Traditional Colleges Side with For-Profit Colleges to Avert New Regulations
June 5, 2015

For many people, Corinthian Colleges Inc. epitomizes everything that is wrong with for-profit colleges. Some days back, Corinthian Colleges filed for bankruptcy, leaving more than 16,000 students scrambling for options. At its peak, Corinthian had an enrollment of more than 110,000 students spread over 120 colleges. The latest announcement capped a year in which one of the country’s largest career school chains collapsed under the eyes of the US Department of Education.

Deadline Looms for For-Profit Colleges to Meet New Standards

Given this backdrop, the Obama administration had turned its gaze on for-profit colleges. Many of these colleges often received tens of billions of dollars in grants and loans. Yet, they often provided education of little (or no) value to its students, while leaving them saddled with massive amounts of student loan debt.

To curtail this menace, the federal government had announced the formulation of new standards that for-profit colleges needed to meet if they wanted to continue receiving federal student aid. The new regulations come into effect from July 01, 2015. Ever since the government announced the new regulations, the for-profit education sector has been trying to look for ways to avert or roll back the new rules.

Recently though, they have acquired the support of traditional colleges and universities in the country, which have traditionally viewed the for-profit education business as a rival to their pre-eminent positions.

Traditional Colleges Joining Forces with For-Profit Education Businesses

Alec MacGillis reports that nearly all of the college establishment’s representatives in Washington are joining forces with for-profit colleges in opposing the government’s crackdown. The American Council on Education (ACE), along with 26 other major higher education associations, joined forces with for-profit colleges in seeking to avert the implementation of the new regulations.

ACE recently sent a letter to the House Committee on Education and the Workforce expressing its support for Republican legislation that would overturn all the efforts taken by the federal government for reining in the worst offenders in the for-profit college education business.

This includes supporting the Supporting Academic Freedom through Regulatory Relief Act, introduced by Rep. Virginia Foxx (R-NC), which would repeal the Gainful Employment rule aiming to prevent for-profit colleges from saddling students with considerable levels of debt.

In the letter, ACE seeks the reauthorization of the Higher Education Act by Congress and other stakeholders for addressing these issues in a more thoughtful and comprehensive manner. However, Stephen Burd mentions that the leaders of ACE are well aware of the fact that the present Congress will never do anything to protect vulnerable students from exploitative for-profit schools.

Higher Education Lobby Banking on Republican Support to Thwart Obama’s New Regulations

MacGillis views the emerging alliance as a strategic maneuver by the higher education lobby. By throwing in their lots with the for-profit schools, traditional colleges are seeking to capitalize on the Republican control of Congress to foil the government’s ability to reach their own campuses. In particular, they are doing so in an attempt to block the new federal ratings system that would help families choose institutions based on factors such as:

  • The number of students who graduate from the institution and,
  • The organizations where these students end up working

By seeking the intervention of the Republicans in Congress, traditional and for-profit colleges are aiming to put an end to any question marks over the approximately $150 billion that the federal government provides colleges and universities annually in the form of subsidized loans and Pell grants for students. After all, it is worth noting that according to the US Department of Education, federal student aid constitutes approximately 90 percent of the revenue at for-profit institutions.

Colleges Rattled by the Reining in of For-Profits by the Federal Government

The emerging alliance of colleges feels that the administration has developed an insatiable appetite for expanding regulation, beyond what is necessary. However, David Bergeron, who served as President Obama’s acting assistant secretary for postsecondary education earlier before joining the Center for American progress, refutes this strongly.

He says, “The higher ed lobby doesn’t want any accountability—they want money, and they want money without limitations, without restrictions, without accountability to anybody outside the academy. What that has led to is very poor performance by our institutions—graduation rates are alarmingly low, and employers are becoming increasingly concerned that the employees they’re hiring out of the academy don’t have the knowledge and skills they require.”

Traditional Schools Have their Own Axes to Grind

Traditional colleges have defended their move to support the troubled for-profit college industry. They signed the letter because they found the revised regulations too weak to root out the worst offending for-profit colleges and too irksome for other institutions to comply with.

The Obama administration rejects this notion completely. They feel that the revised regulations were forcing for-profit schools to close their worst performing programs. In addition, they expected the revised regulations to disqualify seven times more programs than the original regulations would have done.

There are many underlying reasons behind the recent expression of support from traditional colleges to for-profit schools. These include:

  • Their displeasure over the tightened standards for credit hours prescribed by the Department of Education over instances of finding that some colleges were inflating credit hours
  • Their unhappiness with the administration’s proposed rules for evaluating teacher-preparation programs and,
  • Their resistance to the administration’s plans for implementing a new ratings system for colleges

So far, only one university president has opposed the demands of the higher education lobby. Louisiana State University Chancellor F King Alexander felt that the lobby was behaving in a shortsighted manner.

He felt that the greater the number of for-profit schools that received federal aid, the lesser would be the aid that students in traditional colleges would receive. This would result in greater demands for reducing the funding for student aid. As such, he said, traditional schools would not receive higher volumes of financial aid unless the regulations proposed by the federal government came into effect.