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For-profit Higher Education
After a recent government crackdown on the multibillion-dollar career-training industry, stricter limits on student aid and devastating publicity about students hobbled by debt and useless credentials, some for-profit schools simply shut down. But a few others have moved to drop out of the for-profit business altogether, in favor of a more traditional approach to running a higher education institution. And the nonprofit sector, it turns out, can still be quite profitable.
ormer for-profit college students who publicly announced a "debt strike" have gained a prominent endorsement from an influential member of Congress. Rep. Maxine Waters (D-Calif.) said Tuesday she supports the 15 former students who declared last week they won't make payments on their federal student loans. Waters, the top Democrat on the House Financial Services Committee, is the first member of Congress to publicly endorse the actions of the striking debtors, who refuse to repay loans taken out to attend schools owned by Corinthian Colleges Inc., the troubled owner of schools that the U.S. Department of Education recently bailed out.
In recent months, as regulatory scrutiny has intensified the heat on for-profit higher education, several privately financed providers have made a different kind of transition, adopting nonprofit status or becoming an emergent category of institution known as public benefit corporations, created by dozens of states to encourage companies to focus less on their bottom lines and more on societal needs.
The public is financing a mass debt-forgiveness scheme largely in secret for distressed private student loan borrowers who attended schools once owned by Corinthian Colleges Inc. A top Democrat in Congress is calling for more information.
The association representing for-profit institutions filed a motion for summary judgment in its November 2014 suit challenging the Department of Education’s gainful employment regulations.
The New York Times Editorial Board writes: For-profit colleges that burden students with crippling debt — often while giving them useless credentials in return — are luring veterans who receive G.I. Bill benefits to take advantage of a loophole in federal law. On the merits, a proposal in President Obama’s 2016 budget that would close this destructive loophole deserves unanimous support in Congress. But because the for-profit industry has considerable power in Washington, veterans may be let down.
Chris Hicks writes: To date, the Department of Education has yet to collect on the $22.3 million Sallie Mae owes them, despite their impressive track record in recouping debt from the millions of Americans who borrowed money to afford college. In fact, they haven’t even tried to recover the money. That got us thinking: What if Sallie Mae’s $22.3 million bill was treated the same way as a student loan by the Department of Education?
President Barack Obama’s free community college plan stole the education spotlight, but his $4 trillion budget for next year contained another proposal that could alter higher education for many Americans. The President proposed closing a loophole that allows for-profit colleges’ to cash in on veterans’ GI Bill benefits.
Tri-Valley is among at least half a dozen schools shut down or raided by federal authorities in recent years over allegations of immigration fraud. Like Tri-Valley, they had obtained permission from U.S. immigration officials to admit foreign students. But most offered little or no instruction or didn’t require all students to attend classes, instead exploiting the student visa system for profit, investigators said.
The Internet has hundreds of college-search sites, most of them guided not by sophisticated algorithms but by money: Colleges directly or indirectly pay the sites to get names of prospective students, and the sites give play to the colleges that are paying the most for those "leads," often without clear disclosure to the people using the sites. John Katzman, a prominent education-industry entrepreneur and the founder of an education-search company called Noodle, says it’s time "to clean up the education marketplace" involving online search.