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For-Profits and Federal Finances
Budget woes will trump ideology in for-profit policy debate, says industry trade group's chief, who calls for members to reduce reliance on federal revenue.
LAS VEGAS – Federal budget woes will dominate the ongoing policy debate over for-profit colleges, said Steven Gunderson, president of the Association of Private Sector Colleges and Universities, the industry's primary trade group. And as a result, he said, for-profit institutions should reduce their reliance on revenue from federal financial aid.
“There’s not enough money,” said Gunderson, who was speaking here at the association's annual meeting. “We can’t survive on Title IV funding in an era of deficit reduction.”
Gunderson was part of a panel that tackled the question of whether partisan politics have driven the crackdown on for-profits. But the former congressman from Wisconsin predicted that money, or the lack thereof, would be more important than ideology in setting the Obama administration’s higher education policy agenda going forward.
As for Congress, Gunderson, who took over as the association’s president earlier this year, said for-profits aren’t a big-ticket issue. He said the industry should focus its attention on higher education subcommittees in the House and Senate rather than trying to sway rank-and-file lawmakers.
“To understand Congress, you need to understand attention deficit disorder,” Gunderson said, adding that “there is no member of Congress who would be defeated because of their position on 90/10,” referring to the requirement that colleges must receive no more than 90 percent of their revenue from federal aid sources to remain eligible for that aid.
The session’s moderator teed off the discussion with what he acknowledged was a fiery statement on the Obama administration’s allegedly unfair treatment of for-profits.
Wallace Pond, president and CEO of EduK Group, a for-profit that operates colleges in Puerto Rico and Florida, said the U.S. Department of Education under Obama has been “openly attacking” the sector, particularly with “gainful employment” and the tightening of other federal rules last year. He also took aim at the U.S. Government Accountability Office for making errors in an investigation that was critical of for-profits.
“There’s really been a tectonic shift, a major shift, in the polemics of higher education,” Pond said, pointing to the “blatantly political and ideological tone of the dialogue.”
Taking issue with his characterization was Charles Rose, a lawyer with Drinker Biddle, who was general counsel for the Education Department during the gainful employment fracas.
“There was a clear policy agenda,” Rose said, which was to maximize “return on investment” for federal spending on higher education.
Rose, echoing language from a report issued this week by an affiliate of the U.S. Chamber of Commerce, which called for more return on investment in states’ spending on public colleges, said the Education Department has sought to improve how for-profits use federal dollars on a macro level, meaning scrutiny not just over the value of degrees for students, but also how a for-profit education serves employers and the work force.
“The motivation was pretty straightforward,” Rose said.
For his part, Gunderson seemed uninterested in dwelling on gainful employment, arguing instead that even if for-profits “do everything right,” they will probably see less federal aid because the pot will shrink. As a result, he said some for-profits should build partnerships with nonprofits that enable them to become less reliant on revenue from federal sources.
The biggest challenge for higher education writ large, Gunderson said, is advocating for policies that help the growing number of lower-income, underserved students. That isn’t easy, in part because of the divergent policy perspectives of higher education’s various segments (community colleges, private universities, for-profits, etc.), which rarely join forces, he said.
For-profits got some praise -- albeit tentative praise -- from an outsider during the session.
“Yours is a sector that has shown great interest in Latino students,” said Sarita Brown, president of Excelencia in Education. Whether the industry always delivers is another question, Brown said, but some for-profit colleges have worked hard to cater to the needs of Latinos, such as by sending letters in both Spanish and English to the families of students.
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