When Corinthian Colleges was forced out of business, 72,000 students were displaced, write Mark Schneider and Jorge Klor de Alva on The Hill. Students and taxpayers will pay the “real cost of Obama’s war against for-profit colleges,” they write. Schneider, president of College Measures, served as the U.S. Commissioner of Education Statistics from 2005-2008. Klor de Alva is president of Nexus Research and Policy Center.
Sen. Richard Durbin (D-Ill.) told Corinthian’s former students to consider the “plenty of good public universities and community colleges that often offer the same or better courses and cost much less.”
But community colleges and regional public universities may not have the capacity to enroll all these students, write Schneider and Klor de Alva. Furthermore, “the success rates of many of these public schools are embarrassingly low.”
Taking an example from Durbin’s home state, of the seven campuses run by the City Colleges of Chicago, five of them have graduation rates of 10 percent or less. Even at the City College with the highest graduation rate (Kennedy-King) only about 1 of 5 students completes their “two-year” associate’s degree in three years.
At Chicago State the six-year graduation rate for its four-year bachelor’s degree programs is an anemic 21 percent.
Community colleges and state universities are subsidized by local and state taxpayers, they add. Educating Corinthian’s former students in community colleges would cost taxpayers more than $200 million and more than $250 million if they attended public four-year colleges, they estimate.
If for-profit four-year colleges folded, 2.9 million full-time equivalent students would require nearly $19 billion in state subsidies to attend public universities, they estimate. Another 1.7 million full-time equivalent students in for-profit two-year schools would cost $9 billion in community colleges.
Only 21 colleges with high default rates — 20 for-profits and one public adult education program — are set to lose access to student aid this year. Many more were at risk. At the last minute, the U.S. Department of Education decided to omit some defaulted loans when calculating default rates.
The rate is based on the percentage of borrowers who defaulted three years after entering repayment. Tuesday, the department announced it wouldn’t count borrowers who defaulted on one loan but not on a second loan. In some cases, borrowers must repay different loan-servicing companies, which can cause confusion. The adjustment was made only for colleges that risked losing eligibility for student aid.
It’s a Get-Out-of-Jail-Free Card applied selectively with no transparency, writes Clare McCann on EdCentral. Cherry-picked colleges now have lower default rates than colleges that weren’t at risk of sanctions. “There’s no indication of which institutions benefited, in which sectors, or by exactly how much.”
Federal regulations already provide opportunities for colleges to appeal their default rates based on a variety of factors, including poor-quality servicing. Why not simply run this process before finalizing the rates, rather than oddly offering up this upfront assistance?
High-default colleges get a break, but students don’t, adds McCann. Borrowers still are considered in default, even if it isn’t counted against their college.
Community colleges and historically black colleges and universities — both with low-income students and high default rates — had lobbied for relief, notes Inside Higher Ed. “On Tuesday, Education Secretary Arne Duncan said he was pleased that no historically black colleges and universities would face penalties for their default rates this year. Fourteen historically black institutions had default rates above the 30-percent threshold last year.”
Default rates fell slightly for community colleges, the Education Department announced. No community colleges face sanctions.
Critics said the last-minute adjustment undercuts accountability.
“If a school isn’t held accountable for a default, then the borrower shouldn’t be either,” said Debbie Cochrane, a researcher at the Institute for College Access and Success.
Representative George Miller of California, the top Democrat on the House education committee, was one lawmaker who pushed for the expanded three-year default rates. He questioned the department’s adjustment to the loan rates on Tuesday.
“Any changes in the student loan system that reduce transparency and consistency may compromise our ability to hold poor-performing colleges accountable,” Miller said in a statement. “The department should be doing everything it can to ensure student borrowers who have defaulted have every opportunity for redress.”
Community college advocates praised the adjustment. “We believe that the department has acted responsibly by not holding financially needy students hostage to the shortcomings of servicers and other parties involved in loan administration,” said David Baime, senior vice president for government relations and policy analysis at the American Association of Community Colleges.
California faces a shortage of middle-skill workers with technical certificates and associate degrees, reports the Public Policy Institute of California.
In some fields, workers with “some college” earn no more than high school graduates: Child-care workers, solar installers, bakers, massage therapists, personal care aides, housekeepers and hairstylists don’t improve their earnings by attending college, PPIC reports. However, the wage premium is high for health care providers and technicians with a certificate or two-year degree.
FIGURE 4. SOME OCCUPATIONS OFFER HIGHER WAGES AND RETURNS TO “SOME COLLEGE” WORKERS THAN OTHERS
California community colleges should expand training opportunities for allied health care workers in the next decade to meet growing demand, reports PPIC.
Allied health care jobs are technical—licensed vocational nurses, dental hygienists, and imaging technologists, for example—and support positions, such as certified nursing assistants, medical assistants, and dental assistants. They typically require an associate degree or post-secondary certificate that can often be completed in fewer than two years.
However, the number of associate degrees and postsecondary certificates in health programs awarded by the community colleges has increased only slightly in the past decade. Most of these additional degrees have been in nursing.
For-profit colleges have expanded allied health training, enrolling many Latino and black students. However, for-profit students would pay $20,000 to $35,000 for a licensed vocational nurse certificate program, estimates the report. A similar program would cost $4,500 at community colleges.
For-profit college students borrow more than community college students, but don’t earn more, concludes a Center for Analysis of Postsecondary Education and Employment (CAPSEE) working paper.
Six years after enrollment, for-profit students are more likely than community college students to have earned a certificate or associate degree.
They have lower employment rates and earnings compared to all college-going students, but those disadvantages are “linked to their prior academic record and disappear when compared to community college students.”
However, in comparison with similar community college students, for-profit students borrowed about $13,300 more for their higher education. “This borrowing most likely reflects the higher tuition at for-profit colleges, which in turn may be driven by the students’ greater access to federal student loans.”
Millions of laid-off Americans have used federal aid to train for new jobs, reports the New York Times. Yet many end up jobless and in debt.
It’s not clear the $3.1 billion Workforce Investment Act (WIA), which was reauthorized last month, improves trainees’ odds of finding a job or their improving their earnings. The feds don’t keep track.
When Joe DeGrella’s construction company failed, he met with a federally funded counselor, who “provided him with a list of job titles the Labor Department determined to be in high demand,” reports the Times. He chose a college certified to offer job training and received a federal retraining grant.
Two years studying to be a cardiology technician at Daymar College, a for-profit in Louisville, left him with $20,000 in debt and no job. Now 57, he moved into his sister’s basement and works at an AutoZone.
About 21 million jobless people entered retraining at community colleges, vocational and business schools, and four-year universities in 2012.
“The jobs they are being trained for really aren’t better paying,” said Carolyn Heinrich, director of the Center for Health and Social Policy at the University of Texas.
Laid-off workers spend less to take classes at community colleges. However, completion rates low. Defaults are a growing problem.
At Florida Keys Community College, the default rate is 19.4 percent, reports the Times.
The college charges nearly $11,000 for a two-year degree to get a job as a nursing assistant. Median — not starting pay — for a nursing assistant in Florida is less than $26,000 a year.
The updated WIA requires states to “track former students to determine if training helped them find work with sustainable wages,” reports the Times.
. . . In some states, data and academic studies have suggested that a vast majority of the unemployed may have found work without the help of the Workforce Investment Act.
In South Carolina, for example, 75 percent of dislocated workers found jobs without training, compared with 77 percent who found jobs after entering the program, according to state figures.
The Times confuses the student loan program with workforce development,writes Mary Alice McCarthy on EdCentral. Job trainees get grants though many also borrow to pay for college programs.
WIA spends $3 billion a year, the Higher Education Act provide over $150 billion a year in federal grants, loans, and tax credits. “A large share of that money goes to support students earning associate’s degree and occupational certificates,” writes McCarthy.
The government is “a terrible prophet for labor needs down the road,” writes Ed Morrissey on Hot Air. The WIA should subsidize “employer-based training for jobs that need filling now or in the near future,” ensuring that people are trained for “real jobs.” Even then, taxpayers will end up paying for training that would have occurred anyhow.
Morrissey recalls the classic Tennessee Ernie Ford song:
You pass 16 classes and what do you get?
Another day older and deeper in debt.
Saint Peter don’t you call me, it wouldn’t be cool.
I owe my soul to the vocational school.
Job seekers are as attractive to employers with a for-profit certificate or degree as with a community college credential, concludes a Calder working paper by five economists. The study tracked callbacks by employers in response to fictitious resumes.
Resumes were submitted for jobs in administrative assisting, customer service, information technology, sales, medical assisting (excluding nursing) and medical billing, and office work.
Community colleges provide a much better labor market payoff, the study concluded. “It is more expensive to attend for-profit colleges,” Cory Koedel, a University of Missouri economist and one of the co-authors, told Inside Higher Ed. Earning a community college credential provides a better return on investment.
Given the image of for-profit colleges as “greedy diploma mills,” it’s surprising their graduates did so well, responded Stephen R. Porter, a professor of higher education at North Carolina State University. “I was astounded that there was no difference between the groups.”
Job seekers must be prepared for a lot of rejection.
Employers’ overall response rate — meaning a positive, non-perfunctory reply via phone or e-mail — was 11.6 percent for applications that listed community colleges compared to 11.3 percent for those that listed for-profits. Likewise, the split for interview requests was tilted slightly in community colleges’ favor, at 5.3 percent versus 4.7 percent. Those splits fell well within the study’s margin of error.
Employers were even less interested in applicants with “some college.” Given low completion rates, that’s a very large group of people.
Should students loans be available for job training?
Under the federal Higher Education Act, students are eligible for Title IV student loans and grants only if they attend formally accredited institutions. That makes some sense, for purposes of quality control. Except that under the law, only degree-issuing academic institutions are allowed to be accredited. And only the U.S. Department of Education gets to say who can be an accreditor.
By blocking new competitors, the system drives up costs, argues Lee. That prices most Americans “out of the post-secondary opportunities that make the most sense for them” and plunges “most of the rest deep into debt to pursue an increasingly nebulous credential.”
The Higher Education Reform and Opportunity Act would give states the power to create their own, alternative systems of accrediting Title IV-eligible higher education providers. . . . State-based accreditation would augment, not replace, the current regime. (College presidents can rest assured that if they like their regional accreditor, they can keep it.) But the state-based alternatives would not be limited to accrediting formal, degree-issuing “colleges.” They could additionally accredit specialized programs, apprenticeships, professional certification classes, competency tests, and even individual courses.
States could allow the Sierra Club to accredit an environmental science program, a labor union to accredit its apprenticeship program and Boeing to accredit an aerospace engineering “major,” Lee writes. Professors — or others with expertise — could go freelance, offering their teaching talents online.
In today’s customizable world, students should be able to put their transcripts together a la carte – on-campus and online, in classrooms and offices, with traditional semester courses and alternative scenarios like competency testing – and assistance should follow them at every stop along the way.
Employers already have shifted a lot of job training to community colleges. Now they could keep it in house — if their state agreed — with federal taxpayers footing the bill. Smashing the cartel could make today’s quality control problems even worse, responds Jordan Weissmann on Slate.
The entire point of requiring schools to be accredited before they can become eligible for federal aid is to make sure students don’t take out loans for a worthless education while burning taxpayer money in the bargain. As the rise of unscrupulous for-profit colleges demonstrates, the accreditors have basically abdicated that responsibility. Adding yet more accreditors into the mix, and making more programs eligible to profit off of loan dollars—without making it easier to kick schools out—would only worsen our problems with predatory colleges.
“Agencies might be more willing to punish a bad actor if they could downgrade its accreditation status rather than revoke it entirely—which is the only option available to them right now,” writes Weissmann. That’s one of the ideas proposed by New America policy analyst Ben Miller on EdCentral.
Thirty-one percent of military veterans enrolled in for-profit colleges in 2012, up from 23 percent three years earlier. Only 50 percent chose public colleges, down from 62 percent.
For-profit colleges use aggressive marketing to lure vets — and their generous GI Bill funding — complains Iowa Sen. Tom Harkin a new report. For-profit colleges received $1.7 billion in Post-9/11 GI Bill benefits during the 2012-13 academic year.
At the for-profit colleges receiving the most benefits, up to 66 percent of students left without earning a certificate or degree, according to the report. In addition, 39 to 57 percent of the vocational programs “offered by four of the companies receiving the most Post-9/11 GI Bill benefits would fail to meet the proposed gainful employment rule, suggesting that the students who attend these institutions do not earn enough to pay back the debt they take
Veterans choose for-profit institutions “because they offer the right mix of study programs, customer service, and locations and times that meet their needs better than do public college,” writes Daniel L. Bennett, an assistant economics professor at Patrick Henry College and a Center for College Affordability and Productivity research fellow.
Harkin also suggests it costs taxpayers nearly twice as much to send a veteran to a for-profit college ($7,972) than to a public one ($3,914). But these figures are highly misleading. They only account for GI tuition payments, ignoring significant taxpayer subsidies and tax exemption. A 2011 AIR report estimated the annual taxpayer cost per full-time equivalent (FTE) student at unselective public colleges to be nearly $8,000, while for-profit students actually provided taxpayers with an average net gain of nearly $800.
Many vets are looking for job training. For-profit colleges’ two-year programs have much higher completion rates than community college programs, writes Matt Reed, the Community College Dean. Career colleges focus on job training with no electives and minimal delays for remediation. That could be one reason why low-cost community colleges are having trouble competing with high-cost for-profit colleges.
A new bill — soon to be a law — will let veterans pay in-state tuition at any state college or university.
Commonly used college quality measures, such as graduation rates and loan defaults, are inadequate and sometimes misleading, writes Ben Miller, a senior policy analyst for the New America Foundation, on EdCentral.
Completion statistics for community colleges and other two-year-or-less institutions are especially inaccurate, he writes. It’s not just that the federal data misses part-timers and transfers. Completion data also confuses success rates in short-term certificate programs with longer-term associate degrees.
. . . many certificate programs run for no more than a year. These programs thus present fewer opportunities for students to drop out. That’s why colleges that predominantly grant certificates tend to have quite high completion rates and also the reason that for-profit institutions often appear to have better graduation rates than the largely associate-degree-granting community colleges.
A low completion rate is a sign of low quality, but a high completion rate may signify a quick, easy program with very little return on students’ time and money.
Cohort default rates also can be misleading, especially for community colleges with very few borrowers, writes Miller.
For example, Gadsden State Community College in Alabama has a 20 percent default rate but that’s based on five borrowers out of an enrollment of over 8,967. This makes it impossible to draw any conclusions about a college based upon less than 0.05 percent of the college.
On the other side, a low cohort default rate might be just as much an indication of successful loan management than success. The cohort default rate only measures whether students default within a certain time window. Students who default after that period or who are extremely delinquent but never default are not counted in the rate. The usage of income-based payment plans can also distort cohort default rates, since a borrower could be earning such a low income from their program that they have to make little to no payments, making it more difficult to default.
Passage rates on licensure or certification exams, such as in nursing, do measure learning outcomes. However some programs — especially in teaching — ensure a 100 percent pass rate by denying diplomas to students who haven’t passed the exam.
Every year, $15 billion goes to “college dropout factories” and “diploma mills,” according to Tough Love, a new Education Trust report. These are four-year colleges and universities in the bottom 5 percent nationally in graduation rates and student loan repayment rates. In addition, some institutions — including some state universities — admit few low- and moderate-income students eligible for Pell Grants. Tough Love proposes linking federal aid, tax benefits and charitable deductions to minimum standards for access and success:
Pell, full-time freshman enrollment: 17 percent
Six-year, full-time freshman graduation rate: 15 percent
Student loan repayment rate (three-year cohort default rate: 28 percent)
Colleges would have three to four years to meet the standards, the report proposes.
“The federal government writes a $180 billion check annually to thousands of colleges and universities using taxpayer dollars to fund schools from the highest performing to the lowest, with virtually no consideration of institutional performance on access, success, or student loan repayment measures,” said Michael Dannenberg, director of higher education and education finance policy and a co-author of the report. “Schools falling beneath the bottom fifth percentile on these measures represent the ‘worst of the worst,’” said Mary Nguyen Barry, higher education policy analyst and co-author. “Establishing goals without consequences . . . won’t protect students from a lifetime of mounds of debt, a meaningless degree, or no degree at all.”
Many for-profit colleges enroll a high percentage of low-income, non-white and adult students. They tend to have low graduation rates and high default rates. However, also in the bottom 5 percent are a number of historically black colleges as well as “minority-serving” institutions with heavy Latino and Native American enrollments. Linking aid to student success would be politically difficult.
Elite universities and private colleges that can’t afford much financial aid tend to admit few Pell-eligible students. These “engines of inequality” have a lot of political clout too.