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For-profit Higher Education
As second longtime target collapses and enforcement actions pile up, Consumer Financial Protection Bureau becomes key regulator of student loan industry and for-profit higher ed.
Barack Obama has had a consequential presidency. In this special issue of The Chronicle Review, we turn our attention to the accomplishments and disappointments of the past eight years. What has Obama meant for higher education and the broader world of ideas? What will be his intellectual and cultural legacy? And what lies ahead for America in the wake of his presidency?
The Obama administration on Thursday terminated the federal recognition of the nation's largest accreditor of for-profit colleges — a rare move that could ultimately jeopardize the ability of hundreds of schools to access federal funding.
Lawmakers in Congress are looking to beef up the federal role in the college accreditation process as a check on accrediting agencies that continue allowing for-profits schools to receive federal student aid amid reports of fraud.
DeVry Education Group Inc. on Tuesday said it would voluntarily edge down the share of money it gets from federal funding, as it looks to limit its exposure amid a government crackdown on for-profit colleges.
D.C. Council member David Grosso (I-At Large) is proposing the District exercise greater oversight of the companies that collect student loan payments, as federal lawmakers and consumer groups accuse those loan servicers of not doing enough to help struggling borrowers.
The Editorial Board writes: NEVER MIND that the higher education plans of tens of thousands of students will be disrupted. Or that 8,000 people will lose their jobs. Or that American taxpayers could be on the hook for hundreds of millions of dollars in forgiven student loans. What is apparently of most importance to the Obama administration is its ideological opposition to for-profit colleges and universities. That’s a harsh conclusion, but it is otherwise hard to explain why the Education Department has unabashedly used administrative muscle to destroy another company in the beleaguered industry.
The closure of ITT Technical Institutes, a national chain of career schools with a 50-year legacy, is fueling a debate over the federal government’s aggressive policing of for-profit higher education and whether it could destroy the industry. To some experts, the collapse of ITT this week, brought on by sanctions curtailing its access to federal financial aid, is further evidence that the Education Department is going after the industry by pushing tough employment and student loan regulations — rules aimed specifically at for-profits — and by wresting power from the accrediting agency for such schools.
The collapse of ITT, one of the nation’s largest for-profit educational chains, may have seemed sudden, coming less than two weeks after the Education Department — citing financial instability and the likely loss of accreditation — barred the parent company from enrolling new students using federal funds. But the unraveling stretches further back, to a time when ITT was a Wall Street darling, raking in record profits.
The collapse Tuesday of ITT Tech, a massive, publicly-traded for-profit education company with 130 campuses across the country, comes just 12 days after Obama’s Education Department imposed stringent new regulatory restrictions on the college chain. Taxpayers are now on the hook for nearly $500 million in federal loans that ITT students are eligible to have forgiven.