Opening a Dangerous Floodgate

U.S. secretary of education Betsy DeVos has recently launched an effort that may result in an abdication of her responsibility to safeguard federal taxpayer funds. Specifically, she seeks to eliminate and weaken many of the requirements put in place to protect taxpayers and students from being wrongly billed for a subpar college education. In doing so, she gravely underestimates the reality inside for-profit education companies and fails to realize that not all colleges put students first.

I have special insight into these issues, because I served in the executive ranks of several large for-profit college chains: University of Phoenix, Kaplan University and ITT Technical Institute. I would like to share my experience as a former campus president of the now-defunct ITT Tech.

I feel compelled to speak out as an Air Force veteran who was deeply troubled by the conduct of my former employers as they took advantage of thousands of veterans -- to circumvent the federal 90-10 requirements and gain access to the financial benefits of the GI Bill.

In the strongest terms, I want to make plain to federal policy makers that some education companies do not have students’ best interest at heart and do not seek to honorably educate them.

It is important that the Education Department recognize the pressures inside a company to demonstrate to Wall Street that it is increasing enrollment growth while decreasing costs and increasing profit. The truth is that educating students is costly. And it is a cost that is the easiest to slash when a company wants to cut expenses and increase profits.

The company I was part of was extremely profitable. For example, the U.S. Senate Committee on Health, Education, Labor and Pensions reported that my CEO, Kevin Modany, was the fifth highest paid of the chief executives of the 30 for-profit college companies it examined. But our company’s profitability was at odds with its service to students. According to Education Department data, in 2014, ITT Tech took in almost $928 million in tuition and fees, but spent only 14 percent of it on instruction. The lack of spending on instruction showed in the quality of education offered.

Our company had a bifurcated culture. To the outside world, we presented an external appearance of concern for the students and compliance with federal requirements. But inside the company, students were viewed as potential sales targets, and our internal communications focused on “sales production” rather than student needs. The real guidance was that, behind closed doors, we were to “do anything and say anything” to convince students to enroll and sign the loan package. Every employee -- even at the highest levels -- had recruitment metrics, set by headquarters and closely monitored, with the threat of termination if those metrics weren’t met. Weekly emails to all campuses compared our recruitment numbers.

I share this information so that policy makers can have a glimpse into the internal priorities and pressures of a for-profit college company. The truth is that some colleges will take advantage of students and taxpayers if they have the chance.

I am, therefore, concerned about what I understand about the Education Department’s plans to weaken requirements for accreditors’ and states’ oversight of college quality and requirements of “regular and substantive interaction” between teachers and students. I also understand the department wants to eliminate the minimum amount of learning time needed to qualify for a “credit hour” for billing the department, and would allow colleges to subcontract out all of their education to unaccredited providers. These rules strike me as necessary to prevent companies that might seek to bill taxpayers and students without delivering much of an education.

If colleges are not required to demonstrate they provide at least a minimum amount of learning or faculty-student interaction -- or are allowed to operate without much oversight and to subcontract the education to unaccredited providers -- I have grave reservations about the resulting choices industry will make.

Frankly, it is hard to believe Secretary DeVos is even considering such steps in the wake of large for-profit college closures (including ITT Tech) and widespread evidence from state and federal law enforcement about fraud against students by some in the industry. Just last month, 49 states -- nearly every state in the nation -- recovered $500 million from another for-profit college chain, Career Education Corporation, for misleading students.

The Education Department must heed these careful words: I know, from the inside, as a campus president, that not all education providers are to be trusted to independently monitor themselves. By pursuing its recently announced policies, the department is opening a dangerous floodgate.