Friday, March 14, 2014 11:33 am
Q&A on the for-profit college industry
It issued proposed regulations late this week designed to protect students at for-profit colleges from amassing huge debt they can't pay off. The proposed regulations would penalize career-oriented programs that produce graduates without the training needed to find a job with a salary that will allow them to pay off their debt. The programs covered under the proposed regulations include nearly all programs at for-profit schools, as well as certificate programs at public and private nonprofit institutions, such as community colleges, according to the Education Department.
The latest "gainful employment" proposal closely follows those that were struck down in 2012 by a federal judge, but it makes technical changes tailored to the court's concerns that the benchmarks were arbitrary.
Q: Who goes to for-profit colleges?
A: Students who want training in areas such as nursing, truck driving, culinary arts and auto repair. For-profit colleges have been popular with many non-traditional students — many of whom flocked to them during the economic downturn. They've also attracted many veterans. According to the Association of Private Sector Colleges and Universities, about two-thirds of students served by its members are over the age of 24. Half have dependents and almost 40 percent work full-time while enrolled. Last fall, four-year degree programs at for-profit colleges enrolled 1.3 million students, which was a nearly 10 percent decrease from a year earlier, according to the National Student Clearinghouse Research Center.
Q: In what ways are for-profit colleges under fire?
A: The proposed regulations are the latest step in a yearslong fight by the Obama administration to improve outcomes and end aggressive recruiting at for-profit colleges.
In addition, the Consumer Financial Protection Bureau last month filed suit against the large, for-profit college chain ITT Educational Services Inc. alleging that it pushed students into high-cost private loans knowing they would likely end in default. The company denied the charges. Richard Cordray, director of the bureau, told reporters that attorneys general in California, Massachusetts, Colorado, New York, and Illinois also are pursuing action against various for-profit institutions.
On Capitol Hill, Sen. Tom Harkin, D-Iowa, chairman of the Senate Health, Education, Labor and Pensions Committee, has investigated the industry.
Q: Why is the sector such a target?
A: The industry has among the highest student loan default rates and lowest graduation rates in higher education. Some veterans' advocates have accused the industry of aggressively targeting veterans because of their federal GI Bill money. Critics say the schools are a waste of not just the money of students, but of taxpayers who fund the GI Bill and other loan and grant dollars used by a large chunk of students to help pay to attend for-profit colleges. Harkin's committee found that between 2008 and 2009, more than 1 million students enrolled in colleges reviewed by the committee, but by 2010, half had left school without a certificate or degree.
Q: What's the other side of the story?
A: Nonprofit colleges argue that they provide educational programs to students who have historically been left out of higher education and that the proposed regulations would reduce the educational opportunities for students most in need of the "tailored, flexible and innovative options" they provide. The U.S. Chamber of Commerce and Republicans such as Rep. John Kline of Minnesota, chairman of the House Education and the Workforce Committee, and Sen. Lamar Alexander of Tennessee, the ranking member of the Senate HELP Committee, issued statements in opposition to the proposed regulations.
One argument used against the proposed regulations is that it's unfair to target just career-oriented programs in higher education because poor outcomes could be found in other areas of higher education. "If the department's proposed regulation were applied to all sectors of higher education, many programs all across higher education would fail the arbitrary measure," said Steve Gunderson, president and CEO of the Association of Private Sector Colleges and Universities.
Q: Is there merit to Gunderson's claim?
A: It's difficult to gauge because of the limited data publicly available. But work done by Mark Schneider, a former commissioner of the National Center for Education Statistics who is now president of CollegeMeasures.org, provides some clues. He did an analysis of all bachelor's degree programs in Texas universities and determined that if the proposed regulations were applied systemwide in Texas, 8 percent of programs would fail to meet the debt-to-earnings ratio under the proposed regulations three years after students left school. The Texas degree programs that failed to meet the mark were in areas such as multidisciplinary studies, history and biology.
Associated Press writer Philip Elliott contributed to this report.
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