• August 21, 2014

Education Department Takes Aim at For-Profits With Student-Debt Rule

After a five-week delay, the Education Department will release a rule Friday that would penalize for-profit colleges that saddle students with unmanageable amounts of debt.

The proposed "gainful employment" rule, which has been anticipated by for-profit colleges and short-sellers alike, would cut off federal aid to programs whose students have the highest debt burdens and lowest loan-repayment rates, while limiting enrollment growth at hundreds of other programs. For-profit lobbyists are calling the rule "unwise and unnecessary."

In a conference call with reporters, the Education Department said it was seeking to protect students and taxpayers from the high costs of student-loan defaults.

"While career colleges play a vital role in training our work force to be globally competitive, some of them are saddling students with debt they cannot afford in exchange for degrees and certificates they cannot use," said Secretary of Education Arne Duncan in a written statement.

Department officials estimated that 5 percent of programs would become ineligible for student aid under the rule, while 55 percent would be subject to growth restrictions and required to warn consumers and current students about the dangers of excessive borrowing.

The share of borrowers defaulting on their student loans in the first two years of repayment has climbed steadily in recent years, reaching a 10-year high of 7.2 percent this year, according to the Education Department.

For-profit colleges, which educate less than 10 percent of students but receive close to a quarter of federal-student-loan dollars, account for a disproportionate share of those defaults. Two years into repayment, roughly 12 percent of borrowers who attended for-profit colleges have defaulted on their federal loans, compared with 6 percent of those who attended public colleges and 4 percent who attended private colleges.

When the government is unable to collect on defaulted loans, taxpayers are on the hook for the losses. Borrowers, meanwhile, face damaged credit histories, are ineligible for additional federal aid, and may have their wages and tax refunds seized by the government.

Though federal law has long required for-profit colleges to demonstrate that they are preparing their students for "gainful employment," that term has never been defined. The Education Department tried to do so late last year, convening a panel that included consumer advocates, for-profit-college officials, and student advocates to re-examine the rule. But the panel was unable to reach agreement, leaving the department free to offer its own definition.

Turning Up the Heat

The new rule comes as Congress is turning up the heat on the for-profit sector, raising doubts about the cost and quality of some proprietary institutions. In late June, Sen. Tom Harkin, Democrat of Iowa, chairman of the education committee, held a hearing in which lawmakers vowed to crack down on "bad actors" in the rapidly growing sector. A second hearing is planned for early August.

Still, lawmakers and Education Department officials recognize that for-profit colleges will be critical to achieving President Obama's goal of leading the world in college completion by 2020, and are wary of taking steps that could cripple the sector. Today's rule does not go as far as the department's original proposal, which would have ended aid to programs in which a majority of students' loan payments exceeded 8 percent of the lowest quarter of graduates' expected earnings, based on a 10-year repayment plan.

For-profit colleges lobbied vigorously against that proposal, warning that it would force them to shutter thousands of program serving millions of students. The colleges have spent hundreds of thousands of dollars pushing an alternative that would require programs to provide prospective students with more information about their graduates' debt levels and salaries.

The department's revised rule would replace the 8-percent cap with a two-part test that would take into account the share of borrowers repaying their federal student loans and the relationship between total student loan debt and average earnings.

Under that approach, programs whose graduates carried debt-to-earnings ratios of less than 20 percent of discretionary income or 8 percent of total income, or where at least 45 percent of former students (graduates and nongraduates) were paying down the principal on their loans, would be fully eligible for aid.

Programs whose graduates carried debt-to-earnings ratios above 30 percent of discretionary income and 12 percent of total income, and where fewer than 35 percent of former students were paying down principal on their loans, would be ineligible for aid.

Programs that fell somewhere in between would face restrictions on enrollment growth, would be required to demonstrate that employers support their program, and would have to warn consumers and current students of high debt levels.

In the press call, department officials said their goal was to separate the "bad actors" from the good.

"The many good actors should be protected from being tainted or tarnished by the small minority that are doing a disservice to the industry," Mr. Duncan said.

But lobbyists for for-profit colleges say they're unhappy that the department stuck with its "metrics based" approach to measuring gainful employment, rather than simply requiring more disclosures, as the colleges suggested. In a statement, Harris N. Miller, the president of the Career College Association, called the department's proposal "unwise, unnecessary, unproven," and "likely to harm students, employers, institutions, and taxpayers."

"Adjusting the numbers in the original gainful-employment formulation is not the issue," he said.

Groups representing students and consumers, meanwhile, welcomed the proposal, saying it would protect students and taxpayers from programs that overpromise and underdeliver.

"It is encouraging that the administration has proposed a regulation with some teeth," said Pauline Abernathy, vice president of the Institute for College Access and Success.

The gainful-employment rule is one of 14 that the department and college stakeholders have been negotiating over the past nine months. The other regulations, including one that would tighten a ban on incentive compensation for college recruiters, were published in mid-June. After a period for public comment, they will likely be combined in a package of final rules due out in November.

Comments

1. supertatie - July 23, 2010 at 07:14 am

I can't WAIT until the same standard is applied to ALL colleges and universities, many of whom are graduating students with degrees as or more worthless than those of the so-called "for profit" universities.

Let's see how "gainfully employed" EVERYONE'S graduates are, and how much debt EVERYONE'S students are graduating with.

2. notusip - July 23, 2010 at 08:13 am

At least they have a recognizable degree, and there's no question that college graduates have a lifetime earning power larger than nongraduates.

The proposals from the Dept of Ed are targeted at those institutions that heavily advertise certain occupations, primarily those that are at the lower end of the pay scale.

Students borrow all the money to go to school, taking courses that apply only for that occupation. When they're finished, often they cannot get a job in that field, but if they can, the salary is so low that paying the loan back is nigh impossible.

Those who defend such schools need to visit them, hear what the admissions officers are saying, and then walk down the halls and listen to the classes. Heartbreaking.

3. laker - July 23, 2010 at 08:44 am

supertatie - I think you are blending education and training. Many colleges graduate people who are no more employable than "Joe's Business Institute", but they have not bought tons of day time TV advertising targeted at low-income, unemployed individuals and implicitly promised "I got a job, and so can you". Most Liberal Arts colleges, one of which educated me, promised to provide me with tools for developing my own career. I didn't find my college based on inflated promises of job placement, I found it because, at the time, I wanted to go to law school and they did a good job of preparing young people for professional schools. I never went to Law School, but I found a career in HE that has been fulfilling and gratifying. My BA educated son found work in the environmental industry with a degree in Economics. Was he trained for that?, No, but he knows how to learn and acquire skills.

I think the issue is that simple, who educates, and who trains, and at what cost?

4. 22103938 - July 23, 2010 at 08:55 am

Painting all for-profits the same way is the same as saying all non/not-for profits are the same or that all politicians are paid for their vote or that all the people in the decision making positions in the Department of ED never work for a institution of higher ED. The only people to benefit, for sure, from this ruling is Wall Street, again.

Also, the article from yesterdays afternoon's Chronicle about the Indian Higher ED community came to mind while reading this article.


http://chronicle.com/blogPost/Indian-Higher-Ed-Two-Steps/25706/?sid=pm&utm_source=pm&utm_medium=en

5. jasonlocke - July 23, 2010 at 09:18 am

I found the recent PBS Frontline program "College Inc." to support the need for better regulation of for-profit institutions. I was surprised to learn how much some of the for-profits are charging for a degreee and that some are offering worthless degrees. However, I agree that we shouldn't lump together all for-profit institutions. Some are providing valuable vocational training.

I'm also of the mind that not-for profit institutions should be required to provide career/degree counseling to any student taking out loans. I have worked for three traditional residential universities (one of which was the most expensive public at the time) and have watched students take on a significant debt burden to complete degree programs (teacher preparation programs are a good example) with starting salary ranges that will not make it easy to pay back the loans. At the very least, not-for profit institutions should be required to provide counseling.


6. dld310 - July 23, 2010 at 09:35 am

Why doesn't this article address why this policy is not required of the not-for-profits as well. Some of them are shady as well. Apply the policy to all colleges and you will likely see some very interesting stats from both sectors.

7. curquill - July 23, 2010 at 09:36 am

I was a professor at Kaplan University and I soon found out that this is a paper mill institution receiving millions of dollars of our taxes without providing the education we are paying as Americans.

90 professors (yes, 90) joined me in trying to create a union at Kaplan because we had not academic freedom of any type whatsoever. Kaplan will not "invite" you back as a professor if you do not INFLATE grades. The department chairs are very honest when they tell you to inflate grades because they are under pressure to keep students receiving FA.

The president of Kaplan made over 10 million dollars last year. His boss left the company with a 77 million dollars parachute package because there are about 6 lawsuits against Kaplan for stealing government funds via title IV.

America please wake up. You will be stuck with the unpaid loans from students who received a worthless diploma.

Carlos.

8. bdr8y - July 23, 2010 at 09:47 am

As the first post suggests, thought without the spurious indictment of higher ed, I too am curious as to how this will eventually affect small, tuitition dependent not-for-profit institutions serving large shares of low-SES students. Research consistently shows that if/when low-SES students do graduate they do not typically find careers that pay as well as their high-SES peers do, which puts them at some risk for default. Add to it the consistent unemployment rate even among post-sec ed grads and I am worried that eventually this will come back to haunt the small less selective and private who are trying to give low-SES students a chance but that do not have the reputations or organizational capital to place their students in high paying jobs.

9. frankschmidt - July 23, 2010 at 10:17 am

"For-profit colleges, which educate less than 10 percent of students but receive close to a quarter of federal-student-loan dollars, account for a disproportionate share of those defaults."

Sounds like the Home Mortgage scandal all over again - private profits at public expense. Do I hear "Countrywide"?

10. trendisnotdestiny - July 23, 2010 at 10:21 am

Why not make college education costs transparent using a consumer debt warning:

Undergraduate Debt (30K) = $200/month for 15 years (given an income above poverty levels) or $150/month for 25 years (below poverty)...

Graduate School Debt ($40-100K) = ______/month for ____ years (given an income of __________)

Standardize it like credit cards or mortgages because it has turned into financialization of education. Elizabeth Warren called for "basic-Vanilla" disclosure of costs...(minimum payments, over all loan amount, principle, interest, length of terms).....

This would put increases in tuition into a unique perspective for all involved: the profiteers, the complicit, the uninformed and the target audience of solicitation....

MAKE THE PRODUCT UNDERSTANDABLE & INFORM PEOPLE OF THEIR CHOICES BEFORE INDEBTEDNESS TO A SYSTEM DESIGNED TO EXPLOITE OCCURS

11. sarahebel - July 23, 2010 at 10:26 am

For those interested in how this rule, and the others that have been debated along with it, do and do not affect nonprofit colleges, see our previous story here: http://chronicle.com/article/Nonprofit-Colleges-Have-The/66219/

12. 11201780 - July 23, 2010 at 10:46 am

I would like to see both for-profit and nonprofit schools turn out college graduates that can send an email to someone that is clear. Too many colleges, both for-profit and nonprofit turn out graduates who can not do that. How can anyone, who can't send a clearly written email be gainfully employed in the 21st century?

13. drmhp - July 23, 2010 at 11:04 am

Loan default rates, etc. serve as an incredibly poor proxy for educational quality. Borrower characteristics are a primary driving force behind the higher use of Federal Aid and higher default rates in the FP sector. The sector serves students with lower levels of parental financial support which leads to an increased reliance on federal aid to finance one's education. You can't make a comparison saying 12% of FP students default while only 4% of private NFP students default. What portion of the students at NFP private schools are fully supporting themselves and attending school?

People seem fond of comparisons to the mortgage industry issues here - but I think the situation is both similar and different at the same time. In both cases, the issue at hand is the practice of borrowing money. So if the mortgage lenders were at fault for overborrowing to underqualified borrowers, who is at fault in this situation? The FP schools don't decide how much a student can borrow, the government does. And, in fact, the federal loan program actually works the exact opposite way any other borrowing practice does...borrowers who are in the worst financial position can actually borrow more federal aid money. As long as federal aid remains an entitlement program where the likelihood of a borrower defaulting is not considered when the loans are distributed, we will have issues with default rates. These are financial issues, however; so if the Dept of Ed is concerned about educational quality, then they need to look elsewhere. But the consensus seems to be that this would be too difficult...

14. jack_cade - July 23, 2010 at 11:09 am

For profit education is a mistake.
The student CANNOT be the customer, they are the product.
Thus, the consumer model fails when it comes to something like teaching and learning.
By privatizing education we are attempting to hammer ancient history into the shape of contemporary thinking. That history though is not foriegn to us now, in fact, it is more at the core of us than all our obsiquious shows of capitialism. The upstart ideology chaffs where the older ones do not.

15. allens - July 23, 2010 at 11:21 am

For-profit colleges should not be discriminated against by any rule; this is simply promotion of a particular ideology, as shown by jack_cade's complaint against capitalism.

However, I also have to say that I disagree with the idea that for-profit colleges are needed because of a quest for higher proportions of people with a college diploma (as in, over 50%), at least if the diploma is to be a full bachelor's degree as opposed to some variety of technical-school certificate or similar. Most people are, quite simply, not qualified for a full B.A./B.S.; I know this from, among other places, having taught at a _public_ university (with legal pressures on it to admit unqualified students).

16. drmhp - July 23, 2010 at 11:53 am

14. jack_cade - July 23, 2010 at 11:09 am

"For profit education is a mistake.
The student CANNOT be the customer, they are the product."

As long as a college education costs money, regardless of whether that money is paid to a for-profit or not-for-profit university, students will ALWAYS be BOTH customers and products. As long as the student has a decision of where to pursue their education and how much to spend on it, they are customers.

17. intered - July 23, 2010 at 11:56 am

I recommend that interested parties on all sides of the issue download the federal document (above) and review it carefully for the potential for unintended consequences.

Additionally, the federal document needs to be purged of falsehoods.

Page 13 states, "A recent study completed for the Florida legislature concluded that for-profit institutions were more expensive for taxpayers on a per-student basis due to their high prices and large subsidies."

It is virtually impossible for this statement to be true and the purported study is conspicuously lacking a citation. Here, on the other hand, is the verbatim Florida Statute on the topic:

"The 2009 Florida Statutes: Title XLVIII, K-20 EDUCATION CODE, Chapter 1009 EDUCATIONAL SCHOLARSHIPS, FEES, AND FINANCIAL ASSISTANCE 1009.891 The Access to Better Learning and Education Grant Program. (1) The Legislature finds and declares that independent for-profit colleges and universities eligible to participate in the Access to Better Learning and Education Grant Program are an integral part of the higher education system in this state and that a significant number of state residents choose this form of higher education. The Legislature further finds that strong, viable independent for-profit colleges and universities reduce the tax burden on the residents of the state. Because the Access to Better Learning and Education Grant Program is not related to a student's financial need or other criteria upon which financial aid programs are based, it is the intent of the Legislature that the Access to Better Learning and Education Grant Program not be considered a financial aid program but rather a tuition assistance program for state residents."

Shame on th Department for including a trumped up, possibly fictitious, reference in this federal document.

See the following documents for objective determinations of all-in total taxpayer cost issues. The second document requires an analytic background.

http://www.intered.com/storage/post-images/Taxpayer-Analysis.pdf

http://www.intered.com/storage/post-images/WBCAnalysis_072110.pdf

I support reform with respect to many facets of the current system of higher education but the feds and the Harkin committee need to set a positive example by telling the truth. They are not. Whatever problems exist within and among various forms of higher education -- and there are many -- after loading every single cost including differences in loan defaults, for-profits cost the taxpayers substantially less, not more (e.g., roughly $775/student/year for-profits vs. $10,000/student/year community colleges). Policies built on lies help no one in the long run.

Why do we support public servants who refuse to tell the truth and how can anyone feel satisfied with a victory "for their side" that is based on lies?

18. atana09 - July 23, 2010 at 12:21 pm

"The share of borrowers defaulting on their student loans in the first two years of repayment has climbed steadily in recent years, reaching a 10-year high of 7.2 percent this year, according to the Education Department."

The climbing default rate alone should be an indication that in general the student loan system is unsustainable. Overall this has been a result of allowing the lenders to write the rules so as to ensure too many are manipulated into an eternal debt. As noted by Elizabeth Warren and many others this system has long been in dire need of reform. If reforms are not voluntarily brought into being they will be forced due to the collapse of the 580+billion of student debt.

Concerning the for-profit schools and the proposal to link employment potential to eligibility for federal aid, it is a step towards some reform. Certain of these schools rely on selling career chimera's to desperate members of the working classes. Such gems as cooking schools with exorbitant tuition or 'high tech' curriculum which are little more than how to run a word processor or spreadsheet are unfortunately quite common. The majority of programs will never lead to a job paying enough to cover the loan costs-especially after all the enhancements that the private and sub lenders have placed creep into being. Some of which easily double or triple a troubled borrowers debt. Of course that was an end that sweetheart regulations were intended to produce.

There are respectable private & public vo-tech schools, however the games played by their less reputable counterparts bring unease into the whole situation. In general one of the markers of the reputable schools is that they do not view their students as a consumable asset. They do not do so because many of these schools have taken on the role that once belonged to union apprenticeship or the trades schools of the progressive era.

Employment potential and placement linked to federal aid, is obviously raising a hue and cry amongst the profit institutions. It should as many of these schools sell operate as job for sale institutions and deserve some punishment for so blatantly not meeting that obligation. Especially since they sold that deceit to a class within our population which cannot afford an economic mistake.

And if traditional academe fears these tremors, perhaps that is also a good development. It might end the 'lifelong learner' nonsense and other spurious rationales that developed when academe could no longer serve its core function of being the key to maintaining or gaining social status. When the debt/benefit ratio for certain degrees is so skewed that one would stand a better chance with the state lottery then the curtains being pulled away on the illusion. This would be less of an moral and economic issue if academe had not been so complicit in allowing the debt for education model to have been established, and then looked the other way as a entire generation was sold to the debtors pens because of obtaining that higher education.

If higher academe wants to avoid the proposed rules that Duncan has advocated for their lesser compatriots, perhaps its time for a little self reform before the sheriff does get to town.

19. softshellcrab - July 23, 2010 at 02:20 pm

For-Profit schools are never quality institutions. They basically bend over backwards not to fail anyone, and to keep the money coming in. They are simply money making endeavors without real standards. Let's stop the charade.

20. mitcheshe - July 23, 2010 at 02:22 pm

What I find most interesting about this debate is that there is little consideration of the differing populations served by for profit institutions, particularly in comparison to private non-profit ones. Many in for-profit programs are first-generation students, often from less than affluent backgrounds, who need considerably more assistance in order to attend any school. They are drawn to for profit schools because they equate college degrees with better career prospects and they want programs that are specifically aimed at career preparation. These are, in fact, not students who would be likely to attend more traditional universities, because they see such schools as wasting their time with courses of study that do not interest them. Likewise, they are often students who have been failed by the K-12 system, but who can excel if given the right guidance.

At some level, what this regulation demonstrates is not just distrust of for-profit institutions, but disdain for students who choose them. If nearly 10% of students are enrolled in for-profit programs, there is clearly a desire for schools with a career emphasis, and it wasn't created by slick marketing. To more heavily regulate these programs than those at schools that turn out English degrees amounts to discriminating against those who desire a practical connection between what they study and what they will do in their careers.

21. schwnj - July 23, 2010 at 02:51 pm

@ #14 and #16: "As long as a college education costs money, regardless of whether that money is paid to a for-profit or not-for-profit university, students will ALWAYS be BOTH customers and products."

This is essentially a "client/agent" relationship. Both parties have power for different reasons. Clients can go to any agent, and agents can refuse or drop clients at any time. Both need each other. The problem with higher ed is a shift from this client/agent model to more of a traditional customer model.

22. eli_whitney - July 23, 2010 at 03:13 pm

Let me know if this fixes the problems of for-profit education: Borrow some money and buy out the shareholders of your for-profit company and take it private. Apply for a change in tax status and become a not-for-profit. Avoid all the additional regulatory burdens that for-profits are subject to. Pay yourself a handsome salary with your tax savings.

No? Perhaps we should look at the system as a whole.


23. neudy - July 23, 2010 at 04:15 pm

If you want to understand the difference between FPE and NFPE - I'd say sign up for a class at a FPE school. In doing such, you should try to 'become an awful student' and get the worst grade possible (yet - do the work but don't give it your best try). By doing such, you'll see if you believe grades are inflated or not.
I did...I was amazed but I'll keep my comments to myself.

We all like to conduct research - here is your shot.

24. intered - July 23, 2010 at 04:35 pm

@neudy,

May I suggest that you become familiar with the arena in which you offer advice. This theme has been explored in a variety of instantiations. The result? Grade inflation is a fact of life in modern U.S. higher education but not worse in the for-profits. As higher education has evolved from the very small niche markets, that one might infer that you believe it still is, to the diverse mass markets that it is today, grade inflation has followed. While the two tails of the grade distribution curve have never been symmetrical in the U.S., the negative skew grew until the past decade where it began to level off. There are competing explanations as to why the leveling has occurred but one component is simply that we are running out of headroom on the curve and experiencing a numerical compression effect. We have a few million records upon which to base our observations. The bias you display is a common one. You see inflation in the for-profits because you are looking there but you have not noticed the same thing happening in all institutions. If you choose to conduct your own research, you will need to control for age, which is an active intermediate variable. The average age of students in for-profits is 34-35. When you look at the grade distributions for a similar distribution in the publics, you get more-or-less the same results.

In addition to teaching us how to do research, they were supposed to teach us how to be logical, which included examining all the issues before making recommendations.

25. chedie - July 23, 2010 at 05:10 pm

intered,
"Grade inflation is a fact of life in modern U.S. higher education but not worse in the for-profits." Any facts to back this up? I mean a direct comparison of any kind.

26. schwnj - July 23, 2010 at 05:52 pm

@intered,

I've been involved in the process of graduate admissions for some programs that get many applications, and, every so often, we get someone who has training at both a for-profit and "traditional" school. The pattern in my experience has been the same: Low grades at the traditional school, low GRE scores (think bottom 25%), but shockingly high grades at the for-profit. The chronological order of for-profit and traditional doesn't seem to matter.

Now this is just the product of my casual observation, so I can't say whether this is a true representation of grades at the broader level.

27. goodrm - July 23, 2010 at 06:12 pm

I teach at a for-profit art college that awards bachelor's degrees. We have well-prepared students who've left traditional colleges - ivy league to state schools - looking for more focus in a program that will enable them to launch their careers. We also have students who are the first in their families to go to college and are often not well-prepared.

The promise of this school to parents and students is that over 90% of their graduates will be employed in their chosen field. Even in these difficult times, the placement office is meeting those goals.

Contrast that to a large public university that also graduates students in the same field - Film and Television. At the time I worked there, their idea of success was if 5 out of a 100 graduates were working in their chosen field. They counted "video store clerk" as being in the field.

This for-profit college does not consider jobs like that as being in the graduate's chosen field.

The rules should apply across the board or at least take into account that for-profits accept riskier students.

28. softshellcrab - July 23, 2010 at 06:14 pm

@ intered

What are you talking about? I guess it's just anecdotal, but it involves several different schools. I have taught for several different schools, maybe 6 or so, including both for-profit and nonprofit (and both online and on campus). In my own experience, there is no issue whatsoever. The traditional State univeristy I teach for, on campus, grades strictly, and flunks students out left and right, who can't handle the work. If they can't do it, they are out! I see classes with 2.0 or lower gpa's for the class. With the for-profits, and especially online for-profits, we are pushed hard not to give bad grades. We will in fact be fired for giving bad grades. At the nonprofit state school, I have seen several adjuncts let go in whole or in part for grading too easy and being too easy. At the nonprofit online schools, I have seen teachers let go for grading too hard. The difference is ENORMOUS. The state school, not a particularly prestigious one by the way, really cares about its standards, and grades tough in most of the classes. Every non-profit I teach for has been a joke about grading, just concerned with retaining students and getting their money. Let's cut the charade. Non-profits schools are terrible jokes, just trying to make money. I don't believe a single good one really exists.

29. dalcyanne - July 24, 2010 at 12:34 am

For all those who say that non-profit colleges should be held to the same standards as for-profit colleges:

Hell no! The whole notion of the non-profit college is that the money spent goes back to the college and the college community. Yes, Presidents make an absurd amount of money, but that is so that universities can compete with their former salaries in the private sector, and can attract heavy hitters. In a for-profit system, the money is explicitly going toward making the administrators richer. How can we justify spending federal loan dollars on that?

Also, and more importantly, if we only provide resources for developing marketable skills, we risk losing those things that are not inherently marketable, such as ancient or rarely spoken languages, which both enrich our undergraduate students' lives and enable historical research to continue. Who makes money from a degree in Latin or ancient Greek? Or sanskrit, for that matter? Non-profit colleges are the repositories of cultural heritage, and if we stop giving them money for those things because their students have a greater debt to earning ratio, we will lose our identities and our ability to maintain a sense of our pasts.

30. lisadisa - July 24, 2010 at 09:17 am

There is a difference among for-profit colleges. Some are NOT credited colleges by state standards. (Middle States.) If students take courses at non-credited colleges, and then decide to continue their education, they find all the courses they took will NOT transfer, and they have to pay for similar courses all over again! This is a waste of tax dollars, and increases student loans.
Financial Aid should be limited to accredited colleges, whether for-profit or not. This would force FP colleges to meet certain standards before being eligible for tax dollars through FA.

31. intered - July 24, 2010 at 12:01 pm

@softshellcrab, schwnj, chedie, others,

I think the GPA issue is worth a fresh examination in relation to some larger issues that are part of this debate.

First, an elaboration on my claims. The data I have is derived from public, private, and for-profit institutions. Since the for-profit data was derived from programs that served only working adults aged 24 to any upper age, the grade data from the public and private universities were controlled for these demographic variables. I don't recall the exact variances but all institutional types were showing means in the area of 3.10 to 3.25 for these students. I do recall that minor differences, while statistically significant because of the large sample sizes, were not especially meaningful and there was no pattern favoring a particular institutional type.

With respect to the larger issues, we must first acknowledge the empirical limitations: (a) grades are not commensurable across campuses and in many cases within campuses; this would be true even if the validity and internal consistency of the methods by which they are established could somehow be brought up to minimum scientific standards and (b) in the aggregate, grading practices are not scientifically valid in fundamental ways; I can elaborate on these many ways but that is not my point here except to note that scientific validity is a prerequisite to logical validity.

Notwithstanding the above limitations, one can argue that an essential component of teaching is making distinctions among real differences in performance along dimensions relevant to the course objectives. The best aggregate measure of these distinctions having been made is the 'variance' of the grade distribution. The 'mean' statistic can be "fooled" too easily by practices that do not reflect good teaching. The generalization, then, is that wherever we see low variance, we are looking at a failure to make and provide objective feedback to the student, in the form of a grade, based on distinctions among levels of performance that always show up when these same students are evaluated independently with valid assessments. Let me clarify this last point, whenever we have had teachers tell us that their low (sometimes zero) variance is because they teach so well and all of these students learned everything, independent measures on the same learning dimensions do not support their claims. A normal distribution of scores emerges from these same students.

With this in mind, back to the main point. If the for-profits with which many of you have direct experience have grade distributions where the variance statistics are abnormally low, I believe this is evidence that one of the most important parts of the instructional environment is not working well.

Given what many of you say, a large scale study would be instructive. I do not know what will be found but I do know from analyzing many hundreds of such datasets that it will be important to control for student demographics. Early and mid-career adults returning to school, of which there are several million, have substantially different grade distributions than their younger counterparts.

Robert W Tucker

32. rpace - July 24, 2010 at 03:10 pm

I was unemployed for about a year and desperate for employment. My background is business but I always had Pharmacy Tech experience as a backup. After the economy collapsed I couldnt get a job in business for obvious reasons. So I sent resumes anywhere and everywhere.

To my amazement I acquired a job as an adjunct Professor teaching Pharmacy Tech students at a Proprietary college.

The first thing that popped in my mind was why would anyone want an associate degree in Pharmacy Technology when all you need is a high school diploma. But I was desperate for a job. I worked there for about nine months and the whole time there I felt that I was cheating the students because after two years all they had was $20,000.00 debt, a worthless degree and no guarantee of a job. I call it a bootleg college.

I quit and opened my own eight week program to get students certified thru the Pharmacy Tech Certification Board. This enables them get National Certification recognized by every state in the USA at a fraction of the cost thereby saving them tens of thousands of dollars. So far all of my students who have taken the PTCB have passed.

33. mattblum - July 24, 2010 at 06:34 pm

<Comment removed by moderator>

34. icount2 - July 25, 2010 at 08:22 pm

Hello Everyone,

I just thought you might like to hear from someone who graduated from one of those "for profit" institutions that are being discussed. I graduated about 10 years ago and have since continued my education. I am currently working on a Master's Degree. This is all possible because of my beginning in a for profit institution. I had no self-confidence, was a high school drop out that barely passed the GED exam and no skills. Going to school enabled me to get an entry level position that really started the ball rolling for me. I used my employer's tuition reimbursement plan to go into a Bachelors program, graduated Summa Cum Laude and continued to earn more money. I make a decent wage, and was able to pay off my student loan. I know that there were some others enrolled with me who did not stick it out. I do not blame the school for this, dropout rates are probably the highest for students who have to work, take care of children, and, sometimes, worry about where they live or their safety. The reality is, for those of us who complete the programs and put the effort in, the cost was well worth it.

No school is responsible for me - I am responsible for me.

35. guanxi88 - July 26, 2010 at 09:57 am

This is appalling; the only reason my institution operates as a for-profit is to allow for a sufficient demonstration, under the terms and conditions of the standards of financial accountability established BY THE DEPT OF ED that the school is financially sound and stable.

We've had low single-digit cohort default rates for years - heck, management goes berserk if the rate gets over 3% - and now, thanks to the soft totalitarian impulse of the therapeutic state and its managers, our field is about to be "nationalized" via regulation.

They've pulled the same nonsense with health care - make it all but impossible for the private sector to operate, compete, or even function, shovel taxpayer dollars at the "public option," and then declare the failure of the free market system when it finally collapses under the regulatory and financial burdens imposed on it.

36. csaosomeday - July 26, 2010 at 12:25 pm

The efforts here to paint all for-profit (or all non-profit) colleges with the same brush are faulty at best. Many for-profit institutions encourage higher education and allow folks like icount2 to pursue bachelor's degree programs. The proposed rule is not aiming at institutions with these intentions.

The proposed rule instead takes aim at vocational programs and is applied across non-profits and for-profits that offer those programs. Many of these for-profits charge tuition that mandates taking out loans when the students could complete a program with the same resulting degree at the community college without taking out a dime.

You can debate the costs to the taxpayer all you want, but the real costs to the student are higher in these for-profits for what is at best a comparable degree.

37. guanxi88 - July 26, 2010 at 03:08 pm

I do think the "employability" thing is a bit of a joke, especially in the current economic environment. Say, howzabout we shift the animus away from the for-profit sector in general long enough to maybe allow them to start hiring people before we start clamping down on yet another for profit enterprise for failing to improve their graduates' employability?

If the A students running the country can't find work for those already looking, then their impulse to punish institutions trying to increase the employability of their students seems paradoxical at best; perhaps this is part of that blame shifting and buck passing that the current administration finds so distasteful and reprehensible in so many others.

38. intered - July 26, 2010 at 03:42 pm

guanxi88,

Unfortunately, there are many hundreds of schools like yours that are doing a good job, educating student most schools don't want and won't admit, lifting ambitious first-generation college-goers out of the underclass and into responsible positions that built self-esteem. What you'll get from many of the old guard here is a look down their nose, a condemnation that you aren't a real college, and that you are a profit-monger. Too many who work in higher education are appallingly ignorant of its infrastructure, financial operations, and business practices. They are permitted to remain in this woeful state of ignorance and self-indulgence by their professorial blinders.

I wish you and the many other schools like you well . . . but be prepared for the heavy hand of new regulations that are so complex that I can see no way that the feds can actually implement them. This means they will "try" purported offenders in the court of public opinion based on faulty data and an even more faulty understanding of the big picture, as Senator Harkin is doing this very moment.

39. intered - July 26, 2010 at 04:23 pm

@csaosomeday,

Actually, there isn't much room for substantive debate with respect to taxpayer cost. Several new analyses converge on the following numbers, valid per the most recent federal data:

For-profit Colleges - $750 per student per year
Community Colleges - $10,000 per student per year (13x more expensive)

Certain models get the CC cost down to the $8,500 range but never lower.

Do the math on how much it would cost to educate to President Obama's targets if community colleges had to do the job of educating the 2 year students in his target (of course, they don't have the capacity). At $750 per student, the for-profits could get the job done and would have the incentive to ramp up to capacity were it not for the anti-private sector agenda (except banking) that seems to be playing out.

Cost figures for state colleges and independents are equally high but I am not repeating them here because too many error terms remain to be worked out (they are various kinds of categorical errors not necessarily favoring a particular institutional type).

When all of the calculations are in, taxpayer cost of for-profits will remain around $750 or will go lower. I believe they will go lower because property, sales, and use taxes that for-profits pay and public and private colleges do not pay have not been fully factored in to the models I have reviewed. I also believe that some of these models do not fully factor in forgone taxation on private and public endowments.

With 18-19 million students in the system, there should be little doubt that we will see all imaginable forms of failures representing outliers in the systems. With respect to the career schools that focus on associates degrees in "vocational areas" (isn't a teaching or social work degree from BigStateU or IvyU a vocational degree?), they fare pretty well. The average allied health profession graduate starts out at $36,000, many are higher, and is generally in high demand. Average tuition at a for-profit is $14,500. Thus, $36,000 gross for a $29,000, 10-year loan which translates into $300 a month loan payment at 4.5% with a gross income of $3,000 per month. Not great . . . but raises and vertical opportunities come along frequently in allied health (remember the health care cost statistics), and it gets many of these students out of the underclass.

A major student loan problem is this: far too many of today's students, irrespective of where they attend school, take out loans as a substitute for working and/or saving money. The federal system actually encourages them to borrow $60K, $80K or more when the actual tuition is a fraction of that. This is happening every day at public, private, and for-profit universities. However, since most of the growth of late has been in the for-profits, they are getting the attention that goes along with that growth.

Take a look at these documents, each coming from a slightly different angle and each having strengths and weaknesses. While they contain minor flaws, they present a significant education on the topic that is easily verifiable.

http://www.intered.com/storage/post-images/WBCAnalysis_072110.pdf
http://www.intered.com/storage/post-images/Taxpayer-Analysis.pdf

Robert W Tucker

40. yasulh - July 27, 2010 at 07:57 pm

I am a graduate of a for-profit college (as well as state schools) and a faculty member at a for-profit college. While some for-profits may be crooked, not all of them are. I have expressed in previous threads that I had a fantastic learning experience as a student in a for-profit program, and even learned from faculty members who are well known experts in their specialty areas. At the school where I teach, we are very concerned with standards and quality of education. As someone who supervises adjunct faculty, I am constantly trying to find ways to combat grade inflation (which can occur anywhere, especially with new faculty) - not promote it.

You cannot paint all of us with the same brush. I would put the education I received earning my doctorate in psychology from a for-profit school against anyone with a similar degree from a state or other non-profit school any time. I would even let a challenger choose the form of assessment.

Tonia R. Parker, Ph.D.

41. jerrywoods - July 28, 2010 at 09:17 am

I paid to send my son to an out-of-state, public school for the arts, where he majored in film (cinematography), and received a BFA. The cost was in excess of $100K but in the year and half since he graduated he has had little film work, and that he has found paid just above minimum wage. The school has provided little placement assistance. The degree itself is of little value with regard to doing anything outside of the film industry. His "academic" background would probably not be sufficient to attend any graduate program.

Despite my efforts, based on my experience as a senior university administrator, to convince my son that he would have been better served to attend a comprehensive university where he could major in film but get a better academic background, he would consider no other option. Fortunately for him, he didn't have to graduate with any debt. I feel sorry for some of his classmates who did.

Students should be informed of the risk of high debt loads for degrees that may lead to personally fulfilling but low paying careers, but colleges, whether public, private or for-profit, don't want to engage in that kind of dialogue. Rather, it's "buyer beware," but 19 year olds entering college just don't want to think about it...

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