Tag Archives: for-profit colleges

Updated Carnegie Classifications Reveals the Transformation to Higher Education

The Carnegie Foundation for the Advancement of Teaching has released its Updated Carnegie Classifications, and the news confirms what many of us have suspected in the dramatically altering landscape of higher education.  Said Chun-Mei Zhao, who directs Carnegie’s Classifications, “This suggests that the higher education landscape is shifting further away from the traditional model of the liberal arts college.”

The Updated Classifications indicate far more than just the shift away from the traditional liberal arts college that still dominates the way many of us think of colleges and universities.  The private, for-profit sector represented 77% of the new institutions since the last time the Classifications were released in 2005.  Moreover the shift is particularly noticeable in the increase in the number of schools with a professional focus; those schools with a “Professional Focus” or a “Professional Focus plus arts & sciences” now award 60% of the bachelor’s degrees in professional fields.

While the transforming character of higher education is evident in these numbers, the change in enrollments in only five years is particularly telling.  Between 2005 and 2010, traditional public institutions’ enrollments grew by 13.9%, and traditional private institutions’ enrollments grew by 9.3%.  By contrast, the enrollments in private, for-profit colleges and universities more than doubled, growing by 110%.

The shifting industry was also revealed in what is occurring at the community college level.  Those schools classified as traditional associate’s colleges increased dramatically the extent to which they are awarding not just associates’ degrees but bachelors’ degrees as well.  In 2005, 109 traditional associates’ colleges awarded bachelor’s degrees; in 2010, the number was 162, a 49% increase.

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Controversy Continues over GAO Report

Norton Norris released a second study today on the for-profit industry – this time the study focused on the much-debated GAO report on for-profit education and what Norton Norris deems its “disingenuous and erroneous conclusions.” The Norton Norris report concluded that there were flagrant errors and misrepresentations in the GAO’s report even after the GAO issued a heavily amended and revised version of the study in November 2010.

In a press release, Norton Norris detailed its issues with the most recent version of the report:

  • Throughout their report, the GAO shows it does not understand the difference between an academic year and a calendar year. As a result, five of their findings regarding program length and cost are completely wrong and do not even merit mention in the report.

 

  • In one case, the GAO reports that an undercover applicant was told that getting a job “was a piece of cake” and that graduates from this school are making $120,000 to $130,000 per year. There is no evidence of this conversation in the recording.

 

  • During another visit (mystery shop) the question of graduation rate was NEVER raised by the undercover agent but the report indicates a different scenario and states: “The college representative did not tell the graduation rate when asked directly.” This conversation simply does not exist on the recording.

 

  • In an attempt to paint a college as “over-promising” expected earnings at graduation, the original GAO report stated the undercover applicant could make up to $100 an hour. The revised GAO report adjusts this down to $30 an hour. But the complete recording reveals that later in the discussion the admissions representative is clear that earnings are based on experience, the undercover applicant is given a data sheet and the admissions rep states that minimum average rate per hour for massage therapists in their area is $22. The GAO never reports this last accurate piece of information.

 

  • An admission representative thoroughly explains student loans and the importance of financial responsibility. The admissions representative even suggests the undercover applicant borrow less than what they need. However, the original GAO report as well as a revised version from November 2010 ignores these statements. Instead, they focus solely on another statement offered during the conversation regarding the undercover applicant’s ability to take out the maximum in loans.

An Inside Higher Ed article published today also highlights Norton Norris’ report and offers a response from the GAO. This controversy over dueling reports raises many issues, but it leaves unclear the extent to which there are real problems with admissions programs of for-profit colleges.  As a result of rules by the Department of Education, earlier inquiries and press reports, many for-profit colleges reviewed their admissions programs and, where appropriate, made changes designed to reassure their integrity in dealing with prospective students. It is unfortunate that the news today may be interpreted otherwise.

Increased Program Reviews at For-Profit Colleges

The Department of Education recently announced its intention to conduct an increased number of program reviews of student-aid operations in the coming year. These audit-like examinations are intended to ensure that students receive only the grants that they are entitled to and that institutions make the proper refunds. James Kvaal, Deputy Under Secretary of Education, announced that the department would be making these changes at last week’s Association of Private Sector Colleges and Universities Summit – citing a focus on the nation’s deficit.

Addressing this issue, the Chronicle of Higher Education reported:

About 30 percent of all Pell Grant funds now go to students in the for-profit sector. Mr. Kvaal said colleges that educate such needy students with good programs are performing “a service to those students and a service to the country.” But he said then, and at several other times during his talk, that the department remained very concerned about for-profit colleges that rely on “deceptive and high-pressure sales tactics” to enroll students or leave them with unreasonable levels of student debt.

 

Mr. Kvaal is correct in praising the service that is provided by those schools that educate high proportions of working class students.  It is unfortunate that a few bad actors lead to increased and often unnecessary oversight and review for the many good actors among for-profit schools.  The result will be to divert the Department’s resources from improving access to higher education and success of students enrolled in our colleges and universities.

Increased access and students’ ultimate successful graduation with skills and knowledge should be the higher education focus of the department – for both the traditional sector of the higher education industry and the for-profit sector.  Mixed messages from the department are harming the industry and diverting us from critical improvements that are necessary in the traditional and for-profit sectors.  And this is occurring just when we especially need higher education’s contributions to an educated labor force and new technology to aid us in recovering from a too-lengthy recession.

Divided Congress and Future of Education Reform

Following the recent midterm elections, it was apparent that there would be new challenges passing legislation due to the shift in Congressional leadership. Yesterday, The Associated Press published a story about the new difficulties arising from a divided Congress in passing education reform initiatives such as reauthorizing the Elementary and Secondary Education Act, revamping No Child Left Behind and in higher education, saving federal financial aid. See below for an excerpt from yesterday’s piece:

Although higher education is expected to take a backseat to K-12 policy during the next Congress, two significant issues loom: the fate of federal student aid programs and Democratic-led efforts to crack down on for-profit colleges.

The Pell Grant program, a lifeline for low- and middle-income families trying to afford college, has enjoyed bipartisan support over the years. But with Republicans running on a call to cut spending, federal grants and loans subsidizing higher education record could be on the table.

For-profit colleges are fighting a proposed Department of Education rule that would cut off federal aid to college vocational programs with high student-debt levels and poor loan repayment rates.

As leadership in Congress shifts, one thing remains certain: we cannot deny the merits of Pell Grants for students who need aid to attend college or the merits of for-profit colleges for those who seek to become career-ready during their higher education. I encourage members of Congress to explore the data on how their decisions will affect individual student populations before moving forward with any policy changes – each legislative decision will no doubt have a great impact on the educational future of thousands of deserving students.

Sticking to the Facts on For-Profits

On October 25, Lanny Davis penned an interesting piece on Huffington Post. See below for the comment I posted in response:

Mr. Davis addresses the issues with facts, and he makes a great point. The Department of Education’s approach seems to picture for-profit institutions as somehow unworthy of public support, perhaps because they are for-profit entities. In the process of doing so, the Department has failed to propose a rule that will effectively lower student debt rates while assuring access to higher education for working class students.

The facts, as Mr. Davis makes clear, picture for-profit institutions rather differently than recent media attention. As schools of choice for minority and working class students, for-profit colleges and universities have loan repayment rates that are expected for students from these backgrounds. For-profit institutions are less demanding on our tax dollars than traditional four-year schools when all sources of public funding, including loans, are taken into account, and their graduation rates are better than traditional community colleges’ rates.

For-profit schools are very market focused. They understand that they have to be innovative, offer convenient class locations and provide schedules that correspond to working adults’ needs. And their market orientation has led them to provide educational opportunity for students who otherwise would not attend traditional colleges and universities.

Like Mr. Davis, I encourage the Department to work toward lowering student loan rates, but at the same time, let us acknowledge that for-profit scshools are playing a critical role for students in the higher education industry.

Department of Education Meetings with Stakeholders

Yesterday, the Department of Education announced in the Federal Register that it would hold meetings with individuals who filed comments on the gainful employment rule. Presentations will allow stakeholders to express their views but offer no new comments. With so many negative comments having been filed against this rule, it is encouraging that the Department of Education is taking the time to listen to those who dissented to the rule. The Federal Register states:

On July 26, 2010, the Department published a notice of proposed rulemaking (NPRM) in the Federal Register proposing regulations for determining whether a postsecondary educational program provides training that leads to gainful employment in a recognized occupation and the conditions under which such a program would remain eligible for the student financial assistance programs authorized under title IV of the Higher Education Act of 1965, as amended (HEA). Comments on the Department’s proposed regulations were due on September 9, 2010. The Department received over 90,000 comments from a wide range of stakeholders, including for-profit universities and colleges, community colleges, students, higher education associations, members of Congress, financial analysts, economists, and college and university faculty.

The Department appreciates the tremendous feedback, both positive and negative, that it received on the proposed regulations. The response from so many individuals and entities demonstrates how important the issues relating to gainful employment and this rulemaking are. To better understand parties’ comments and have an opportunity to interact with commenters, the Department will hold four public meeting sessions over the course of two days. During this time, commenters who have timely submitted comments on the NPRM may orally present their comments to a panel of Department representatives. Commenters also may have an opportunity to respond to questions from the Department about their comments.

Why are Short-Sellers Talking to the Department of Education?

On October 16, Fortune published an article about short-sellers in the for-profit education debate. The article discusses the roles that all parties – short-sellers, community college officials and third parties – have played in the lawsuit between Keiser University and Florida State College. With access to private emails, Fortune summarized the issues:

In the litigation, filed earlier this month, a privately held for-profit school called Keiser University sued a competing nonprofit public institution, Florida State College, for spreading “injurious falsehoods” about Keiser. In its formal complaint, Keiser — which is based in Fort Lauderdale and has 21,000 students seeking degrees ranging up to doctorates — claims FSC and two of its administrators aimed to “derail” the for-profit education sector through a “false and misleading campaign.” That campaign, according to the complaint, was executed in part through a “conspiracy” with both advocacy groups and short-sellers like Eisman, who famously made a hedge-fund fortune by anticipating the housing-market crash in 2008 and betting against subprime mortgages. Along with FSC, the two administrators — CEO Steven Wallace and vice president Susan Lehr — are named as defendants in the suit. Eisman and two other institutional investors, Gilchrist Berg and Antal Desai, are cited only as “co-conspirators.”

One of the more interesting aspects of this case – and the Fortune article – is this – Why are short-sellers and representatives of the Department of Education talking with one another?

The Department of Education wrote the Gainful Employment rule as an attempt to decrease student debt.  Since its was released, there has been significant debate over whether the Gainful Employment rule is in fact a path to addressing the issue of student debt.  But whatever the rule’s merits, discussions between short-sellers and representatives of the Department of Education give an appearance of impropriety.  There is the appearance that information is being preemptively shared with short-sellers and some others who have vested interests in opposition to for-profit schools.  Addressing student debt constructively while assuring access to higher education are laudable goals; the appearance of impropriety tarnishes those efforts.  We should really be focusing on the future of our students – and their access to higher education along with their successful graduation.

Balanced Reporting in the For-Profit Sector

With so much negative coverage of private sector colleges and universities in the news, this blog has focused on a balanced view of access and success in higher education.  Some would say that the media’s reporting could hardly be called “fair.”  However, two media opinion pieces this week bring some balance to the issues.  Of particular note is the recognition of several themes of this blog: (a) the need for more “seats” and the capacity of the private sector to provide increased access and (b) the biased focus of the Department of Education on only one sector of higher education while ignoring the need to improve public higher education.  See below for excerpts from these articles:

The Florida Times-Union: “For-profit, ‘career’ colleges play vital role in education”

In a society where the haves and have-nots are on increasingly divergent trajectories, education remains a critical path to equal opportunity.

 

The traditional model of higher education – nonprofit public and private universities and community colleges – is limited in its ability to support this pathway.

 

In fact, the overcrowding problem is so acute at some community colleges that many students have stopped making progress toward a degree simply because they cannot get access to necessary courses.


Milwaukee Journal-Sentinel: “A well-laid plan to cripple needed for-profit colleges”

Let’s be clear. We agree with the concern the department is trying to address. The idea is that students should graduate with jobs that pay enough to enable them to repay their loans. We’re committed to students’ successes, so we would like to be part of any solution that helps further their success.

 

So what has gone awry?

 

The Department of Education proposed a rule based on anecdotal information from 16 unnamed for-profit colleges that no one is allowed to examine for accuracy. Worse, the “study” does nothing to compare graduation outcomes or debt levels of our students with public or non-profit institutions serving similar student populations.

Obama’s “War” on For-Profits

In his recent opinion piece in the Chronicle of Higher Education, “Is Obama at War With the For-Profit Universities?” Richard Vedder makes an interesting point. By attacking private sector institutions, President Obama and his administration are jeopardizing their self-proclaimed goal of increasing the number of college graduates. And in this economy, when a college education is necessary to get and keep a job, we should not be discouraging any student from pursuing higher education.

Private sector colleges and universities increasingly are the innovators among higher education institutions.  Many increasingly fuse innovative teaching practices with the latest in technology; they have a record of “customer focus” that has resulted in their offering convenient class times at nearby locations with career-related degrees.  The private sector of the higher education industry has thrived, in part because of its innovation and accessibility.

We should neither be employing legislative nor executive remedies to rising student debt that jeopardize access to higher education for only some students in only some programs at only some schools.  Our focus should be Instead on raising the quality of all of the higher education players, making the experience of higher education a transformative one that educates and raises the quality of our labor supply.  And that focus should be on traditional, public and private colleges and universities as well as private sector colleges and universities.  We should work to improve the state of higher education as a whole, without depriving students of access to federal financial aid.

Education is Not a Commodity

Colleges and universities have a primary responsibility to the community in the social contract they are granted.  An essential aspect of that responsibility is the education of students. Without students, there would be no purpose for an educational institution, including research universities. Private sector institutions exist to educate and train students with the knowledge and skills they will need in their careers, on-the-job, and in real-world settings.

In a recent Jackson Sun column, Professor Harry Lee Poe muses that education is not a commodity. While it might seem that Professor Poe was intending to argue against the for-profit education model, the article turns out to be quite the opposite. Instead, Poe emphasizes the importance of what he calls “corporate colleges” in adult education. “College education has become as important as a high school education was 40 years ago.” – he states – and private sector schools make it possible for adults to receive a vital portion of their education.

We need a variety of forms of higher education, and private sector schools in their considerable diversity represent many aspects of higher education.  Restrictions, like the ones proposed by the Department of Education’s proposed gainful employment rule have the considerable potential to limit some of those forms of higher education – either by restricting access of students to some of them or restricting new entrants into the higher education market.  Moreover, the rule is turning the attention of for-profit schools away from education and on regulation or the potential for it.  It is time to re-examine the full consequences of the proposed rule before it is implemented – and before it jeopardizes the educational future of thousands of students.