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For-profit Higher Education
For-profit Caribbean medical schools that don’t have access to U.S. federal loans are finding a way around the rules: Encouraging some students to enroll simultaneously in online master’s programs at U.S. universities.
Vocational programs would have a tougher time qualifying for federal student aid, and some would lose their eligibility immediately, under the latest draft "gainful employment" rules from the U.S. Education Department. The revised rules, which federal negotiators will debate at a three-day meeting here next week, would judge programs based not only on their graduates' student-loan-debt burdens, but also on their former students' ability to repay their loans, whether or not the students graduated.
Enrollment has tumbled at all colleges and universities as the number of traditional-age college students falls and the economy picks up, but the drop-off at the for-profit schools so far this year — nearly 9 percent — is almost four times as steep as at nonprofit universities and colleges, according to the National Student Clearinghouse. The Apollo Group, publicly traded parent of the University of Phoenix, has reported an 18 percent plunge in enrollment and a 22 percent dip in new registrations since last year, leading to a 36 percent decline in operating income.
More than 600,000 federal student loan borrowers who began repaying their debts in 2010 defaulted on their loans by 2012, according to federal data. Almost half — 46 percent — attended for-profit colleges, which also had higher average default rates than other schools. For-profit schools had an average default rate of almost 22 percent, compared with about 15 percent for borrowers across all colleges.
Altius had been in the vanguard of an influx of investors and businesspeople looking to profit by putting new kinds of colleges and educational ventures, like Ameritas College, the Minerva Project, and Udacity on the map. Many regard this changing landscape with suspicion, but Mr. Freedman, who embedded technology and learning science into Altius, was seen by industry observers as "one of the good guys."
The Economic Policy Institute's review of job data shows that 52 percent of employed college graduates under the age of 24 are working in jobs that don't require college degrees. Put another way, of the 21 million workers earning less than $10.01 per hour, 3.57 million hold college degrees and an additional 5.46 million have some college. That these sales representatives, clerks, cashiers, and restaurant servers hold associate or bachelor's degrees does not mean they needed to present them when they applied.
A former top higher-education official at the U.S. Department of Education is urging the agency to step up its oversight of for-profit colleges and become "more proactive at rooting out fraud and protecting student interests." In a memorandum sent to student and consumer groups in advance of a meeting with leaders of the department's Office of Federal Student Aid last month, Robert M. Shireman, a former deputy under secretary of education, argued that the department is too focused on checking "administrative boxes" and should delve more deeply into colleges' financial statements.
In 2011 for-profit higher-education companies unveiled plans to develop a voluntary code of conduct—a response to critics who argued for reining in an industry they considered prone to abuses of students. Today hardly any trace of the effort can be found.
More than a year after a U.S. Senate committee criticized the industry in a lengthy, sometimes blistering report, the FCC's new rules appear to be among the few new limits on institutions that have been accused of being more interested in shareholder profits than student learning. Meanwhile, disgruntled students and alumni of for-profit colleges continue to file complaints, and lawyers continue to file suits.
The Obama administration is toughening its regulation of for-profit colleges in numerous straightforward ways, most notably and publicly by taking another shot (after a federal judge blocked the last one) at drafting rules requiring vocational programs to prove that they are preparing students for "gainful employment." But advocates for the colleges and other, more independent observers accuse administration officials of discriminating against for-profit institutions in a less-visible way, too -- and twisting federal statutes to do so.