The Obama administration has taken steps to stop federal funding of for-profit institutions that are preparing too few of their students for “gainful employment” and that boast high student-loan default rates. Jesse Jackson and several members of the Black and Hispanic Congressional Caucuses have spoke out against these steps. In a letter to Secretary of Education Arne Duncan (September 15, 2010), Jackson stated, “I am concerned that the proposed rule casts too broad and too general a brush on many institutions, some of whom are doing an excellent job at serving economically disadvantaged and minority students.”
Herein lies the problem with Jackson’s claim: The institutions that are doing an “excellent job” won’t lose funding as their students are much more likely to secure employment by earning useful degrees. In addition, these same students will be more likely to pay back their students loans because they are employed. Jackson and others are worried that low-income, first-generation African-American and Latino college students will lose out on opportunities for a college education if the Obama administration holds for-profits more accountable. In truth, holding these institutions more accountable will help racial and ethnic minorities. It does not serve anyone well—African-Americans, Latinos, Whites, the nation overall—to have a degree that doesn’t lead to gainful employment or, worse, is not respected by employers. And in fact, granting degrees that are of low quality sets up a two-tiered system in which racial and ethnic minorities as well as low-income Whites pay the price.
Instead of critiquing the Obama administration’s attempt to raise the quality of education for all students—but especially low-income students who frequent for-profit institutions—Jackson, members of the Black and Hispanic caucuses, and all of us for that matter, need to be pushing for more access and greater degree attainment at colleges and universities that care deeply about the future prospects of their students. We need to pay particular attention to racial and ethnic minorities—not only because it is the right thing to do—but because they are quickly becoming the majority of the population.
If you take a closer look at the outcomes of attendance at for profit institutions, the Obama administration’s actions make sense. For example, according to the National Center for Educational Statistics, default rates measured 4 years after students begin repaying their loans show that students who attended for-profit schools have a higher default rate than those who attended non-profit public and private institutions. Specifically, public institutions have a rate of 7.1 percent, private institutions 6.2 percent and for-profits 19.2 percent. In fairness, although the for-profit sector’s rate is higher than that of other sectors, according to Government Accountability Office data, it is still beneath the threshold cut-off rates that disqualify schools from Title IV eligibility.
If we turn our attention to graduation rates, for-profits have lower six-year graduation rates than their non-profit counterparts. For example, according to a recent Chronicle article, 44 percent of students who seek a four-year degree at a for-profit institution graduate. That compares with 54 percent of students attending public four-year colleges and 64 percent enrolled at private, non-profit, four-year colleges. If we look more closely, African-Americans graduate at a rate of 40 percent at for-profit institutions, compared to 45 percent at non-profit colleges and universities (NCES, 2005). Likewise, Latinos graduate at a rate of 50 percent at non-profits, but only at 46 percent at for-profit institutions (NCES, 2005).
Of course, higher loan-default rates and lower graduation rates can be explained, in part, by the student population served by for-profit institutions. Research tells us that low-income and first-generation students are more likely to default on their loans and less likely to graduate. Other colleges and universities that serve those populations also struggle with the same issues that for-profits do, but they do not operate with a goal of making a profit.
Although there are for-profit institutions that are graduating racial and ethnic minorities at a commendable rate, anytime you mix making money with education—especially the education of low-income, first-generation, or racial and ethnic minorities—it is vital to have the highest level of accountability measures in place. The Obama administration is doing the right thing by holding institutions that make a profit off of education, as well as those that don’t, accountable for providing a quality experience to students and making sure these students graduate with valuable degrees.
7 Responses to Gainful Employment, Jesse Jackson, and For-Profit Institutions
jwhawthorne - September 28, 2010 at 12:37 pm
Jackson’s comments underscore how effective the for-profit ad campaigns have been. They have succeeded in making the argument about “denial of access.” If their ads reflected the gainful employment rules they should say, “If we consistently misrepresent ourselves to this student about jobs, allow high loan acquisition loads that cannot be repaid, and don’t graduate our students at a meaningful rate, we could lose Title IV eligibility this student wouldn’t have access.”
loshead1285 - September 28, 2010 at 12:38 pm
The Obama administration’s efforts are well placed and much needed!! Thanks for your cogent argument Marybeth!
gdrobinsong - October 4, 2010 at 1:11 pm
If not the non-profits, than who. Actually there is no one because the public institutions (at least in my state) are cutting back and by definition the non-profits dont have the capacity for the level of access needed to provide those who wish a higher education with the access to get it. Who will pick up the the 40%. Does it not seem more valuable to society and individuals to fix whatever the problems are rather then to throw the baby out with the bathwater. For-profits provide what non-profits and Public universities cannot, access. We are in agreement that the graduation rate should be higher and that is where the focus should be, not if abolishing the programs.
gdrobinsong - October 4, 2010 at 1:13 pm
correction to gdrobinsong. The first statement should read “If not For-Profits than who?
deejgriffin - October 4, 2010 at 9:44 pm
JWHawthorne is correct. The for-profit lobbyists are doing a great job propagandizing and instilling fear rather than correcting the root of the problem – corporate greed. In response to gdrobinsong. The “who” in “If not For-Profits than who?” should be community colleges. This is where Obama should put the money. For profit institutions don’t offer any more “bang for the buck” than community colleges could. Fund the community colleges. They can do a great job with less financial risk for the students. Need an online education to help students balance the work/family/education juggling act? Again, fund community colleges. Distance learning is not rocket science. There is no reason why an associate’s degree should cost upwards of $25,000 at some for-profit institutions.
jesuccess - October 5, 2010 at 10:30 am
If Jackson is so concerned about Black and Latino students getting a college education then he should rally more support and promotion for Historical Black Colleges and Hispanic Serving Institutes. These institutions have the ability to not only provide a quality education but also contribute to self efficacy. I use to work for a for-profit school and they took advantage of those who just did not know. These schools are sometimes the first experience a student has with going to college and if it turns out to be a negative situation, then it not only effects the student, but it also effects the people that the student is connected to.
jsweets10 - October 27, 2010 at 8:50 am
I used to work for a for profit college and it is not only high dropout rates, high debt, and useless degrees. For profit colleges are immoral and unethical. I had students enrolled in my class that couldn’t read and write. Students are interviewed and given campus tours where I worked, so do you really believe that the enrollment counselors who enroll students that can’t read or write didn’t know what they were doing when they admitted these types of students to a business administration program. It is all about getting Title IV loans.
I’ve seen students advance through a program and they can’t speak English or write a sentence in English. I have also worked in financial aid for a for profit college and they will allow a student to fail a class as many as a dozen times and never try to assist the student or give the student the help that he or she needs and all the while they are steadily billing for a repeatedly failed course. The courses go by so fast that many times the student is enrolled in a course, but their financial aid has already been exhausted and then the student gets a whopping bill that he or she can’t pay because they depend on financial aid totally. Then they are withdrawn from classes and told that they have to pay the bill in full before they can return to class.
Students are not allowed to select which courses they want to take, but are enrolled in a series of courses or they are told a week before a four week course ends what their next class is and there is no time for a student to decide if he or she is ready to take a class. For profit colleges are a huge mess.