Gainful employment regulations are baaaaaaaack. The Obama administration will try again to regulate career training programs — primarily at for-profit colleges — that leave students in debt they don’t earn enough to repay.
The draft “includes standards for debt-to-earnings rates and other language that could generate significant debate,” reports the Washington Post. The Education Department estimates that 9 percent of career training programs could fail to meet the new standards.
The White House push is too narrow, argues Reihan Salam on Reuters.
The Department of Education plans to identify vocational programs that leave their average graduate paying a high share of their earnings in loan payments (8 percent or more of total earnings, 20 percent or more of discretionary earnings) as well as those with a high average loan default rate (of 30 percent or more). Programs that cross these red lines in two out of three years will lose the right to offer their students federal financial aid.
Curbing the abuses of this sector could do some good. But career training programs represent a small subset of the higher education universe. If we take a somewhat wider view, it seems pretty puzzling that, say, business or engineering majors at four-year colleges and universities aren’t being treated as enrollees in vocational programs.
Many recent college graduates are underemployed and unable to pay back student loans, Salam argues. Most thought their degree would lead to a good job.
“If the regulation were applied to all of higher education, programs like a bachelor’s degree in journalism from Northwestern University, a law degree from George Washington University Law School and a bachelor’s degree in social work from Virginia Commonwealth University, would all be penalized,” complains Steve Gunderson, president of the Association of Private Sector Colleges and Universities, the for-profits’ trade association.
Why not “protect consumers from the least effective post-secondary programs” in all branches of higher education?, asks Salam. Whether it’s overpriced paralegal training at a career college or an overpriced bachelor’s in film studies from a private nonprofit college, the borrower is likely to default.
“Coding academies,” which offer intensive, short-term training in programming skills, don’t rely on state or federal financial aid. But California’s Bureau for Private Postsecondary Education is threatening to shut down “coding academies” and other training providers unless they apply for state licensing.
The startups — which include places like App Academy, Dev Bootcamp, General Assembly, Hack Reactor, Hackbright Academy and Zipfian Academy – typically charge between $8,000 and $12,000 for a six- to 10-week course, reports Inside Higher Ed.
App Academy is free — until graduates of the nine-week course find a job. Then they pay 15 percent of their first-year’s pay, which averages more $80,000 a year, says co-founder Kush Patel.
The BPPE sent a letter telling coding academies to cease operations immediately or face fines of $50,000. But spokesman Russ Heimerich told Inside Higher Ed that bureau officials neither “believe these schools are unscrupulous” nor aim to run them out of business. “If you’re making a good-faith effort to come into compliance, it’s not like we’re going to move to shut you down,” he said.
General Assembly and Dev Bootcamp began the process of applying for California licensure before the letter was sent, founders say.
Dev Bootcamp’s Shereef Bishay says he understands the need to protect against shady education providers, but “the regulation was written without a new sector like ours in mind.”
The rules require, for instance, that all instructors must have three years of teaching experience, and while Dev Bootcamp’s instructors average 7-10 years of experience in their industries, where they have mentored employees and trained apprentices at companies like Google and Apple, many of them have little formal teaching experience.
. . . Similarly, the BPPE regulations state that a provider must run any change in curriculum by the agency, and that approval may take up to six months. “We change our curriculum every three weeks, and we can’t teach technology that’s six months old,” Bishay said.
. . . “Instead of telling me how to educate them, how to track them, and how often my curriculum can change, make sure my alumni are succeeding and that I’m not defrauding my customers. I support that 110 percent.”
Jake Schwartz, CEO and co-founder of General Assembly, hopes regulators will crack down on any providers that are “ripping people off.” His company has a 96 percent job placement rate, he said.
Hack Reactor, which charges $17,000, claims a 99 percent placement rate, reports Venture Beat.
Federal aid is subsidizing colleges with low graduation, loan repayment and employment rates, writes Judah Bellon on Minding the Campus. Instead of singling out for-profit higher education, regulators should scrutinize the outcomes of all colleges and universities that rely on federal loans and grants.
For-profit colleges enroll more black, Hispanic, low-income and older students than public and nonprofit institutions. Their no-frills programs attract working students who need a flexible schedule, writes Bellon. Technical training is the strong suit of for-profit colleges, which adjust quickly to employer demand. For-profit students are more likely to complete certificates and associate degrees than community college students.
However, for-profit students are much less likely to complete four-year degrees and much more likely to default on student loans. That inspired the U.S. Department of Education’s attempt to enforce “gainful employment” rules limiting aid to programs whose graduates don’t earn enough to pay back their loans.
Regulate the bad applies, writes Bellon. But don’t single out for-profit higher education. If students are failing to graduate for jobs or unable to pay back their loans, it doesn’t matter if they attended a for-profit, private nonprofit or public institution.
The U.S. Education Department will rewrite “gainful employment” regulations fought bitterly by for-profit colleges, according to a notice published in the Federal Register. The department plans to use “negotiated rule-making” to move forward its agenda on college aid and affordability, substituting regulation for legislation, notes Inside Higher Ed.
The traditional venue for enacting long-term changes to help students afford, attend and graduate from college would be the Higher Education Act, the massive law governing federal financial aid programs that is periodically rewritten to account for changing times or to pursue new policy goals.
Usually, negotiated rule-making comes after the revised act is signed into law, to wrangle with details and write more precise regulations to put a legislative vision into practice. The Education Department convenes a panel of stakeholders — representing different sectors of higher education as well as some advocacy groups — to hammer out new regulations for colleges to follow.
The Obama administration has proposed expanding Perkins Loans and federal work-study to reward colleges that offer “good value” by keeping cost-per-degree numbers down. However, spending more will require legislation.
The department used “negotiated rule-making” to write the “gainful employment” rule, which was partially overturned in court last year.
Congress members are pushing back. House Committee on Education and the Workforce Chairman John Kline, R-Minn., Rep. Virginia Fox, R-N.C., and several Democratic representatives sent a letter urging Secretary of Education Arne Duncan to “abandon these harmful regulations and instead work with Congress to strengthen the nation’s higher education system through reauthorization of the Higher Education Act.“
Higher education must discard elitism and broaden access said panelists at Charting the Future of Higher Education, reports Diverse. Education Sector hosted the conference, which was funded by the Lumina Foundation. Discussants contrasted Washington Monthly‘s college guide, which looks at how colleges encourage social mobility, with the U.S. News guide, which ranks colleges on selectivity.
“We think (students) need lots more options that better match students to institutions that will both challenge and prepare them for a more global future that we see reflected in these international rankings,” said Lumina CEO Jamie Merisotis in opening remarks.
Basing degrees on “seat time” is old hat, said Robert Mendenhall, president of the online Western Governors University. WGU awards degrees when students demonstrate competencies, “irrespective of how many courses they took.”
“We have an environment that doesn’t foster innovation or change,” Mendenhall said. The accreditation process takes too long, for example. “If you can figure out how to stay in business five years without being accredited, you’ll get it.”
Zakiya Smith, senior education adviser at the White House Domestic Policy Council, defended regulation, citing new rules limiting for-profit colleges. “We’re always open to ideas, so we’re balancing (innovation and regulation) and not harming people,” said Smith.
Accreditors “judge newcomers largely on how much they look like those who already exist,” countered Carey. That’s one reason for-profits exist, he said. “There should be a fast track to accreditation for those who make the best case, and a fast track out for those who are not serving students well.”
Rising tuition is putting higher education out of reach, warned Paul Glastris, editor of the Washington Monthly. Federal higher education investment should focus on community colleges to have the most impact, Glastris told Community College Times after the forum.
Kevin Carey, policy director of the Education Sector, called for reforming college admissions with innovations such as ConnectEDU, which matches students with colleges that meet their needs and budgets.
ConnectEDU helps elite colleges recruit high-achieving students from rural, lower-income or other often-overlooked high schools, explained founder and CEO Craig Powell. Many students from those schools don’t understand how education affects their career goals, don’t believe they have a chance to get into a good college, don’t realize they might be eligible for financial aid, and don’t understand the impact of a huge amount of student loan debt.
ConnectEDU allows students to post their transcripts, grades and other data online; keep track of applications and financial aid forms; and select a career.
The “vast majority of kids” using ConnectEDU enroll in a community college, said Powell. Some are pursuing an associate degree or certificate, while others want to cut the cost of a four-year degree. ConnectEDU helps them plan careers and monitor their progress, he said.
Smith agreed that not all students need a four-year degree to be successful.
While new federal rules for for-profit colleges are stalled, for-profit colleges face more state-level regulation, reports Stateline.
Maryland’s Legislature has passed legislation eliminating all state aid to for-profit schools, banning commissions or bonuses for student recruiting, and requiring for-profit schools to contribute to a fund to protect students if any college in their group breaches a contract. Gov. Martin O’Malley says he’ll sign the bills.
California will restrict for-profit colleges’ eligibility for Cal Grants, state-funded college scholarships.
Nebraska legislators are expected to approve a bill streamlining the regulatory process for all colleges, for-profit or not, and increasing accountability once colleges are approved.
However, tighter controls on the accreditation of for-profit colleges failed this year in North Dakota.
Bills regulating for-profit colleges have been proposed in Arizona, Iowa, Idaho, Massachusetts, Minnesota, Missouri, Mississippi, North Carolina, New York, Texas and Utah. In addition, attorneys general in Florida, Illinois, Iowa and Kentucky have launched investigations of for-profit schools.
“It is my job to ensure that businesses — and these schools are businesses — are following Kentucky’s consumer protection laws,” Kentucky Attorney General Jack Conway wrote in an op-ed for the Lexington Herald-Leader.
“Gainful employment” regulations due soon would deny federal loans and grants to college vocational programs with high debt and default rates. For-profit colleges, fighting hard against “gainful employment,” found an ally this week in House Education and Labor Committee Chairman John Kline, who filed an amendment to prevent the Education Department from finalizing the rules. Rep. Alcee Hastings, a Florida Democrat, joined Kline, making it a bipartisan measure.
The House proposed amendment would block funding for the gainful employment rule for the remainder of the current fiscal year, which ends Sept. 30, and would provide more time to change the department’s plan, Kline said. The amendment also would stop government rules scheduled to go into effect July 1 requiring for-profit colleges to notify the department before offering new courses, he said.
“This gives us more time, or the department more time, to consider the language of the rules,” he said yesterday. “We know that there are proprietary schools that have had plans to expand and have stopped or laid off people in large part because of the threat of these rules.”
Blocking “gainful employment” gives the green light to waste, fraud and abuse by for-profit colleges, charges Campus Progress.
As career colleges expand rapidly, New York’s regulatory agency is “in chaos,” according to one official. “The state’s Bureau of Proprietary School Supervision can’t keep up with a rising tide of new schools — and has largely abandoned probes into unlicensed schools altogether,” reports the New York Daily News.
In the mid-1990s, a staff of 40 covered 300 schools. Today, a staff of 20 covers 500 schools, with 100 to 150 applications pending.
There are five investigators statewide, and to keep costs down they rarely fly to the western half of the state. In the last year, all schools cited for violations were in New York City or Long Island.
Unlicensed schools are not investigated, unless there’s an immediately health threat. Instead, they get a letter “telling them that they might need to be licensed,” said Carole Yates, head of the Bureau of Proprietary School Supervision.
The bureau is funded by the schools it regulates.
For-profit college recruiters lied about potential earnings and deceived applicants about loans, charged undercover investigators in a Government Accountability Office report released Aug. 4. Now the GAO has changed key passages, reports the Washington Post. All the changes make the for-profit recruiters look better.
For example, the original report charged a recruiter with telling the investigator that some graduates in architectural and civil drafting earn $120,000 to $130,000 a year. The GAO notes that 90 percent of drafters earn less than $70,000. In the revision, the recruiter adds that in the current economic climate, starting pay is only $13 to $14 an hour, $15 an hour if a graduate is “lucky.”
In another case, the original report said a recruiter had inflated salaries for massage therapists. The revision admits the recruiter gave an accurate figure, but added that the school’s massage instructors make much more.
The original report charged a recruiter had told the investigator that he’d finish the seven-month course before the details on the loan application would be checked by the Education Department. That suggestion came from the investigator, the revised report says. The recruiter merely agreed.
Undercover GAO investigators posed as prospective students in encounters with college representatives that were captured in audio and video recordings. The GAO is a nonpartisan investigative arm of Congress.
Its widely reported findings were a major political setback for the industry, and executives apologized for incidents that put their schools in an embarrassing light. Industry critics said the report buttressed their case as they pushed for a new rule requiring that for-profit colleges demonstrate that their courses lead to “gainful employment” for their students or lose access to lucrative federal student aid programs.
Democrat Sen. Tom Harkin, chair of the Health, Education, Labor and Pensions committee, used the GAO report to lambaste for-profit higher education in hearings on regulating the industry. While the GAO stands by its initial conclusion — some for-profit recruiters provide misleading information and encourage loan fraud — Republican Sen. Mike Enzi, the ranking Republican on the committee, wants the GAO to explain the changes. He wrote in a letter Tuesday to Gene L. Dodaro, the acting head of the GAO, that the “substantial” revisions raise “a number of troubling questions” and “undermine many of the allegations” in the GAO report.
Under attack in the Senate and facing tougher regulation of student loans, for-profit higher education companies have seen stock prices fall sharply. Both Apollo Group, which owns the University of Phoenix, and Kaplan have adopted new policies to screen out less-motivated students, who are unlikely to complete a program and earn enough to pay back their loans. Expecting enrollment declines, both companies are laying off employees.
Who will investigate the GAO? asks Jonathan Robe on the College Affordability blog.
Now I know that nobody is perfect and therefore the need for revision doesn’t necessarily imply malfeasance on the part of the GAO, but when you’re doing an investigation purporting to show misleading advertising and even fraud, the first rule of thumb is that you do all that you can to avoid committing the same error you accuse others of committing.
In an unbiased evaluation, would all the errors go one way?
For-profit colleges are attracting students — and regulators’ attention, write Elaine Korry and Liz Willen in the Washington Post. Students say the for-profits offer convenient schedules that let them complete a degree quickly. Critics say too many students end up with crushing debt.
New federal rules, expected to be formally proposed in coming days, would tighten oversight of the industry. One much-debated proposal would cut federal aid to for-profit schools in certain cases if graduates spend more than 8 percent of their starting salaries to repay loans. Sen. Tom Harkin (D-Iowa) also plans this month to begin hearings on the industry, examining recruiting practices and student loan default rates.
Enrollment in for-profit colleges such as the University of Phoenix, DeVry University and Kaplan University nearly tripled in the last decade. “The growth has been fueled in California and some other states by discounts and incentives the schools offer to help students apply credits earned online toward community college degrees.”
Federal aid to for-profit colleges jumped to $26.5 billion in 2009, from $4.6 billion in 2000. Two-thirds of for-profit students receive federal Pell grants, which target low-income students and don’t have to be repaid. Even so, more than half of bachelor-degree recipients in 2007 at for-profit schools fell into a “high debt” range of at least $30,000 in loans, a recent College Board study found.
Tuition at for-profit schools averaged $14,174 in 2009, according to the College Board, compared to $2,544 at community colleges. However, low tuition doesn’t matter if classes aren’t available. California’s community colleges are canceling classes and turning students away. That’s been a bonanza for the for-profits.
Education Secretary Arne Duncan last month urged the sector “to get rid of bad actors.” But Duncan added: “Among the for-profits, phenomenal players are out there making a huge difference in helping people take the next step in the economic ladder.”
For-profits claim a “gainful employment” rule — loans must be repayable with 8 percent of starting pay — will put many programs out of business. (How many liberal arts students would meet that standard?) The Quick and the Ed analyzes the impact here and here.
Yesterday, the Education Department announced 14 new rules — including a ban on compensating recruiters based on how many students they bring in — but delayed the gainful employment rule to give time for more consideration.
For-profits will educate 42 percent of adult students by 2019, up from 25 percent now, predicts the consulting company Eduventures.
Online education, in which for-profit universities are “vastly overrepresented,” will become the norm for adults seeking bachelor’s degrees, Richard Garrett, an Eduventures managing director, told the Chronicle of Higher Education.