Las Vegas
New federal rules that the U.S. Department of Education is now expected to propose next week are dominating many conversations here at the annual meeting of the Career College Association, which represents more than 1,400 for-profit colleges.
Thousands of for-profit-college operators, financial analysts, faculty members, investors, and companies converged to take part in the three-day national conference being held by the association, which announced Wednesday that it will be changing its name to the Association of Private Sector Colleges and Universities.
The rules, which will mostly affect the for-profit-college sector, cover an array of issues, including misrepresentation of consumer information and how to define a high-school diploma. The most-contentious issue has become a proposed rule, known as the "gainful employment" rule, that would withhold federal aid from for-profit programs whose graduates are likely to carry high debt-to-income loads.
The department has said its goal is to crack down on colleges that overcharge and underdeliver in training students for jobs right after graduation.
Similar issues are also gaining the attention of Congress. On Thursday, Sen. Tom Harkin, the chairman of the U.S. Senate Health, Education, Labor, and Pensions Committee, announced that his panel would hold hearings, beginning this month, to examine "issues related to the growing role of the for-profit higher-education sector, including the scope and rapid growth of the federal investment in for-profit higher education and the corresponding opportunities and risks for students and taxpayers."
Harris N. Miller, the president of the career-college association, said Thursday that the group welcomed the hearings. "The education landscape in America is shifting," he said. "Federal student aid in private-sector education is an incredibly important way to provide postsecondary access for all."
Standing-Room Only
Because of the forthcoming federal rules' possible effects on the for-profit sector, it is not surprising that many of the sessions at the conference revolved around legislative and regulatory issues. One session went in-depth into the issue of how to compensate student recruiters without running afoul of the federal ban on paying employees based on how many people they enroll, while another gave attendees an overview of state issues facing for-profit colleges, such as complying with licensure fees and state grant eligibility.
It was standing-room only at a session called "Neg Reg 2010: There Is a New Sheriff in Town!" with a number of attendees forced to stand outside the door and listen from the hallway. The panel gave an overview of the 14 rules the federal Education Department plans to unveil.
Sharon H. Bob, a higher-education consultant at the Washington-based law firm of Powers Pyles Sutter & Verville, urged the attendees to take full advantage of the 30-to-40-day comment period that will begin after the department releases its rules to make sure the department understands all the concerns of the for-profit sector.
"You want the full weight of the sector on the issues," she said.
The panel left the most-contentious issue, "gainful employment," last for discussion. A hush came over the room when the panelists finally started talking about it.
The Higher Education Act of 1965 requires that proprietary and vocational colleges, other than those clearly designated as "liberal arts" and vocational programs not designed to lead to a degree, provide "an eligible program of training to prepare students for gainful employment in a recognized occupation." Compliance with the rule is a condition for those colleges' students to be eligible to receive federal financial aid.
The higher-education act does not define "gainful employment" as described by the proposed rule. So the Education Department set out to do that late last year, convening a panel that included consumer advocates, for-profit-college officials, and student advocates to re-examine the rule.
At Thursday's session, Elaine Neely, senior vice president of regulatory affairs at Kaplan Higher Education Corporation, said the department has never produced data supporting the need to define "gainful employment."
The department's most-recent draft of the "gainful employment" rule would bar federal aid for programs where a majority of the students' loan payments would exceed 8 percent of graduates' expected earnings based on a 10-year repayment plan.
In April the career-college association released a report on a study of more than 10,000 for-profit college programs. It estimated that nearly one-fifth of those programs would become ineligible for federal student aid and forced to close under the proposed rule.
Ms. Neely urged for-profit college operators to talk with nonprofit colleges to find out how the rule would affect them.
"This is a slippery slope that traditional schools need to be aware of," she said.
Another panelist, Lawrence Brown, president of Beam Reach Education, which focuses on acquiring and developing specialized trade schools, said everyone agrees that graduates of a career college should leave gainfully employed, but he has a problem with the department "picking arbitrary numbers" to define what that means. A lot of heads in the room nodded in agreement. He said if the issue is that much of a problem, then Congress, not the department, should deal with it.
Jitters and Advocacy
The talk of gainful employment was inescapable at the convention, which, the association said, is set to break records, with an estimated 2,500 attendees.
Outside the exhibit hall, financial analysts talked among themselves about the forthcoming rules. Some said they were jittery about the proposals and how they might hurt profits. Talk of the rules spilled into elevators and even the casino, with a conference attendee making a joke about the rules before playing a hand during a poker game.
A newly formed group called Students for Academic Choice says it will represent the interests of career-college students and graduates. At the conference, the group's leaders said their first order of business was to send Education Secretary Arne Duncan a letter expressing their concern about the proposed gainful employment rule. The group said the proposal would adversely affect hundreds of thousands of students. The group has gathered over 32,000 signatures for the letter.
Dawn Connor, a student at Globe University in Wisconsin and the group's president, said the proposed rule would take away a student's choice of where to attend college.
Ms. Connor said the group plans to put together a full public-policy agenda in the future. She said the voice of students who attend for-profit colleges has been overlooked and unheard on issues and that the new student association wants to change that.
Jane A. Nickles, an instructor at Le Cordon Bleu College of Culinary Arts in Austin, Tex., says discussion of the proposed federal regulations has just started to trickle down to faculty members. She says some instructors are concerned about how the rules may affect them.
However, Ms. Nickles said she planned to attend sessions on faculty development and teaching rather than those dealing with legislative or regulatory issues. She will lead a session on Friday called "Teacher Vs. Twitter" that focuses on how to better engage students in the classroom. She said she is dealing with tech-savvy students with short attention spans and will tell instructors that "We have to be as engaging as video games."
Comments
1. 11284943 - June 11, 2010 at 10:16 am
Interesting
2. tomoted - June 11, 2010 at 12:02 pm
Why would the newly defined gainful employment rule only apply to for-profts?
3. gettingreal - June 11, 2010 at 12:20 pm
This really seems like a anti private sector vendetta.. If the eight percent rule is necessary I can not understand the implied logic that it should not apply to all program in all types of higher ed where students receive federal financial loans. Do we really think the problem of unkept promises made to students, particularly unprepared students, is any less in the public sector?? Right
I suspect that many elementary education baccalaureate programs in rural states with low teacher salaries would not meet the proposed 8 percent rule. Then there the psy. majors, art history majors etc etc etc. The underemployment rate for arts and science majors is 67%. One wonders how many of all higher ed programs would be able to meet the 8% rule now and especially in the future
I think all higher should be very careful. As the old saw goes, "What goes around comes around."
gty
4. notusip - June 11, 2010 at 01:05 pm
The rules apply only to for-profits because of their past history of abuses.
Most for-profits receive close to 90% of their revenues from student loans. In 2007, students at for-profits made up about 7% of the student population, yet accounted for 44% of the loan defaults. Increasingly the for-profits are owned by corporate conglomerates. Their profits, passed on to their stockholders, are paid for by you and me.
Currently, "hot" areas being taught by for-profits include health areas, such as medical assisting. Medical assisting requires no training for employment and salaries range from $25,000 - $34,000. A student graduating from such a program is qualified for nothing else and may leave with loans totaling $12,000-20,000. How can such loans be paid back with such low salaries?
The new rules are targeted to stop abusive practices such as recruiting students with promises of good employment and no upfront costs. While for-profits often cite high percentages of students employed after graduation, the employment often is the same job the student held before.
5. amy_l - June 11, 2010 at 02:47 pm
Wow - even students in cooking classes have trouble paying attention? I don't feel so bad about my philosophy students anymore!
6. lizoneill - June 11, 2010 at 03:13 pm
I've read conflicting reports on gainful employment proposals. Are they worded strictly to address vocational programs with obvious career paths(e.g. medical assisting), or can they potentially revoke federal aid from for-profit bachelor's and associate's programs? I think HEA wording specifies that gainful employment applies to all for-profit offerings other than those designated as "liberal arts," but there are other degrees (e.g. business) outside of liberal arts that also don't necessarily lead to a specific career title with an identifiable starting salary. How will those offerings be affected?
7. 22213708 - June 11, 2010 at 04:11 pm
Just suppose I'm going to college to get an education rather than prepare for gainful employment. Will that mean I can't qualify for federal aid?
8. notusip - June 11, 2010 at 06:24 pm
If you're going to college to get an education, you wouldn't be going to a for-profit school.
9. lexyca - June 12, 2010 at 06:37 pm
It's hard to be sympathetic to the "plight" of the for profit educational institutions when you have the hard financial analysis. I recommend googling "market folly subprime goes to college" for an education on the for-profit college tactics. It's not only the past history of the abuses of the for-profit colleges, according to Steve Eisman in his presentation titled "Subprime Goes to College," "only 9 cents on every dollar received from the government" is going into the cost of actual education. Most of the money is going to executive pay and marketing. As tax payers, we are subsidizing an educational industry that has drop out rates as high as 50-100% per year according to Eisman. Additionally, the student loan default rate is through the roof and--at the tax payer's expense. I highly recommend http://www.pbs.org/wgbh/pages/frontline/collegeinc/view/?utm_campaign=viewpage&utm_medium=grid&utm_source=grid.
10. elisesroberts - June 12, 2010 at 11:18 pm
I am a doctoral student in Educational Leadership at a highly respected midwestern not-for-profit university. Loan repayment would be approximately 10% of expected salary. The dropout rate in the program is 50%. The job market for this degree is soft so after graduation I will also be employed in the same job I held before graduation. This sounds very much like the statistics attributed to the for-profit college sector. Yet this university will not be held accountable to the "gainful employment" rule. So what job do I hold? I am a humanities instructor at a century old for-profit career college. Why do I choose to teach here? Each day I encounter bright students who are not in the traditional college sector for many reasons, personal and professional. My students are older than traditional students, usually balancing family and full-time jobs-just like I am. They are often the first person in their family to go to college, and appreciate the low student/staff ratio of 20 to 1, the nearby campus and the convenient class times. And when I see their enthusiasm for new knowledge, including art and history-well, that is what teaching is all about.
11. cannchapman - June 13, 2010 at 09:59 am
My disgust with for-profit colleges is their neglect of basics necessities for students. For example,the one I taught at (I quit after two terms)has computers that are always breaking down. They are equipped with Microsoft 2001; most printers in the classrooms thathave them are inoperable; some computers are programmed to print in another classroom so when students send a document to print it goes unretrieved (a waste of paper). Speaking of paper, that often runs out and both teachers and students have to wait sometimes as long as three days to get more. Teachers are all bunched up into three rooms and must share computers. Only two classrooms have cameras; the remotes have disappear so a teachers must climb on a chair to turn the camera on (the camera in the other classroom is turned on and off with a long bambo stick). The copy machines are often broken. The administration is so "stuck on profit" that teachers are required to call students who are absent after each class and if a student misses many classes the teachers are forced to keep them on roll. One teacher reported that an administrator brought a student in who had not attended class for the entire term and asked the teacher to give the student a passing grade. Some students' behavior is quite unacceptable (fighting in the halls, cursing and rudeness to instructors, consulting on Facebook during class). It's a nightmare.
12. intered - June 13, 2010 at 11:30 am
@notusip,
All of are ignorant on a variety of topics but the intellectual discipline that is supposed to come with higher education teaches us what we do not know. It is treasonous to the discipline of intellectuals that you are so factually incorrect and lack even a primitive view of the landscape of higher education policy and practice, yet find it acceptable to spread your ignorance on these pages. Shame on you.
Then there is @lexcya who would have us accept the self-serving distortions of the short-seller who is credited as instrumental in causing the recession and who is now seeking to fatten his portfolio by destroying another industry to his benefit. By the way, taxpayers do not support for-profit higher education. The student loan business is a net profit center for the government and the for-profits pay taxes on profits. Defaults are high for all members of the underclass whether they attend a community college or a for-profit career school. No one else wants or will take them. Should we simply let them eat cake? By the way, if @lexcya works at a public college s/he may be interested in knowing that the taxpayer costs there are $10,500 per student per year.
To other readers, with considerable effort, you will get a 360 degree view of these issues by examining the Frontline website but only by carefully examining a few hundred of the posts and doing the best you can to assess their merits. The issues are complex and clearly beyond Frontline's comprehension. Their "ready/fire/aim" analyses only served to look foolish to impartial experts.
I have summarized some of the issues here:
http://www.intered.com/higheredbriefing/2010/5/6/behind-the-frontline.html
http://chronicle.com/article/For-Innovation-to-Occur/65780/
http://www.intered.com/higheredbriefing/2010/1/26/an-alternative-to-begging-how-our-state-universities-can-do.html
13. mikpap - June 14, 2010 at 12:04 am
For-profit and traditional universities have more commonalities than differences. I've graduated from both and the programs were about the same. I would say that the for-profit was more similar to the other private university I attended than the other public universities I attended. The in-class experiences were the same. To me, any rules or regulations should apply to all institutions. If anything, the for-profits, currently, have a higher level of accountability than do traditional schools. Also, my financial experience has been that all institutions of higher learning are for-profit.
14. jesor - June 14, 2010 at 11:45 am
I don't think this should just be aimed at the for-profit sector, but rather at programs that claim to be career based. This the same principle behind accreditation. If you do what you say you're going to do then you're fine. If you lure students in with the promise of a career and most can't have that career even after being successful in your courses, then you aren't doing what you told the students you were going to do and it's false advertising.
Unfortunately the for-profit sector is the area that's saddled by a history of fly-by-night operations that leave students with large debts, no education, and a worthless transcript (if they can even get a copy of it). This by no means characterizes all for-profit institutions, or even near a majority, but there are a large number of bad-actors out there.
15. breppe - June 26, 2010 at 03:04 pm
As I've said in other posts on this site, if we limit borrowing to direct cost for part time and online attendance, it will solve a great deal of the overburdening student loan debt problem. Those who attend part time or online usually work full time and should already have income and could not legitimately argue that they need the additional funds for living expenses. When you recognize that a part time MBA night student at your typical college can borrow $10250 for $4000 in tuition, you can see a financial train wreck from a mile away, but current Title IV policy does not address this loose lending.