Will For-Profit Colleges Be Held Accountable?

Washington: A Negotiated Rulemaking Committee meets for the first time today to discuss the regulation of “Gainful Employment” standards at American colleges across the country. The meeting is the first of three that will be held this week; the last three will be held the week of October 21st.

While the committee meeting is meant to set standards by which colleges and universities will be able to definitively regulate and report the effectiveness of their vocational programs in regards to future employment opportunities for students, the meeting is also seen as the Obama Administration’s pushback against for-profit schools and their undesirable track record with student graduation rates, student loan defaults, and continued tax-payer support.

The “Gainful Employment” stipulation would potentially strip accredited institutions of access to the government’s financial aid programs which have helped fuel the growth of for-profit schools over the last several years. Schools like the University of Phoenix, DeVry, and Strayer have all benefited from an influx of students – due to financial aid packages, the advancement of online classes, and a wide array of degree options – but an alarmingly high number of those students are not benefiting from attending the for-profit schools. In a report released by Iowa Senator Tom Harkin, Chairman of the Senate Health, Education, Labor and Pensions Committee (HELP), the numbers look grim. Over half of the students that entered for-profit colleges in 2008 and 2009 had left by 2010 without degrees, and over 95% of students that attended for-profit schools received student loans. With so many students abandoning degree programs yet still saddled with student loans to repay, those students had a much harder time avoiding default than students attending more traditional, non-profit schools. These numbers are even more emblematic when one considers that for-profit universities have historically charged more tuition than community colleges and many of the public universities. Because these schools are driven by profit – many of which are publicly traded – there are concerns that the schools are not as invested in curriculum, educators, or the outcome of student preparedness once pupils leave their institutions. The “Gainful Employment” measure would attempt to tie a school’s ability to continue receiving federal aid assistance with the success of its students – and their ability to repay their student loans – once they leave.

But some House members are pushing back. As recently as July, Rep. John Kline and Rep. Alcee Hastings of the House Education and the Workforce Committee sought to end the momentum of the “Gainful Employment” regulations by introducing H.R. 2637, which was aimed at keeping the government from placing responsibility of high debt-to-income ratios and student loan defaults on the shoulders of the institutions those students attend. While this bill could be seen as an effort to leave the freedom of educational decisions solely in the hands of schools, these members also received an influx of political contributions from for-profit schools over the summer, as reported by USA Today.

This will be a contentious fight moving forward as the Obama Administration works to curb the inflating cost of higher education, the economic plight of student loan defaults, and to reinforce its desire to hold institutions accountable with a more specific view of what schools are providing students as they move towards future job prospects. It will be hard for the government to force for-profit schools into more accountable measures; regardless, the steps that have been taken are important in shedding light on for-profit schools and their place in the transforming educational landscape. With more options comes the potential for more mistakes being made, and when considering a college degree, it is important for students to have the most information possible, especially when borrowing money. For-profit schools might be the right choice for some people, but the high number of students that do not complete degrees or have trouble paying off student loans may lead students to seek a more traditional method of schooling.


You can find the full report of the HELP Committee and Senator Tom Harkin here.

More information about the Education Department’s meeting on Gainful Employment can be found here.

Information on H.R. 2637 can be found here.

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