The U.S. Department of Education used a misleading statistic in its rollout last month of proposed "gainful employment" regulations aimed at for-profit institutions, The Washington Postreported. Advocates for the sector had pushed back on the validity of the department's prominently featured assertion that graduates of 72 percent of programs at for-profits make less than high school dropouts. The Post looked into the argument on its "Fact Checker" blog, and sided with for-profits.
For starters, the baseline earnings calculation for high-school dropouts was not up to snuff, the newspaper found. The feds used a relatively high figure, relative to other data. And then the department, in both a White House briefing and in written material, used the figure in comparison to for-profit programs. That was an "apples to oranges" comparison, the Post said. One key reason is that the median salary for high-school dropouts did not include data for unemployed workers. It also factored in people who were many years into their careers, while using only recent graduates for the for-profit graduate figure.
The department defended the statistic, which the Post called "bogus." An official said the figure was merely a benchmark, and that problems with for-profits are serious. "However you cut it, one statement remains true: Graduates of a significant number of for-profit career college programs wind up getting jobs with very low earnings -- a fact that should cause concern for any consumer who’s considering those programs as a post-secondary option intended to prepare them for a job.”
Massachusetts sued Corinthian Colleges Thursday, charging that it engaged in illegally deceptive marketing, including the use of inflated job placement statistics and high pressure tactics on prospective students. The suit by the state attorney general charges that the for profit system's campuses in the state told prospective students that various programs had placement rates ranging from 70 to 99 percent, when the rates in these programs were actually between 20 and 30 percent.
Kent Jenkins, a Corinthian spokesman, told The Boston Globe that Corinthian has "a strong record of offering students a quality education and treating them honestly and fairly." Jenkins said that the attorney general didn't even one complaint from a student at a Massachusetts campus.
The announcement of the suit, however, does quote such a student. The student says that a Corinthian recruiter "called me every day at any time during the day or night to tell me that car[eer] will change my life. Guess what? It didn’t! I’m working at my city grocery store.”
Three Congressional lawmakers are pushing for a new federal committee that would coordinate the government’s oversight of for-profit colleges. Senators Dick Durbin of Illinois and Tom Harkin of Iowa, both Democrats, plan to introduce legislation Thursday that would create a committee comprising representatives from nine federal agencies that oversee for-profit colleges.
The committee would be tasked with improving the coordination among the various federal and state regulators that are investigating for-profit institutions. It would also publish an annual “warning list” of colleges that have been found guilty of illegal activity or institutions for which the committee otherwise has “sufficient evidence” of widespread abuses. Representative Elijah Cummings, a Maryland Democrat, plans to introduce an identical proposal in the House, but both bills are likely to face fierce opposition from Republicans, who have been critical of the Obama administration’s efforts to more tightly regulate the for-profit industry.
The U.S. Senate's Committee on Health, Education, Labor and Pensions (HELP) on Wednesday announced that it had approved Portia Wu as assistant secretary of labor for employment and training. Wu is a lawyer who previously worked for the committee. She replaces Jane Oates, who left the Labor Department last year and is now vice president for external affairs at the Apollo Education Group, which owns the University of Phoenix.
Timothy P. Slottow is the next president of the University of Phoenix, the large for-profit institution announced on Tuesday. Slottow is currently executive vice president and chief financial officer for the University of Michigan. Phoenix has hired a leader from traditional higher education in the past. Even so, Slottow's jump across sectors is certain to raise eyebrows.
Also on Tuesday, the Apollo Education Group, which owns Phoenix, announced it had received a subpoena from the U.S. Department of Education's Office of Inspector General about "information relating to marketing, recruitment, enrollment, financial aid processing" and other activities conducted by one of the university's regional offices.
The U.S. Education Department this morning formally published its proposed regulations requiring vocational programs at for-profit institutions and community colleges to show that they are preparing graduates for "gainful employment." The department previewed the rules this month, drawing criticism from those who thought they were unfairly tough and too weak alike.
California's Bureau for Private Postsecondary Education has "consistently failed to meet its responsibility to protect the public's interests," a state audit released Wednesday said. The report from the California State Auditor cited a list of agency's shortcomings, including long backlogs of applications for licenses and delays in processing applications, failing to "identify proactively and sanction effectively unlicensed institutions," and conducting far too few inspections of institutions. The bureau, which the legislature created in 2009 after the state's previous regulatory body was killed, challenged the audit's negative conclusion but agreed with its recommendations for improving the agency's performance going forward.
A newly released study found that four states would need to spend $8.4 billion over five years to educate the 1.4 million students who attend for-profits in those states. The report, which was prepared by the Nexus Research and Policy Center, calculated that number by looking at state and local expenditures necessary to serve those 1.4 million students in public institutions. Nexus is funded by the Apollo Group, which owns the University of Phoenix, and the John G. Sperling Foundation. Sperling is Phoenix's founder.
After months of deliberation, the Obama administration issued a proposed gainful employment regulation in an effort to protect students from programs at for-profit colleges that leave them with unmanageable debt and worthless degrees. The proposed rule includes provisions requiring career education programs to meet certain standards related to the debt-to-earnings ratio and default rate of graduates. While I would have liked to see a stronger rule – one that includes, for example, loan repayment rates as a metric and a new program approval process – it is a step forward.
Too often, for-profit colleges get away with using predatory and deceptive tactics to bully our most vulnerable students – including minority, veteran, and low-income students – into “career” programs that fail to make them career-ready. As a teacher of predominantly low-income and minority students for more than 20 years, I know what these students need from postsecondary education. They need access to affordable degree and certificate programs that lead directly to good jobs.
In Congress, I have led multiple efforts to support the administration’s rulemaking process for gainful employment and to educate my colleagues. Unfortunately, I have found that the issue is little understood here on Capitol Hill. And the powerful for-profit lobby is relentless – both in its portrayal of for-profits as victims in this debate and in its campaign contributions.
For-profits like to claim that they are student-centered and dedicated to serving, educating, and preparing underrepresented and underserved populations for the workforce, but the numbers tell a different story. The Department of Education reports that for-profit programs account for just 13 percent of postsecondary students, but nearly half of all student loan defaults. And a little over a quarter of for-profit colleges produce graduates who earn more than high school dropouts. Meanwhile, most for-profits receive between 80-90 percent of their revenues from federal student aid.
Perhaps even more telling than these statistics is the fact that the very organizations dedicated to advocating for and protecting minority, veteran, and low-income populations are skeptical of for-profit programs and support strong gainful employment regulations. These groups include the AFL-CIO, NAACP, League of United Latin American Citizens (LULAC), Iraq and Afghanistan Veterans of America (IAVA), Student Veterans of America, and many others. In fact, at a gainful employment briefing that I organized on the Hill for Members of Congress and their staff, representatives from several of these groups spoke passionately about the harmful effects many of these programs have had on these populations.
Despite massive efforts by the Association of Private Sector Colleges and Universities (APSCU) – the linchpin of the for-profit lobby – I know that there is strong support in the House of Representatives for gainful employment regulations. Last year, I was joined by 34 of my colleagues in sending letters to the Administration in support of a gainful employment regulation. And I know that there is broad public support for cracking down on for-profits. A petition I launched with the organization CREDO in opposition to HR 2637, which would prevent the Department of Education from issuing gainful employment regulations, garnered over 101,000 signatures.
My staff and I have met with for-profit college representatives numerous times. In each of these meetings, we hear the same rhetoric – our programs are doing their job, they are all properly accredited, our graduation and job-placement rates are great. Some of them even tell us that they would support a version of a gainful employment regulation and that bad actors should be penalized.
If that is the case, if their programs are high-quality and meet certain standards, then why wouldn’t they support the administration’s gainful employment regulation? Wouldn’t this rule weed out those bad actors and drive more business to the industry’s super stars? It all seems a bit disingenuous. Especially considering the fact that more than 30 state attorneys general, the Consumer Financial Protection Bureau, the Securities Exchange Commission, Federal Deposit Insurance Corporation, and the Education Department are all involved in investigating the practices of for-profit colleges.
Again, the administration’s proposed rule is a solid move toward protecting our students. I hope that as the rulemaking process continues to move forward, there are opportunities to make the rule even stronger. And to all the students who have suffered as a result of poor career-education programs, I hope you speak up and tell your story.
U.S. Representative Mark Takano is a Democrat who represents California's 41st district.