Regulating for-profits

National Journal’s Education Experts discuss regulating for-profit higher education. One proposed regulation will ban incentive pay based on how many students a recruiter signs up.  Another — held back for further consideration — would cut federal aid to for-profits whose graduates pay more than 8 percent of their salary to service their student-loan debt. The industry is fighting this one very hard.

Steve Peha of Teaching That Makes Sense wonders why regulators are going after the “expensive sham degree from Strip Mall U” and ignoring “an equally useless and perhaps even more costly credential” from a traditional institution.

Drop in at any third-rate state school and I’m sure you’ll find dozens of kids who won’t find work in their fields after paying a pretty penny for the privilege of a few nice buildings, a little green grass, and a better chance of getting laid on the weekend. Out of the last class of pre-service teachers with whom I worked, maybe one or two might have been good enough to get a job and keep it. Not their fault. Or mine. The university sucked them in and immediately struck up the band with “Pomp and Circumstance,” even when it was obvious that many were not up to the task. Kids who can barely speak and write in complete sentences are rushed through their programs before their financial aid runs out — and profs who think they ought not be passed along are discouraged from giving out failing grades, even when their students fail to master crucial material or even to complete minimal amounts of work.

Education Sector‘s Kevin Carey also wants accountability to extend to all higher education sectors.

Once the Department implements the “gainful employment” policy, why limit it to for-profits? As the New York Times recently reported, some private universities think nothing of letting students borrow $100,000 for a bachelor’s degree with limited value in the job market. While the for-profit share of public subsidies is growing, the vast majority of taxpayer support for higher education continues to flow to traditional public and non-profit institutions. Many of them are doing a poor job and have loan default problems of their own. I hope the Department’s actions are a first step toward higher standards for all public support of higher education, for-profit and otherwise.

I agree. But taking a hard look at what college students get out of their degrees — or a few semesters in college with no degree — will be very painful. Should federal aid support poorly prepared students who are unlikely to earn a useful credential? Should grants and loans go to students with academic interests unlikely to qualify them for a job? What about those third-rate schools turning out semi-skilled graduates?

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  1. SuperSub says:

    This is a perfect example of free market influence…

    One, the only reason that demand (and therefore costs) have inflated while value has deflated is due to government interference… the guarantee of a college education whether someone wants it or is capable of it.

    Secondly, the market is starting to shift. College graduates are turning to plumbing and other skilled trades after graduation when they find that their degrees are worthless in the job market. Given enough time, the realization that many degrees are worthless will trickle down finally to parents and high schoolers.

    No government influence is needed, but unfortunately I believe that Congress will step in at the behest of colleges to try and artificially prop up that market. This will just make the situation worse and prolong the problem.

  2. Cranberry says:

    I gather that “profit” is a dirty word in some quarters. I’m a little perplexed, though, why for-profit secondary education is being singled out as Public Enemy Number 1, when the so-called “non-profit” colleges and universities have allowed tuition to rise so sharply over the last several decades. Many colleges aren’t barely making ends meet with tuition, which is what I would naively expect from the “non-profit” moniker. They see fit to pay their presidents and coaches well!

    A determined trade school student may be a better bet to repay his student loans than the graduate in Film Studies from a “nonprofit” University. Let’s also consider the recent scandal in the too-chummy relationships between college financial aid offices and for-profit student loan outfits.

    I suspect some colleges are starting to feel the pinch from a lack of communications majors? Is it moral to make it financially impossible for a working-class child to try become a plumber? 8% of a starting wage is…not much.

  3. Michael E. Lopez says:

    Somewhere, people forgot that a college education is a luxury good, not an economic investment. The strong correlation between college education and financial success was never a causation-relationship; even in cases where a degree was required for a profession (teaching, law, medicine) the degree itself was something obtain en passant to starting the career or the training for the career.

  4. tim-10-ber says:

    I say investigate them all…charge the cost of remedial classes to the K-12 school district from which the student came and hold all colleges (for profit and “NFP”) accountable for a quality education, graduating students and providing opportunities for all students to find quality jobs…

    hmmm…also hold all schools responsible for monitoring the amount of debt students incur and council them to less expense alternatives…colleges truly need to raise admission standards and do a better job screening applicants to determine college readiness…

  5. Charles R. Williams says:

    For profit schools are gaming the system for profits. Non-profit schools are gaming the system to support a key Obama constituency – academia. Profits are evil. Supporting the Ward Churchills and the queer studies people is good.

    The issue here is that 18 year olds are being tricked into taking massive loans that cannot be discharged in bankruptcy. Let the educational institutions collect the debts and eat the losses and the problem of debt slavery goes away. But then semi-literate disadvantaged students would not be able to get degrees.

  6. Is it just me that wonders why the links are to the website and not to the article? I can’t read either article.

    Agreed with the larger point.

  7. A question: Are the for-profit schools going through the same accreditation process that, say, a state university must do? I’d think that would be one check on them making unrealistic promises, or how the finances and such are managed.

    Also, which Michael E. Lopez said: earning a college degree does not guarantee you a job in your field. It is, as he said, a “passport.” I think too many people have forgotten that – I’ve had students actually SAY “D is for Diploma” (meaning they expect that they can earn Ds, still graduate, and still get a job.)

    Granted, my department has a very good record of “placement” – the students who actually give a darn about learning and do stuff like internships or research experience or the field-trip classes get good jobs, but then again, the people who slacked through, they still are stocking the shelves at Wal-mart after earning their degree. And really, that’s OK with me.

    A cushy job after college graduation shouldn’t be expected to be handed out like trophies in t-ball. Not everyone is a “winner.” And in a lot of cases I’ve seen, the “not winners” are people who weren’t willing to make an effort.

  8. “Not for profit” organizations are often *very* profitable for their key executives on an individual basis…check out the incomes of college presidents and of many association heads. All the “nonprofit” designation means is that there are no pesky shareholders with whom the loot must be shared.


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