Posts Tagged ‘education’

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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

  • Posted by Robert W Tucker , President at InterEd, Inc. on September 13, 2010 at 12:15pm EDT
  • Not everyone who wrote to the Department objecting to the proposed rules has skin in the game.

    http://www.intered.com/storage/deptofed/InterEdTuckerLetter-to-Duncan_090810.pdf

    On balance, my work will be unaffected by the outcome. I wrote my response because the proposed regulations are blatantly hypocritical and unfair, and riddled with logical and empirical errors, half-truths, and at least one lie. Perhaps worst, is the fact that the proposed rules would not accomplish their stated goals. They would work against these goals via a myriad of “unintended” consequences. Sometimes I wonder if there is anything left but politics and special interests in the federal process,and if our leaders are even capable of objective, dispassionate thought. I encourage everyone involved at senior levels of higher education to read the proposed rules.

    A few of more than a dozen key points:

    1. The Administration’s reasons for proposing this narrow application of rules to 12% of the market and not the other 88% are: (a) that for-profits cost the taxpayer more and (b) have higher loan values and default rates. Both claims are empirically false. Not grey areas . . . they are false. First, economists vary in their assumptions and therefore their findings when determining taxpayer costs of institutional types but the absolute range is from zero to $4,500 for for-profits with less than $2,000 being based on the most sound models, and $10,500 to $16,500 for publics. Second, examining the feds own loan database for loan payback and default for public colleges serving higher proportions of lower income, first-generation students, turn in higher loan values and lower payback percentages.

    2. The rules, as proposed, are based on intentionally distorted empirical foundations. The largest proportion of variance in the variables of interest (default, etc.) are accounted for by loan value and debt/income ratios. From a different perspective, these same variances are accounted for by student and family demographics (e.g., University of Phoenix programs offered to established, working business people have among the lowest default rates in the nation; on the other hand, their programs designed to serve the underclass have high drop out and default rates. (I have no interest in defending UOP. They are not a client. I mention them because I know their default rates in detail.)

    Common sense right? I guess not because the schools to be regulated by these proposed rules: (a) will not be permitted any visibility into how much their students borrow, (b) will not be permitted to determine whether their students can reasonably be expected to be able to pay back what they borrow, and (c) will not be permitted to have any influence whatsoever on the amount borrowed. These schools will be held accountable for behavior over which they will be denied any control or visibility. Does that sound fair to anyone?

    Statistics are widely available showing the growing trend of students borrowing as a substitute for saving and working, even taking out maximum student loans to purchase cars and homes. Under the proposed rules, the schools will be held accountable for these excesses but will not be permitted to learn of them until they receive their after the fact default notice from the feds. And, what is the fed’s position this growing loan problem? One need only look at the fed websites to see that they are encouraging students to borrow as much as they “need” and to consolidate loans. At the same time, the proposed rules count consolidations as defaults against the schools. (There is more detail to this but the main point stands.)

    3. The Administration appears to believe that the at-risk students taken away from the “expensive” for-profits will be well served by other choices. “What they mean by this is tax-supported public institutions where the total cost is north of tuition plus $10-16K (~$20K). The Administration seems ignorant of the fact that public institutions across the nation have turned in double-digit tuition increases, some as high as 17%, with hidden fee increases reported as high as 54%. In the meantime, they are closing doors on programs, reducing enrollments, and turning record numbers of applicants away. These are the schools these the Administration would have the displaced underclass students attend. The truth is that these public institutions do not want and will not admit many of these students. Let them eat cake, I guess.

    Much attention has been given to the culinary industry as an example of programs for which students of for-profit schools do not meet reasonable gainful employment tests and that the public institutions could just as easily educate. Today, 59% of the culinary bachelors degrees are delivered by for-profits. No knowledgeable person could suggest that the public 4-year institutions could pick up this load when, at present, they provide only 11% of these degrees. Take a look at what the National restaurant Association said in their plea to the Department to look at the facts. They depend on the for-profits for an educated workforce and they are worried. See: http://www.intered.com/storage/deptofed/NRA_Gainful_Employment_Comments.pdf

    4. The Department has ignored technical shortcomings in the proposed rules, noting they can be worked out later. To suggest this is either disingenuous or naive. The department of education has a near perfect record of creating rules that it does not and cannot enforce. Who — in reality, based on track record — will work out the bugs in this approach and enforce the final versions? How will that work take place and why would we think it will take place since the history of this kind of detailed follow-up is an embarrassment to the Department?Additionally, every single abuse of the student loan system that has been uncovered to date – whether in for-profits, independents, or publics – is covered under existing law. Law that has not been adequately enforced. This and most federal departments follows a standard practice of proposing new rules to address problems created by failing to enforce current rules. Then there is the fact that each administration wants to leave its stamp on every major industry.

    5. There are more than 900 for-profits colleges and universities. Some serve only the underclass. Some offer only advanced degrees to senior professionals. All but a small handful are not publicly traded. They are small companies closely tied to their communities, employers, and the professions they serve. These 900 schools have little more in common than any 900 schools selected at random from the IPEDS database.

    The proposed rules are clearly designed to slow the growth of the large publicly traded for-profits without regard for the fact that they don’t fit hundreds of schools and will close the doors of dozens of small schools that are serving students no one else wants or will admit.

    To anyone working in a public institution who might be enjoying the suffering of your for-profit colleagues, I would advise you to put principle of equity and rationality over immediate self-interest. The feds have plans to come after you next and you will have lost your opportunity to stop this paternalism, unreasonable for 17-21 year olds, notwithstanding the fact the 40% of college students are working adults and something in the area of 75% of the for-profits’ students are working adults.

On Saturday, The Hill published an article that discussed how Senate Democrats and for-profit educators were sparring over the Department of Education’s proposed gainful employment restriction. The article noted:

‘High student loan debt coupled with low repayment rates signal a questionable investment for students and taxpayers,’ the Democrats wrote Thursday in a letter to Education Secretary Arne Duncan. ‘We encourage swift implementation of the gainful employment regulation and would be concerned with any efforts to weaken the proposal.’

In their haste to see the Department of Education implement the gainful employment rule, some Democrats have overlooked an important point –the gainful employment rule will harm the very people who most deserve increased access to higher education.  Students at for-profit schools are disproportionately low-income and minority students who come from working class families.  These hardworking students from non-traditional backgrounds are often not privileged with the same means, support systems or opportunity as their peers who attend traditional colleges and universities.  That may explain why “for-profit colleges make up roughly 10 percent of college students but 44 percent of student loan defaults.”

Those who have argued for the gainful employment rule have consistently failed to look at the statistics within the context of the type of students’ attending for-profit higher education.  Many of those engaged in this debate have ignored that these students enrolled in the for-profit sector come from at-risk backgrounds where the non-traditional approaches and flexible schedules of for-profit education make graduation a possibility.  These students deserve our support, especially in this recession.

Without for-profit schools, many low-income and minority students would not have an option in higher education.  Access to higher education remains an issue that rule-makers and their supporters should take into account before they cut off support for thousands of students.

Larry Penley Ph.D

http://larrypenley.com/2010/09/14/jousting-over-higher-ed/

The Liberal Paradox

Suppose that a conservative Republican Administration, in the middle of high unemployment and an economic slowdown, proposed new regulations that would most hurt lower income people and minority groups and the for-profit colleges and universities that serve them? Can you imagine the cries of outrage from liberal critics, condemning “hard-hearted” Republicans targeting the most vulnerable young people in our society?

Yet that is exactly what the Department of Education’s proposed “gainful employment” regulations would likely do. They are almost exclusively aimed at “for profit” private colleges, which are predominantly comprised of lower income and minority students. Let’s be careful about characterizing, as some liberals have done, those schools catering to such vulnerable at-risk students with “open admission” policies as “bad actors” whereas the more selective elitist Harvards and Stanfords with less student loan defaults are deemed “good actors.”

This has the uncomfortable look and feel of disparate class and racial treatment – which should make liberals very uncomfortable.

So how to explain the paradox that, in fact, these proposed regulations are being proposed by a progressive Democratic Administration and its strongest proponents are liberal members of congress?

There appear to be three explanations – each one less meritorious than the other.

The first is a simple misunderstanding of the facts. 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 (although liberal commentators and editorial writers continue to conflate the two issues).

Moreover, those 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, when the approximately $1 billion of taxes/year paid by for-profits are taken into account.

Second, this is a classic example of overly broad regulations confirming the law of unintended consequences.

How overly broad? 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. But, supporters of the regulation say, failing just one-of-two tests won’t result in loss of student federal loan eligibility. However, just recently, Iowa Democratic Senator Tom Harkin, one of the strongest proponents of this proposed regulation, suggested that failure of the loan repayment test alone should be enough to bar student loans to those who need them the most.

This is why numerous members of the Congressional Black Caucus have strongly weighed in against these proposed regulations and more and more representatives from minority and blue collar communities are waking up and opposing the proposed regulation.

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, opposition that seemed increasingly paradoxical as more and more inner city parents supported having the choice of charter schools for their children.

The fact is, it is precisely the profit motive that causes for-profits to offer more flexible, consumer-responsive schedules and courses, such as night classes, online courses, and new curricula that are directly responsive to recent changes in the job market.

Clearly Secretary Duncan needs to put an amber light on the “Gainful Employment Regulation” as it is presently written. As Harry C. Alford, President and CEO of the National Black Chamber of Commerce wrote recently, “student debt is a national problem, one that must be addressed, but imposing regulations on schools that are effectively educating students is unnecessary.”

If any regulation is necessary, then Mr. Duncan owes it to the most vulnerable students who will be disproportionately hurt by the current version to use a scalpel, not a hatchet, and to address the issue of excessive student debt at all higher education institutions – not just at for-profits, but at non-profits and public universities as well.

# # # # #

Lanny J. Davis, a Washington D.C. attorney and former Special Counsel to President Bill Clinton in 1996-98, serves as a paid “Special Advisor” to the Coalition for Educational Success, a group composed of several companies that own and operate for-profit higher educational colleges in the U.S.

A lot of people will have to forfeit their right to a higher education because of this “Gainful Employment” act. The President and congressmen are stating and campaigning on how “we” as Americans need to continue our higher education, enroll in universities and colleges so that we can get high paying jobs and stimulate the economy. Well the only problem with that, is that we can’t afford to attend these colleges, nor do we have the time to attend these major universities that ultimately require you to attend school during the day. Granted some colleges have evening courses but not all of them. And beyond the financial aid you still have to come out of pocket for a lot of things that are needed to attend those universities, like books, supplies, meals, parking, lab materials, etc… The only thing that low income families can afford are (“second rate”how some senators like to label it ) career colleges.

About half of the people in this supposedly great nation are considered low income. The only thing they are accomplishing by enacting this new law/rule is taking away the last bit of hope that these (“lower income”) people (like myself) had for themselves as well as their children. For most, this is the only way to better their children’s lives, to one day be above the lower income stigma and to not have to struggle or even worry about whether or not they’ll be able to make ends meet. The only thing the government will be stimulating is the continuation of a vicious cycle that will keep the rich people rich and poor people poor.

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

By Caralee Adams on September 2, 2010

The proposed gainful-employments rules aimed at reigning in for-profit colleges may also affect other sectors of higher education, namely community colleges.

“Unfortunately, there is a high probability that community colleges will be swept along with the for-profits into a category that will subject the institutions to greater regulation and reporting requirements,” writes George Boggs, president and chief executive officer of the American Association of Community Colleges in a Sept. 2 update to board members.

AACC has joined with other higher education groups to submit letters of concern to the Department of Education’s proposed gainful-employment rules designed to crack down on abuses in the for-profit education industry.

Boggs urges community college leaders to take the time to contact the department prior to Sept. 9 for public comment to let the regulators know how the rules will affect their institutions and students. While the proposed regulations are complex, Boggs worries that the regulations would limit a college’s ability to respond quickly to the needs of its community by requiring federal approval of programs and would add costly reporting requirements.

AACC, along with several other associations, has signed a letter sent by the American Council on Education and has joined with the Association of Community College Trustees in sending a separate letter to the Department of Education.

In a conference call last month to go over the rules with the department, community college leaders learned that 30,000 of the 50,000 programs potentially covered by the gainful-employment rules were community college programs.

Much of the drive for more oversight was linked to the concern that for-profits were increasingly supported with federal student loans that graduates have not been able to repay. Community college leaders point to the 2008 National Postsecondary Student Aid Study (NPSAS) that shows just 5 percent of students in certificate programs at public 2-year certificate programs borrowed federal loans in 2008 compared with 77 percent at for-profits. About 84 percent of private for-profit students in certificate programs borrowed at all in 2008, compared with 21 percent at public 4-year institutions, 45 percent of those at private not-for-profits, and 9 percent at public two-year colleges.

While many feel community colleges will be required to abide by the proposed rules, if they are adopted, leaders in the field are hoping others will voice their concern in public comment ending next week.

Sandra Kurtinitis, president of The Community College of Baltimore County, says she initially had not paid close attention to the gainful-employment proposal because she didn’t think it would directly affect the school. But she is following it now as it might require some additional data collection on graduates and their jobs. While accountability is a good thing, Kurtinitis says response to graduate follow-up surveys is not high, and she thinks it would be a challenge to track students. With 74,000 students in 100 associate degree programs and 200 substantial certificate programs, being required to do this additional data collection would be very significant, says Kurtinitis.

The additional regulation would likely mean adding staff in the research office, which would be difficult as the college is beginning the year with $2.6 million less than last. “We would do it, of course. But it’s an unfortunate time to ramp up the energy to approach collecting the data,” she says. Kurtinitis says she hopes ACCT and others weighing in on the issue might make a difference, but for now, community colleges will have to wait and see.

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 http://www.nhcsl.org.

Source: National Hispanic Caucus of State Legislators

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

IRVINE, Calif., Sept. 1 /PRNewswire-USNewswire/ — In an open letter to congress, Fardad Fateri, President and CEO of International Education Corporation (IEC), opposed the proposed federal regulation on Gainful Employment. Fateri asserts that U.S. Senate’s Help Committee chair Senator Tom Harkin is supporting a federal regulation called Gainful Employment that will prevent millions of low-income and ethnically diverse students from pursuing a college education. For the full copy of the Open Letter to Congress, go to: An Important Message from IEC’s President & CEO or visit the Newsroom section of the IEC website at http://www.iecglobal.com

According to Fateri’s Open Letter to Congress:

The proposed regulation sets formulas that will mostly hurt historically underserved and under-represented students. This proposed regulation targets the career education sector of which IEC is a member and is comprised of for-profit education companies serving hundreds of thousands of students and employing thousands of individuals all over the United States. The U.S. Senate’s Help Committee’s support of this regulation is in line with their zeal to destroy the sector which will in essence eliminate access to students who need postsecondary education the most in addition to eliminating thousands of jobs all over the country. Students have been flocking to private for-profit institutions because of the sector’s ability to provide timely and relevant programs and offer true access to postsecondary education. Ethnic and racial diversity in traditional public and private non-profit universities is rare; in fact, the University of Iowa’s own website touts a student population comprised of only 2.4% African American/Black and a 2.8% Hispanic/Latino. Senator Tom Harkin of Iowa has been fighting vigorously against the career education sector just because of the for-profit tax status of the companies in the sector.

The entire proprietary postsecondary sector exists because of an incredible need for career education. All the pundits on the U.S. Senate HELP Committee must understand that the growth of this sector is not due to ingenious marketing methodology or unconventional recruitment tactics. The for-profit career education sector prepares students for the workforce with tuition rates that are of tremendous value considering that this sector does not have access to additional funding only accessible by public and non-profit colleges and universities. In addition, when referring to recruitment tactics of the for-profit career education sector, let’s remember the approaches of traditional public and non-profit colleges and universities who manage to convince students and their sophisticated parents to pay approximately $400,000.00 for an undergraduate degree that will seldom lead to an academically related career. There are anecdotes on all sides; the most prudent approach would be to focus on thoughtful as well as meaningful decision-making grounded in evidence.

The students attending for-profit colleges are smart, ambitious, and they care deeply about their future. So, the claim that these students are naive and are easily abused is offensive and disrespectful. An individual’s household income and ethnicity should not be grounds for unfounded assumptions about their aptitude, judgment and ability. Without the for-profit education sector, millions of students will not have access to post-secondary education because public colleges and non-profit colleges have historically ignored and avoided these students.

When assessing a college, quality demonstrated through student retention, graduation and employment rates must be considered, not repayment rate of student loans. Consider the strain on federal entitlement programs when students remain on welfare as opposed to securing employment. And as taxpayers, many companies on the for-profit education side frequently question the lack of accountability for quality in education and lack of fiscal responsibility illustrated through atrocious expenditures of public and non-profit colleges that are tax-exempt.

For the full copy of the Open Letter to Congress, go to: An Important Message from IEC’s President & CEO or visit the Newsroom section of the IEC website at http://www.iecglobal.com

About International Education Corporation

Headquartered in Irvine, California, International Education Corporation is one of the largest private providers of postsecondary career education in the United States, offering quality programs in high-demand verticals such as healthcare, business, technology, transportation, and criminal justice. International Education Corporation is the parent company of UEI College and United Education Institute.

For more information about International Education Corporation, please visit http://www.iecglobal.com

Contact:
Hanan Awad
International Education Corporation
(949) 272-7200 begin_of_the_skype_highlighting              (949) 272-7200      end_of_the_skype_highlighting
(714) 368-0885 Fax
mordaah@iecglobal.com
http://www.iecglobal.com



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 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.

According to the Career College Association (CCA), the proposed Gainful Employment (GE) regulation change will limit access to higher education for hundreds of thousands of non-traditional students (primarily working adults and lower income students) at a time when job creation, often requiring skills training or retraining, is a paramount national public policy goal.

Further, pertinent points from the CCA in regards to the many flaws in the GE metric are as follows:

  • According to data released by the Department of Education (“ED”), if the same metric were applied to traditional medical schools, most would fail. An analysis of the data provided show that institutions in the private not-for-profit and public sector that serve populations similar to those attending private sector colleges and universities (i.e. non-traditional, minority, and lower socioeconomic populations) have similar repayment rates. Yet, ED is targeting just one sector—for-profit career colleges that afford students the opportunity and flexibility to work fulltime while pursuing their academic goals.
  • Schools in our sector serve proportionately more low income and minority students who are under-represented in postsecondary education than the traditional sector. This regulation implicitly discriminates against African American and Hispanic students by eliminating program choice and access.
  • Economists have shown that it takes seven years or more after graduation, not three years, for those with higher degrees to begin to experience the real financial advantage of additional education in the marketplace. This is especially true for non-traditional student-workers who are attending college to develop the necessary skills and ascertain the academic credibility that will empower them to move into an entirely new field and/or increase their chances of advancing within their current organization.
  • ED states institutions could comply with the metric by lowering their tuition. Not only is this a back-door way to control tuition pricing, it is a false premise. Students will still be able to take out the same amount of federal loans even if a school lowers tuition because institutions are not permitted to limit loan eligibility even when that eligibility far exceeds institutional charges.
  • ED is telling lower income students who rely on title IV Federal aid to assist them in achieving their postsecondary dreams where they can go to school, what they can study, and what careers they can enter. A student who can afford to pay out of pocket can make his/her own choices.

In fact, not only will the new GE rule potentially dictate who can attend college, where they can attend, and what they can study; if enacted in its current form, hundreds of thousands of non-traditional students may see the elimination of their existing career focused certificate and degree programs in business, education, and healthcare.
The question is why? If the real problem is the inability of students to repay loans, why not consider a cap on the total amount students can borrow?  By establishing borrowing limits based on actual tuition costs and required fees, a college/university would be able to ensure that students can only borrow the actual amount they need to cover the costs of their education while potentially reducing the repayment problem by disallowing students to borrow the mandated maximum amount (which often exceeds the amount required to cover tuition/costs and the excess is often used to fund non-education related matters).  By allowing financial administrators to act as bona fide financial advisers to their students, borrowers and lenders would benefit from a prudent approach that more accurately assesses each student’s needs.  Instead, ED’s proposal will attempt to solve the loan repayment problem by installing a fixed price tuition scheme that will inhibit the working poor from obtaining the funding required to achieve the education they need in order to be competitive in today’s tough job market.  Additionally, the proposal will restrict what programs a career college can offer based on loan repayment statistics that favor larger, public institutions.
Please click here to send a letter to the Department of Education expressing your concerns over the proposed gainful employment regulation change before the September 9, 2010 deadline.

Brian Stoddard

http://www.examiner.com/conservative-in-new-orleans/doe-s-gainful-employment-proposed-regulation-change-is-attempt-to-solve-problem-at-the-wrong-end

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.