Profit

For-profit colleges have made a comeback fueled by COVID


For-profit colleges and vocational schools in the United States were in a privileged position when the pandemic arrived. Freed by the Trump administration from the restrictions imposed by the Obama administration, they had easy access to federal student aid and, since many of their programs were already conducted online, they could pose as providers of safe and practical benefits for people confined to the home. and the dislocated. Armed with this message, they made the most of the moment. According to the National Student Clearinghouse Research Center, as traditional higher education institutions lost students, enrollment in for-profit four-year schools increased by more than five percent last year; among students with no previous college experience, the increase was nine and a half percent.

Hundreds of thousands of Americans have made significant commitments of time, effort, and money to these institutions. And many can get what they’re looking for, including jobs and opportunities that justify the investment. But an alarming number of others, judging by the recent industry record, have set out on a path destined to end in dashed hopes and crushing debt – and many more will be on the way. down that path over the next few years, unless the Biden administration does something about it.

For-profit higher education is a world of large corporations that derive most of their income (typically over seventy-five percent) from government grants. The industry in its modern form dates back to the late 1940s when the GI Bill was first launched. Then as now, some companies put more effort into raising federal student aid funds than teaching or learning. The GI Bill is rightly celebrated for helping millions of returning veterans get to college; it also sparked an “explosion of deceptive advertising, predatory recruiting practices, substandard training, outright fraud,” writes David Whitman, in his recent book “The Profits of Failure: For-Profit Colleges and the Closing of the Conservative Mind. “

A string of scandals sparked a crackdown, however, and for decades such abuses could be counted on to spark bipartisan outrage and pressure for countermeasures. In the early 2000s, however, the political dynamic changed with the rise of giant corporate chains that spent unprecedented amounts of money on lobbying and campaign donations, focusing an increasing share of their attention. on the Republican Party. Republican officials have in the past been quick, sometimes quicker than Democrats, to speak out when it is shown that schools systematically laughed at the government; now (as Whitman’s subtitle sums it up) they have become blind defenders of the industry and its subsidies. The final years of George W. Bush’s presidency brought yet another round of scandals, involving schools that deployed armies of telemarketers to enroll people by fair or crude means. The University of Phoenix, according to the findings of a subsequent Federal Trade Commission investigation, claimed investment partnerships that did not exist – with AT&T, Yahoo, Microsoft, Twitter and the American Red Cross. Corinthian colleges sent out memos (litigation would reveal) encouraging recruiters to target “lonely” and “impatient” people with “low self-esteem.” The ITT technical institute enrolled tens of thousands of students in computer courses that were often so hastily concocted, and generally so frowned upon by employers, that some alumni eventually decided that their job searches fell short. would have gone better if they had left ITT out of their resume.

Industry misdeeds led the Obama administration to promulgate the Gainful Employment Rule, a set of regulations requiring public disclosure of key performance data, school-by-school monitoring of student debt levels and income, and a cut in federal aid to institutions that systematically over-committed and under-delivered. These measures, along with the bad publicity, have caused some of the worst institutions, including Corinthian and ITT, to shut down, while others have struggled to rename themselves. By the end of the Obama years, the whole concept of for-profit higher education had fallen into disrepute. Investors as well as students were fleeing. The industry needed a miracle.

He’s got a chain. Donald Trump, the former principal owner of Trump University, has become President of the United States. He installed as Secretary of Education Betsy DeVos, a privatization fanatic with a large record of investments in companies associated with for-profit schools. DeVos has placed a roster of industry leaders and lobbyists in high-level political positions, and she and her team have made it clear their contempt for the paid employment rule, first by neglecting it, then, in July 2019, by repealing it.

Since Biden’s presidency began, there have been many calls for the reestablishment of rule. The Ministry of Education, now headed by Miguel Cardona, is able to make this wish come true, thanks to a lawsuit in 2020 filed on behalf of the students by the National Student Legal Defense Network. Cardona and his team could come up with a settlement overturning the rule’s repeal by their predecessors, as plaintiffs have requested. In a brief filed in late October, however, government lawyers said they would prefer to leave the repeal in place.

It was a surprising statement. The administration had shown concern for victims of industry deception by relaunching a loan forgiveness program for borrowers entering the public service and backing a freeze on pandemic-related repayments – a policy recently extended until May 2022. The government did not challenge the applicants’ characterization of the repeal as a flawed procedural decision based on inaccurate evidence. Two of the senior officials of the Ministry of Education have, in other capacities, defended the importance of protections for borrowers at the heart of the paid employment rule; in fact, the ministry is currently preparing plans for a new rulemaking initiative to develop even stronger safeguards. (One of the goals of these regulations is to implement a provision of the US bailout, tightening a ninety percent limit on how much of a school’s income can come from public funds.)

Why then did the Administration not seize the opportunity to put the old rule back in place? In a supporting affidavit submitted with the October brief, James Kvaal, the Under-Secretary for Education, disconcertedly explained that such an effort would result in “a considerable disruption and diversion of resources from the priorities of the ministry, which include the reinstatement of student protections in this rule. . “

The intentions seemed good, but the logic was far-fetched, confusing a long-term project with a short-term need. New rule making could easily take several years. (Almost five years have been spent developing and implementing the paid employment rule.) Meanwhile, large numbers of people will select schools and programs without having access to crucial information. .

In an amicus brief, a California group called Housing and Economic Rights Advocates presented a series of real-life stories about what can happen to those who choose badly. Eric Luongo, hoping for a career in web graphic design, moved to DeVry University, he said, after learning that his graduates regularly earn more than eighty thousand dollars per year. Luongo, a Navy veteran, should have been able to cover much of the cost with the benefits of the GI Bill and other grants, but the school, according to the brief, misled him by contracting unnecessary loans. After graduating, he failed to land a design job and was stunned to learn that he owed over a hundred thousand dollars. Mallory Peck walked away from her studies at the Art Institutes International Minnesota with nearly forty thousand dollars in outstanding loans and a degree that turned out to be “useless.” Kareem Britt decided to study heating, ventilating, and air conditioning after stumbling across an ad for Florida Career College aimed at those who were fed up with “ramen noodles” and “ready for steak.” Training was sketchy, according to Britt, and training tools and equipment were “at best limited, and non-existent at worst.” He ended up struggling to repay thousands of dollars in loans while working as a cook, the same job he did before.