Nexus study: For-profits face ‘witch hunt’

Under attack for high student default rates, the for-profit sector is fighting back with a  report (pdf) by the Nexus Research and Policy Center that hits proposed Education Department regulations that would limit recruiting and student loan eligibility.

Jorge Klor de Alva, former president of the University of Phoenix and now president of Nexus, calls the attack on for-profits a “witch hunt” in a guest post on The College Puzzle.

For-profit colleges and universities, the fastest growing segment of American higher education, are being accused by the media, the Department of Education, Wall Street’s short sellers, and Congress of deception, greed and a failure to comply with regulations. These accusations rest on only the barest of evidence, relying primarily on anecdotes. In fact, two Government Accountability Office studies this year, one covering thousands of schools since 1998, found only 37 for-profit institutions in violation of Departmental regulations.

The “gainful employment” rule would exclude hundreds of thousands of teaching, nursing, and public safety students, Klor de Alva writes. Applied to the public and nonprofit private colleges, it would “remove so many programs from eligibility for federal financial aid that it could lead to the possible closure of 40% of community colleges, 90% of Historically Black Colleges and Universities, and 45% of campuses where Hispanic students constitute more than 25% of the students.”

Only the for-profit higher education sector “can grow sufficiently to accommodate the millions of students the nation must educate to remain globally competitive,” Klor de Alva argues. Furthermore, this comes at “no cost to taxpayers” because the for-profit educators’ taxes and the interest students pay on their federal loans exceeds the dollar value of the Pell Grants and other government subsidies received by students and institutions.

Without a robust for-profit sector, it would cost nearly a trillion dollars to reach President Obama’s goal of being the first in the world in degree attainment by 2020, the Nexus report estimates.

All institutions of higher education should measure the learning outcomes of their students and publish those results, Klor de Alva writes. “Then at last taxpayers would have the data needed to distinguish good from bad performers, making for the efficient disbursement of local, state and federal education subsidies.”

I’d love to see an objective study of subsidies going to public, nonprofit private and for-profit colleges and universities. Which sector costs taxpayers the most? What kind of return are taxpayers getting on the investment?

Objective is the key word. Nexus is funded by the University of Phoenix and the John G. Sperling Foundation, reports Washington Monthly’s College Guide. John Sperling is the executive chairman of the Apollo Group, which owns the University of Phoenix.


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[…] Community College Spotlight:  Without a strong for-profit sector, it will cost nearly $1 trillion to make the U.S. first in the world in college degrees by 2020, President Obama’s goal, argues a former University of Phoenix […]

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