For-profit colleges have been the regular recipients of strong criticism, and not without just cause. Corinthian Colleges, a major for-profit college chain that collapsed after being charged with fraudulent marketing practices, left tens of thousands of students stranded with useless credits and piles of debt. The chain’s catastrophic failure, and others like it, have become touchstones for those who cry out against the inherent malignancy of for-profit colleges.
Complaints against for-profit malpractice follow a familiar course: For-profit colleges target low-income students with aggressive marketing strategies, promise them that a degree in x, y, or z will lead to a gleaming career, guzzle their federal loan money, and then leave them out to dry. Once enrolled, with no way out, students realize that the program they were ushered into is not worthwhile, that they can’t afford it (as they’d been assured), or that they simply don’t have the time to juggle a full-time job, coursework, and duties at home. With a six-year graduation rate of a mere 26 percent at for-profit institutions and staggering rates of loan default, the numbers are bleak.
The Obama administration took all this as a directive to crack down on for-profits, which, on the whole, truly did need a greater standard of accountability. But by focusing solely on for-profits, the former administration did not touch the many nonprofit institutions that also have dismal graduation and default rates. In order to level the playing field, the Trump administration recently called off that effort. However, rather than letting for-profit and nonprofit colleges alike vacuum up federal dollars while providing little in return, the administration and Congress should hold all colleges accountable. At minimum, prospective students should have easy access to accurate information about how much debt they will have when they graduate and how much graduates of each school and program typically earn.
In order to hold for-profit colleges more accountable to their students, the Obama administration devised the “gainful employment” (GE) rule, which was finalized in 2014. The idea was to flag for-profit colleges whose students have piles of debt and low job-placement success, and to deny federal funding to the worst offenders. As the vast majority of revenue at for-profit colleges comes from federal programs, losing access to these funds would mean instantaneous collapse for the offending colleges.
The GE rule came at a time when the for-profit model was already becoming less viable, with students increasingly skeptical of the value of attending. Enrollment at for-profit colleges has been steadily tanking for the past ten years, and many schools have been forced to shutter their physical campuses thanks to lack of demand. Enrollment at the University of Phoenix, which was one of the biggest players in the for-profit scene, has decreased by a whopping 70 percent since 2010.
A few months ago, however, Betsy DeVos and the Department of Education officially repealed the gainful-employment regulations, effective in July of next year — a move that provoked heavy criticism. In short, the rollback means that for-profit colleges will again be able to receive federal money whether or not their students have brighter career prospects post-attendance.
Given the past sins of so many for-profit colleges, it’s hard to see why releasing them from a reasonable regulation was a top priority for the Department of Education. But at the same time, it makes little sense to regulate for-profits while leaving nonprofits with the same problems alone: If a school leaves students with lots of debt and low earnings prospects, why should being a nonprofit preserve its federal funding?
For-profit colleges are not inherently bad. They essentially pioneered the online classroom, a move that received much backlash at the time. The option to take classes online has proved immensely valuable, opening the doors to students who were unable to fit traditional classes into their schedule, such as single parents and full-time workers.
Indeed, for-profit schools are the paragon of accessibility. By definition, selective schools cannot admit everyone. While critics often assert that for-profit colleges target and prey on low-income, veteran, and first-generation students, it is quite possible that this analysis is inverted: For-profit colleges fill a gap in the education sector, servicing nontraditional, low-income, veteran, and first-generation students when other institutions will not. In addition, because most students at for-profit colleges enjoy neither financial support from Mom and Dad nor the privilege of taking time off of work to study, the low graduation rates cannot be attributed entirely to the schools themselves. They stem at least in part from the realities of their students’ lives, which the Obama regulation did not take into account.
Most critics argue that for-profit colleges should be annihilated in favor of community colleges, because community colleges offer a better overall value. However, they often fail to mention that community colleges are generally structured to serve as a stepping stone from high school to a degree at another institution. While some community colleges do offer training in concrete, career-oriented skills, only 12 percent of students enrolled in certificate programs at for-profit colleges would have had access to a similar program at a community college where they lived. In other words, for many students seeking direct career preparation, for-profit schools are the only options available.
Protecting the future viability of for-profit colleges should not be the point of the gainful-employment rollback. Instead, this should clear the way for a new mode of accountability for all institutions, not merely for-profits.
Jason Delisle, a resident fellow at the American Enterprise Institute with a focus on higher education, thinks DeVos made the right move in rolling back the Obama-era regulation. Delisle is not against accountability for the for-profits; rather, he believes the same rules should apply to everyone. He says the elimination of the GE rule “passes the baton to Congress” to legislate new measures of accountability across all American colleges and universities. In his view, rather than a government-imposed regulation, the debt-to-earnings ratio of students from all colleges and universities (and the specific programs at each) should be public information so potential students can make a fully informed decision prior to enrollment.
Senator Lamar Alexander of Tennessee, who chairs the Senate Committee on Health, Education, Labor, and Pensions (HELP), has been vocal about enforcing greater accountability among colleges. He gave an opening statement at a hearing on accountability in April, asserting that the GE rule “has proved to be a confusing and ineffective measure of accountability because it is too complex and does not account for students who take out loans but do not complete their degrees.”
Rather than slashing accountability measures, however, Senator Alexander thinks
we need a more effective measure of accountability. But I do not want the federal government acting as a sort of national school board for colleges — telling states and accreditors and boards of directors at institutions how to manage the 6,000 colleges and universities. . . . Instead, Congress should create a new measure of accountability that looks at whether students are actually repaying their loans. This would be a more effective and simpler way to ensure that taxpayers aren’t financing degrees that are priced so high and worth so little that students are never able to pay back their loans.
Currently, the Department of Education is seeking this new mode of universal transparency through a reboot of the College Scorecard. Launched in 2015, the scorecard is a database managed by the Department of Education that tracks the outcomes of students who took out federal loans. The hope is that the scorecard will promulgate the graduation rate, the average student debt after graduation, and the average salary of a student ten years after graduation (among other measures) for every program at every college and university. This way, students will be able to make a well-informed decision about the financial benefits of where they study, as well as what they study.
At the moment, the scorecard certainly does not live up to this vision. The website is missing a decent amount of information, with “Data Not Available” popping up on graphs for a good bulk of schools, often rendering institutional comparisons ineffective. But this mode of regulation is the best — giving prospective students all of the information they could need in order to make informed decisions about what is good for them.