beyond our means (which was actually initiated early on in the previous administration) is simply an attempt at keeping our increasingly unsustainable economic approach afloat for awhile longer, hoping against hope to come up with some means of avoiding runaway inflation or the economic collapse of a major depression, likely accompanied by anarchy. I think we all had better hope for another bit of economic good fortune such as the Clinton administration enjoyed, since tax cuts absent spending constraint certainly hasn’t helped, and it’s hard to imagine how continued spending beyond our means can possibly do so. One thing is for certain, we need fresh ideas, something economists like Mr. Vedder are quite short of supplying.

8. isambard – August 31, 2010 at 11:12 am

If Obama had a few more socialist inclinations, the country would stand a better chance of surviving the next thirty years or so. The first thing he’d have done is looked for ways of getting health care down from 16 percent of GDP to around 12 – higher than France or Germany, whose systems are vastly more effective than the USA’s. No socialist could have hired Obama’s economics team. As for for-profits, there’s no reason in principle why they can’t deliver perfectly decent, non-academic, training; the dodgy area is a problem they share with community colleges, which is the claim that a fairly low-level general, non-vocational education will do a lot to increase the earnings of the students who take it. It may make them nicer, better citizens, or more interested in their existences, but absent an enormous number more jobs of the appropriate sort than the economy seems likely to produce in the next decade, it won’t improve their earnings, and has to be a bad bargain, economically speaking. Attacking them for selling something they can’t deliver is hardly an attack on capitalism. Not, for the matter of that, that American capitalism as practised for the past few years has been anything a true capitalist could be proud of; it’s depended almost entirely on leaching off government in innumerable obvious ways, while berating government for the sloppiness that allows it to do so. Talk about biting the hand that feeds you…

9. senecan – August 31, 2010 at 11:57 am

The “president is a socialist, a person who craves for collectivist, government solutions to problems, and is deeply distrustful of private enterprise”? Why is this appearing on the Chronicle Web site rather than the Wall Street Journal editorial page?

10. betterschools – August 31, 2010 at 12:20 pm

Growing bodies of evidence will convince the open-minded that Mr. Vedder is correct in his assessment of President Obama’s intentions.

Through sources present in the Whitehouse discussions, we have learned of his belief that the community colleges can assimilate the business he is intentionally taking from the for-profits. Somehow, he believes the taxpayers can and should come up with the $800 billion it will take to meet his education goal of having the highest graduation rate among developed nations.

In October, President Obama plans to announce a stimulus package for the community colleges. Apparently, he is not a student of history. Were he so schooled, he would know that public colleges quickly suck up federal stimuli with tuition and fee increases, returning access to its pre-stimulus level.

I recognize that different ideologies can lead us to different positions with respect to the for-profit v. public debate. I hold mixed views myself and I especially want to see the publics succeed in their challenge of becoming efficient and adapting to changing needs. What is so personally disappointing is to have witnessed the uninspiring bag of dirty tricks the Obama administration used to get its way by trashing the for-profits. Does it not have the skill to get its way on the high road?

This administration spread lies (for-profits do not cost the taxpayer more, they cost significantly less, even with all defaults loaded into the equation), half-truths (for-profits do have problems with graduation rates, loan amounts, and loan repayments when educating the underclass but the nation’s state institutions operating in underclass areas of the nation have even lower rates; see Alexander’s analysis, at the link below), and innuendo (employers do not disdain the for-profits; we have conducted employer impact research for 16 years, interviewing more than 20,000 employers in depth and can easily refute this claim with hard empirical evidence). As an early supporter of this administration, I have been disappointed to see the arrogance and deceptive practices with which it pursues its agenda.

If you hate for-profits or if you think they can do no wrong, little will change your mind. If you recognize the complexity of this issue and can understand that the healthy functioning of the for-profits, publics, and independents is essential to meeting the nation’s education needs, you will be informed by the information posted at this document repository.

http://www.intered.com/for-profit-regulation

Take a look at Apollo’s report. DeVry’s response to the NPRM, Carl Barney’s response to Secretary Duncan, Steve Alexander’s analysis of loan amounts and repayments in public universities serving a portion of the underclass, Mark Kantwowitz’s FA analyses, The Parthenon Group’s comparative analysis, and others.

If you think the publics are already healthy, look at this review http://www.intered.com/higheredbriefing/2010/8/27/are-public-universities-responsible-for-the-success-of-for-p.html.

President Obama won the election and his party holds Congress. He has the right to change education policy in accordance with his vision. He does not have the right to lie about, cheat, and steal from the private sector. I thought it was a crisis of exception when he did all three with respect to securing largely undeserved benefits for unions at the expense of Chrysler’s legally secured bond holders. No such crisis can serve as an excuse today.

Keep the President’s education goals in front of you. Unless all of us speak out, this approach to secure those worthwhile goals will fail badly. Besides, its methods are deplorable.

11. 11132507 – August 31, 2010 at 12:46 pm

Well, the Chronicle does have to keep things fair and balanced, which in the rest of the world outside Fox News, means presenting multiple viewpoints. So Chronicle readers can read Mr. Vedder’s perspectives. Or turn the page.

Face it, if Obama announced today that the sun rises in the East, the right wing would find ways to use that as evidence that he’s a socialist, a Muslim terrorist and I don’t know, is going to force us all to wear leisure suits. But as much as the Chronicle does have, I suppose, a journalistic responsibility to present different opinions, it’s still disheartening to see a piece in which we get phrases such as “war against capitalism” and “the capitalistic Evil Empire.” All you’d need to do to this piece to make it Glenn Beck-ready is add a comparison or two to Hitler or Stalin, and you’re good to go.

When Republicans question government spending on flawed programs, it’s done in the name of fiscal responsibility and stewardship of taxpayer money. When Obama does it, it’s because he’s trying to destroy America.

12. jakarlson – August 31, 2010 at 02:52 pm

Indeed disappointing that The Chronicle would publish such a ‘slam’ about our president. You should know better. I think I’ll push the ‘report abuse’ button so you can re-read Vedder’s article.

13. leekantz – August 31, 2010 at 03:36 pm

Didn’t this investigation begin in Congress, not the Executive Branch? And doesn’t Obama’s Secretary of Education repeatedly say that the for-profit education sector has an important role to play in higher ed? I guess that makes Obama a socialist, huh?

There can be a reasoned argument that the for-profits are being portrayed in a negative light, and in an unfair light compared to the inadequacies of the non-profit education sector. But if you’re going to start that argument with the premise that our president is a socialist, it’s a poisonous politics that turns off 50% of our country (and probably a higher percentage of Chronicle readers), and it adds absolutely nothing to this discussion.

Obama may be guilty of silence on this issue, but I would imagine the issue is somewhere below 590 on his list of things to attend to.

Let’s have a reasoned discussion on this issue without turning into Glenn Beck’s and Keith Olbermann’s.

14. reisberg – August 31, 2010 at 04:00 pm

I am not convinced that giving Mr. Vedder (Darth Vedder?) space for his views is required for us to have “balance” in The Chronicle. Mr. Vedder plays fast and loose with data and makes outrageous accusations that have no basis. I think Fox news is a more appropriate platform for this type of ideological rhetoric.

The most laughable part of his specious argument is that the for-profits would not be profitable if they did not exploit federal programs to fund their students. If you take government out of the equation, they collapse. Additionally recruiting practices of the for-profits (paying commission to people for recruiting students) has to make you wonder whose interests they serve–the incentives in the operation are skewed against the students.

15. betterschools – August 31, 2010 at 04:24 pm

@leekantz,

Reasonable questions but, no, the assault began with the Whitehouse, specifically the President’s untested vision of new community colleges and the thought that he could secure the foot traffic to make them work by suppressing the successful for-profits and, in effect, stealing their business. A former member of the planning committee the community college logic in a conference call two weeks ago. Best guess, the Harkin committee represents a back-room quid pro quo as part of the coordinated discrediting strategy. I agree that this topic has to come in low on a stressful presidential agenda but honesty is honesty. This guy whom I once respected highly is looking more and more like another Chicago trained politician who happens to possess exceptional public speaking abilities and personal charisma.

If you have more than a passing interest in this, look at the plethora of documents at http://www.intered.com/for-profit-regulation and make up your own mind.

16. tgroleau – August 31, 2010 at 04:35 pm

Rather than argue about the tone of the article, I’ll hit two points:

1) Yes, of course the standards and regulations should be the same for both for-profit and not-for-profit schools. If our tax dollars flow into either type of school, they should have to meet the same standards. Based on the Chronicle articles I read, I didn’t think many of us felt otherwise.

2) Speaking of tax dollars… I’m generally a big fan of capitalism – bring your products or services to the market and see if you can make it. Therefore, I would never present for-profit colleges as examples of capitalism. They aren’t making profits in the open market, they’re making profits from government subsidies of higher education. Without our tax dollars, most of them would go bankrupt. Some industries need government subsidies to get started (and we can all debate the pros/cons of that startup help). But the for-profit college business model requires never ending tax subsidy. I’m not willing to call that capitalism.

17. betterschools – August 31, 2010 at 04:50 pm

@tgroleau,

Have an economist map this out.

– Loans are made to students who then choose on their own where to attend (unless you want to argue they are automatons).

– The feds make money on student loans, even including defaults where they are estimated to collect $106 for every defaulted $100 (fines, etc.)

– Including the widest possible range of estimates of all political persuasions, for-profits cost the taxpayers — all in, including 100% of the loan defaults (which are lower than comparable publics serving the underclass) — between minus $500 per student per year and plus $1,700 per student per year.

– Again, including the widest possible range of estimates, publics cost the taxpayer between $11,500 and $16,500 per student per year.

Given this information, where do you get the idea that the for-profits are luxuriating in a tax subsidy? I have an agenda for the improvement of the for-profits but it is not advanced by the lies the feds have spread, and the ill-informed disseminate per their bidding.

Check my facts and if you have counter-evidence (not opinion), post it at http://www.intered.com/for-profit-regulation . Many of us are only interested in setting the record straight on all issues before proceeding.

18. 11132507 – August 31, 2010 at 04:57 pm

Excellent point #16 – the for-profit schools have done quite well with the so-called 90/10 rule, which allows them to receive up to 90% of their revenue purely from federal aid, and even then they have tried fuzzy math accounting tricks to skirt that gaping loophole of a law.

This is very similar to another group of Republican “capitalist” buddies (and like for-profit schools, very reliable campaign contributors), the banks who made zillions in the Stafford Loan program…all in the name of the free market, but creating no product other than moving other peoples’ money around, and being rather handsomely subsidized by taxpayers for doing it. But it made rich guys richer, so the Republicans were all for it, and the program’s demise is reason #6,714 on the “Why Obama Is A Socialist” list.

19. trendisnotdestiny – September 01, 2010 at 09:30 am

@ To All Readers

After reading this thread, it concerns me that too many here are discussing the power of one person; a figurehead who represents a multiplicity of branded ideologies fused together by monied interests. I can think of several hundred people who have more influence and power to create change than our president, but that is for another time…

Why is it that when the right feels some pressure they yell unfair or uncle using socialism as the great fear weapon? (culturally embedded in our Rocky movies and hockey victories. Dr. Vedder your understanding of Obama’s positions are not supported by his choices of financial advisors, supporters and legislative efforts thus far (all which have supported industry firtst and the middle class last)… Remember, he was funded en masse by the finance sector and would not have received their support if he was… So once again you prove that any movement away from the right in this country requires a corpulent call of socialism… Well done! Predictable… So I will reiterate some things for you to chew on:

First, a president is not the most powerful force in our country, economy or even in policy matters. We must acknowledge this first. No such thing as Obama bailouts or plans of a socialist takeover unless you consider the corporate socialism of the past two decades…. It is important to identify who has the most power to affect outcomes here. In any analysis, the groups that move this country are uniformally from industry: finance, pharma, media and energy…. In the land of predatory capitalism, who has the money controls the power! These people fund elections, lobby legislators and control politicians of what we call government.

By acknowledging this, it is not a far leap as to why all our systems are incurring massive debts all at once (state and local budgets, government deficits, personal and familial debt). This is a planned consequence of a consumer driven economy where credit has been cheap, markets have been gutted/de-regulated and control have moved into elite or private hands for the final consolidation of patriotic selling points (9/11). Government has colluded with this process of being bought off, but the governing power in this society is the corporation. Very rarely can you sue it, change it or vote it out…. It replicates itself into our culture: sports teams, college adminstrations, and our consumption of media…. Let’s not be naive here, presidents who make $400K are more about branding and salesmanship than actual policy. They are told what to do and say by their corporate financiers and our choices as voters are limited to the flavors (Yale or Harvard) that power provides as they whisper their intentions to the lackey adminsitrations…. As a result, each adminsitration is most concerned about GDP growth. Their policies often reflect it, people be damned….

Second, when we read that people want government intrusion out of thier lives, this plays into the hands of both the corrupt government officials as well as their corporate benefactors. However, for most the corporate influence is less visible in the divide and conquer rhetoric designed to break critically thinking people into camps: spending stimulus versus paying down debt, cutting social supports versus soliciting entrepreneurism or shared governance in higher ed versus a top down approach….
We live in a society where the distraction of professional sports entertainment like the NFL often take up more time in our culture than critical thought. Obama is here to distract us just like every president over the past 30 years aided by television and corporately owned media…. In essence, we have a distracted and highly stressed population with a public-private marketing arm designed to create more division between and among (pure Edward Bernays here 1928)…

However, people who are angry about how profits are privatized and losses socialized do have legitimate concerns, but little access to the inside narratives as to why this happening. So, I will speculate and suggest something rather troubling.

One — wealth and currency from FR banking systems are created from debt. This is important to understand that those who issue debt have the most power in a global capitalistic system. They influence and control political figures who serve as their defacto shields for anonimity. (so calls of socialism are disingenuous at best and moronic at worst)….

Two — the world’s resources are dwindling; there is a massive race for information, access, and ownership of the various depleted resources: water, food, oil, precious metals, minerals etc. When you combine this race to privatization with an unsustainable global population demographic, you could begin to see why bubble economics (neoliberal economics) are needed to clearly bifurcate and distinguish the people who have and have not. These bubbles are an instrument of social darwinism….

Three — The forces that led to the creation an indebted population are same ones leading the push for eliminating social security, medicare and spending programs for the poor calling them “entitlements”. You have to ask the why now question. After a period where there have been massive bankruptcies, home foreclosures and systemic unemployment, why would power want to cut social supports now during one of the worst periods in economic history… The answer is that during times of shock, it is the perfect time for power to inflict changes that would have normally been resisted. Again, Obama is helping to dismantle these programs as many democrats before him (see Clinton & many congressional leaders)…. Government officials are more dependent upon industry than the populace; this means that they are the mouthpieces of power not the final decision makers….

four — consolidation of power in every industry has been the corporate culmination of this project. This is the most critically ignored and unexplored issue out there. Very few of us critically analyze why there are so few companies soliciting product in a free market. Banking there are the top 6 who control the industry. Healthcare there are slightly fewer. Energy companies are even less. Media too…. These companies ability to impact our lives is far greater than one person in the white house, one party, one supreme court nominee….

five —- SUMMARY
money is created by debt
future natural resource shortages
over populated and polluted biosphere
transfer of risk onto individuals
cutting supports & renaming them entitlements
disparity between have & have nots grows
consolidation of power at every level
prices rise, jobs disappear
social unrest, anger and competing narratives

Figure it out people! Its right in front of you…. Oh! and quit spewing this nonsense that it is the left’s fault or right’s fault. There are in together. It was obvious when Geithner first spoke about the stress tests….. power calls it a public-private partnership (PPP)…. this does not bode well for the third group: consumers…. So, maybe we should be working together as we all are legitimately angry and have vested interests that have been co-opted…. but socialism is so far off the map as to make this article the comic section instead of an academic article.

Peace

20. tgroleau – September 01, 2010 at 09:56 am

betterschools –

I’m taking about Pell grants not loans: http://chronicle.com/article/Data-Points-For-Profit/63388/

21. adanz1 – September 01, 2010 at 10:44 am

I applaud Mr. Vetter’s cogent and coherent expression of the real driver of Durbin’s and Hawkin’s witchhunt wrapped in public “hearings.” This is, fortunately, an election year in which the democrats are looking to find any cause to which they can point to success for their socialist bent. Why are the “for-profit” institutions being pursued when the “non-profits” are not? Why is nobody bringing into the debate the dependence of the non-profit sector on public financing? Why is such dependence not equally evaluated for what it is? Community colleges depend upon state and federal subsidies to keep their prices down. Yet, somehow, the price point analysis fails to incorporate the full cost of non-profit programs when making comparisons to the students using Title IV funds at the for-profits who, by the way, pay taxes. Fully loaded, folks, the “dependence” of the non-profits on taxpayer funds is virutually identical to reliance of for-profit institutions on Title IV. It’s time that we see this exercise for what it is: another attack on the free market system that has made this country a bright star in the global economy.

By Kevin Kuzma

“Make a difference” is a call to action that is used so often, it sometimes doesn’t even register with us. The trouble with that phrase is that we frequently give our time or money to causes and we know it makes an impact, somehow, even if the results aren’t immediately evident to us. When it comes to such a call and reaching out to elected officials, it can seem even more futile: the government is a big, inaccessible behemoth, we think. It might pretend to listen, but given the thoughts and views of millions of others who want their opinions to matter, too, how can it?

This summer has been incredibly rough on career education. Nearly every day, the “for-profit” sector of education, as the media has deemed it, has fallen victim to scathing reports using either conflicting data or student anecdotes meant to cast all schools in a negative light. Read the last part of that sentence again: “meant to cast ALL schools in a negative light.”

The cards have been stacked, so it seems, by these biased reports and a Senate that’s done what it can to call to light the flaws of our sector. Some of their findings have been relevant and shown a need for improvement in various practices. But they’ve also gone about their investigation in the most public, unrelenting and potentially damaging way possible. Our schools have been cast in the most embarrassing light you can shine on a sector.

As hopeless as all the negativity toward career education might have made you feel over the last few months, you have a chance to make a difference. Really. You have a chance to make your voice heard – and in a format that matters. While it might sound like a rally cry (and to a certain extent, it is), you can stand up for your students, for your profession, and for what you do by sharing your thoughts on the Department of Education’s (DOE) proposed gainful employment rule.

Less than two weeks remain to submit public comments to the DOE about its gainful employment proposal. The best measure you have available to make sure gainful employment stops stumbling forward is to submit your thoughts directly to our elected leaders. Share your view about why gainful employment is wrong. Explain who it negatively impacts. Tell them why we should explore other alternatives.

The Career College Association (CCA) has made a few clarion calls to its members, requesting that they stand up and be heard by submitting their comments. And, CCA has made it easy to share your thoughts with a website that gives you everything you need to send your letters today.

Your words can be as concise as you like. What matters is that your voice is heard, and that it contributes to the collective din we want legislators to hear. Your words and those of individual students – the people who actually work inside of or regularly attend classes at career colleges – can change the discussion. What you have to say can convince your Congressman and Senators to thwart the proposed metric on September 9.

This is your only chance to file your comments with the US government and have them play a real part in the future of our schools. Our country’s leaders are going to be reviewing those remarks to see how valid counter-arguments are to their proposal and how passionate our sector is about the rule they want to impose. Share it all with them while the floor is yours.

Please visit this website http://www.bipac.net/page.asp?g=cca&content=alerts and let your voice be heard!  We need to fight for our rights to keep educational choices available in the United States.

The Department’s proposed rules for “gainful employment” underestimate the number of borrowers who are repaying their student loans, according to a recent policy analysis by Mark Kantrowitz, publisher of FinAid.org and Fastweb.com.

If the Department overestimates the number of students who are not in repayment, some programs could be unfairly penalized for not meeting the proposed gainful employment requirements. In his analysis, The Impact of ‘Persistence of Interest’ on Loan Repayment Rates, Kantrowitz contends that the Department’s proposal “fails to give credit for all borrowers who are making full payments on their loans.”

The Department’s proposal would include an annual loan repayment rate test that would measure the percentage of borrowers who are successfully reducing the principal of their FFEL and Direct Loans. The Department would measure whether borrowers are actually repaying their loans by comparing snapshots of a borrower’s principal balance at the start and end of the most recent federal fiscal year. But, since loan payments are applied to accrued interest before principal, borrowers could be making full loan payments on their loans without actually paying down their loan debt, according to Kantrowitz.
Read the rest – http://www.nasfaa.org/publications/2010/rgainfulmetric082510.html