Posts Tagged ‘private sector’

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Washington, D.C.—U.S. Representative Glenn ‘GT’ Thompson, R-Howard, today told a rally of a thousand students that, “You have every right to determine your own educational needs; you have every right to determine your future career path; and, you have every right to make your own destiny.”

Thompson joined his colleagues Reps. Rob Andrews (D-NJ); Alcee Hastings (D-FL); and Brett Guthrie (R-KY) at the foot of the U.S. Capitol in a bipartisan show of support for the students’ concerns about U.S. Department of Education proposed regulations on “gainful employment”.

If the “gainful employment” rules go into effect, they will eliminate access to higher education for as many as 400,000 students per year. These rules apply almost exclusively to the for-profit sector of higher education, while ignoring the same issues concerning student debt found at public and private non-profit institutions.

One of the requirements for for-profit institutions to participate in the federal student aid program is that they offer a course of study that leads to “gainful employment” in a recognized occupation. Despite over forty years of existing precedent, the Education Department is considering regulations to define “gainful employment” by establishing an arbitrary 12 percent debt-to-earnings threshold based on student debt for recent graduates of each program offered by the institution. One way of explaining that is a question posed by the Department: Are graduates with typical student debt able to repay their loans in ten years without taking 12 percent of the expected earnings in the occupation?

Once again, these new regulations do not affect public and private not-for-profit universities and colleges.

“The President has promoted a policy to have 5 million new college graduates by 2020,” said Thompson. “I commend the President for that goal, however, I have to stop and wonder how we’re going to achieve the mission if the Department of Education is going to put up road blocks—or—decide that you can only attend one type of school over another.”

“I represent a very rural district in Pennsylvania,” Thompson told the rally. “Many of my constituents don’t have access to a community college and live a significant distance from universities. Many proprietary schools have sprung up out of necessity.”

The effect of these regulations will be that student choice will be limited, because for-profit institutions may not be able to continue offering certain programs, to ensure the proposed debt-earnings-ratio.

“Many students in Pennsylvania choose these schools because of their convenience. They realize that career colleges offer course work of all types and work to accommodate the busy schedules that we all have. They realize that life does not just stop for four years—so you can go to school. And they realize these institutions will give them the skills they need to enter the work force and earn a decent living,” added Thompson.

In May, Thompson joined 9 members of the Pennsylvania Congressional Delegation in sending a letter in opposition to Education Secretary Arne Duncan on this issue, requesting that the Department vacate the proposed changes. In August, the Department of Education released a formal proposal. Since, Thompson has joined with several of his colleagues on the House Education & Labor Committee in submitting formal comments in opposition to the rules as proposed.

This week, the Department of Education, due to extensive public comment, has decided to move the scheduled publication date of the rules from November 1, 2010, to July 1, 2011.

From : http://friendsofglennthompson.blogspot.com/2010/10/thompson-rallies-with-students-for.html

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

The debate on proposed regulation of for-profit colleges [“How to discourage college students,” editorial, Aug. 22] missed the larger point: As a nation we are failing to connect the dots between college and careers. Our research shows that college is increasingly the only path to middle-class earning power. Students need user-friendly information about the costs of postsecondary education and the potential earnings in their chosen career if they are to successfully become part of tomorrow’s workforce.

We need to do a better job of connecting the dots between the costs and returns of postsecondary education. In truth, the basic data already exist in the form of wage records, transcript and program data, figures on job openings and detailed information on occupational competencies. Properly assembled, such an information system would minimize, though not eliminate, the future need for aggressive federal oversight or state-level regulation, a matter at the heart of the current debate. Rather than get sidetracked by discord, our common goal should be to compile this information effectively and make it publicly available.

Anthony P. Carnevale, Washington

The writer is director of the Center on Education and the Workforce at Georgetown University.

So maybe we should rate for-profit colleges on whether their graduates can turn a profit and measure their “profitability” by the default rate on their students’ loans? This makes at least as much sense as some of the yearly high-stakes, minimum-standards testing that drives (down) much of the curriculum in many K-12 public schools. If we implement this standard, let’s make sure the for-profit colleges don’t meet the standards by reducing the percentage of poor students admitted.

Have the goal be 100 percent on-time loan repayment by 2014 for all economic categories — poor, lower-middle-income, middle-income, high-income — and 100 percent repayment for separate sub-categories: special education students, English-language-learners, fine arts majors, etc. Or is such an approach “good” for public schools but somehow not so good for for-profit corporations?

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Joyce Migdall, Falls Church

Millions of college students are getting ready to go back to school. Millions more adult students attending year-round institutions are about to enter their next term. Among the common questions: Will this all be worth it? Having a clearer picture would sure be nice.

The U.S. Department of Education is trying to give students that clearer picture and protection from making what it deems could be wrong choices. How? With its new regulation called “Gainful Employment.”

It would apply a formula to programs in career-oriented majors, like healthcare, business and education to name a few, to decide which ones lead to ‘Gainful Employment.’ Those that do not would be eliminated. Students would also get concrete information about graduation rates, employment rates, potential salaries in their chosen field, loan debt info and the like before they choose their school. This information should help students analyze their risk/reward scenario.

The disclosure requirement is an excellent idea; it helps students compare their options. It
should be implemented at all schools. As for setting standards to see if programs yield Gainful Employment? It could be a good idea, if the regulation’s measurements and mechanisms are derived correctly. But that’s not easy.

For example, one key factor in recent draft regulations – a specially calculated federal student-loan repayment rate – shows many fine and varied institutions from Alabama State University to Harvard University Medical School dramatically failing that metric. This points to the proposed approach being somehow flawed.

By Randy Pronto, read the rest here – http://www.huffingtonpost.com/randy-proto/gainful-employment_b_683521.html