Unusual Gathering of For-Profit Colleges
With their institutions under increasing scrutiny on many fronts, leaders of for-profit colleges have responded in many ways -- including lots of aggressive political lobbying and some forceful legal actions.
On Thursday, a group of the institutions took a slightly more positive tack: talking among themselves -- and with leaders of sector-crossing national higher education associations -- about how they can respond to the concerns about their integrity and improve their students' learning experiences. At a closed two-day meeting at (of all places) the Princeton Club in New York City, the presidents of 32 regionally accredited career colleges gathered to discuss their common concerns and how they might work together to address them.
The meeting did not take place under the aegis of any existing group or, at least for now, with any specific, stated goal; a spokeswoman for the organizer, Dario A. Cortes, president of New York's Berkeley College, said that the gathering had emerged from a series of discussions he had had with individual presidents about a need for a "national conversation" among the institutions. Whether it eventually leads to more meetings or some kind of common plan of action is still uncertain, said the spokeswoman, Laura Jewell.
But already the meeting differed from many other recent gatherings of for-profit college officials. First, it included officials from two national groups, the American Council on Education and the Association of Governing Boards of Universities and Colleges, that are dominated by traditional nonprofit institutions but include regionally accredited for-profit colleges among their members. It also included representatives of some of the regional accrediting agencies themselves.
And second, Thursday's meeting contained "no discussion" of how the institutions might lobby against or otherwise fight the heightened regulatory pressure or political scrutiny they are facing, said Terry W. Hartle, who heads the government and public affairs arm of the American Council on Education and attended the meeting.
Yes, there was a lot of talk about allegations of admissions abuses that have been leveled against some for-profit colleges in a U.S. Senate committee's inquiry into the sector, among other issues of particular interest to this set of colleges, Hartle said. But much of the discussion was about concerns that these colleges share with some of their nonprofit peers, such as students who enroll not "ready to do college-level work," Hartle said. "The discussion was candid and frank, and not terribly angry either."
Just how much common ground these colleges can find, and what it might lead them to do -- sponsor research on learning practices, for instance -- remains to be seen. While all of them are accredited by one of the seven regional accreditors (as opposed to the national agencies that accredit the vast majority of for-profit colleges), there is enormous variation among them, from massive publicly traded companies like the University of Phoenix and DeVry University, to 9,000-student institutions like Berkeley, to specialty institutions with under 1,500 students, like the College of Westchester and Harrington College of Design.
Thursday, March 3, 2011
Tuesday, January 4, 2011
Will the For-Profit Education Bubble Burst in 2011?
Will the For-Profit Education Bubble Burst in 2011?
http://www.consumeraffairs.com/news04/2010/12/will-the-for-profit-education-bubble-burst-in-2011.html
First there was the high-tech bubble, then the housing bubble. What bubble will burst in 2011?
Many are betting it will be for-profit education - as critics question the value of the expensive degrees and certificates awarded by the likes of Kaplan University and the University of Phoenix.
"Serious questions have emerged about the share of the military educational benefit pool going to for-profit schools with questionable outcomes," said a report issued earlier this month by the Senate's Health, Education Labor and Pensions Committee.
The "gainful employment" Rule Will Deny Two Million Students The Opportunity to Go to College. Committee chair Tom Harkin (D-Iowa) said that by extending benefits similar to the GI Bill to current veterans, "Congress may have unintentionally subjected this new generation of veterans to the worst excesses of the for-profit industry: manipulative and misleading marketing campaigns, educational programs far more expensive than comparable public or nonprofit programs, and a lack of needed services."
The for-profit colleges make big profits on federally-guaranteed loans but critics say that even students who graduate - a small percentage - aren't likely to snag the kind of high-paying positions they're led to expect.
For-profit schools exploded over the last decade. They appeal to working adults seeking training that will help them advance their careers, veterans and active-duty military hoping to smooth the transition to civilian life and, in many cases, those who did poorly in high school and are unable to gain admittance to more selective universities.
Kaplan's bubble may already have burst. Owned by the Washington Post Company, Kaplan is facing Congressional investigations and numerous lawsuits, including a whistle-blower suit filed by the school's former director of education, David Goodstein.
The lawsuits claim that Kaplan recruiters aggressively signed up students who were unqualified and enrolled students in vocational-training courses for industries that they knew to be over-staffed.
Alarmed by the reports of graduates who leave school with heavy debt only to wind up working low-paying jobs, the U.S. Department of Education has proposed regulations that would cut off federal financing to programs that have high debt-to-income ratios and low repayment rates.
One such student is Hope of Hahira, Ga. She graduated from Kaplan in 2006 with an associates degree in paralegal studies and despite having a straight-A average in school, she was fired after a year because her Kaplan education was inadequate, she said in a complaint to ConsumerAffairs.com.
"I now owe all of this student loan debt and am unable to find a job in my field and am in default of my student loans because I can't support myself," Hope said. "I wish that I had known that this school was not a school where credits are transferable and where the "material" isn't appropriate or conducive to learning how to work in the legal environment."
The Washington Post Company has been quick to defend Kaplan, its most profitable unit. It reported spending $350,000 on lobbying during the third quarter of 2010, more than any other higher-education company.
Post Company chairman Donald Graham, a powerful figure in Washington, has also put his personal influence to work, schmoozing lawmakers and regulators. The Post has editorialized against the regulations, saying they would limit students' choices.
"The aim of the regulations was to punish bad actors, but the effect is to punish institutions that serve poor students," Graham said in a recent interview with The New York Times.
But Department of Education figures show that only 28 percent of Kaplan students were repaying their student loans - well below the 45 percent level generally considered the minimum acceptable rate. At the University of Phoenix, by contrast, 44 percent of students were repaying their loans.
The Florida Attorney General has also launched an investigation of Kaplan. In a statement, the office of Attorney General Bill McCollum said the investigation concerned "alleged misrepresentations regarding financial aid; alleged unfair/deceptive practices regarding recruitment, enrollment, accreditation, placement, graduation rates, etc."
Earlier this year, Sen. Harkin's committee held hearings that included undercover videos showing high-pressure recruiting tactics by Kaplan and other for-profit colleges.
The Post Company's Graham called the videos "sickening" and said the company has done its best to clean up the abuses.
The lobbying muscle of the Post Company and other for-profit education companies may be adequate to squash further Congressional action and head off restrictive new regulations.
But the question for consumers to ponder is whether a degree or certificate from a for-profit school will carry the same weight as a similar degree from a community college or public four-year university. Returning veterans and job-seekers hoping to advance their prospects are often better off going directly to potential employers and talking with them about the requirements and aptitudes they look for in prospective employees, employment counselors say.
http://www.consumeraffairs.com/news04/2010/12/will-the-for-profit-education-bubble-burst-in-2011.html
First there was the high-tech bubble, then the housing bubble. What bubble will burst in 2011?
Many are betting it will be for-profit education - as critics question the value of the expensive degrees and certificates awarded by the likes of Kaplan University and the University of Phoenix.
"Serious questions have emerged about the share of the military educational benefit pool going to for-profit schools with questionable outcomes," said a report issued earlier this month by the Senate's Health, Education Labor and Pensions Committee.
The "gainful employment" Rule Will Deny Two Million Students The Opportunity to Go to College. Committee chair Tom Harkin (D-Iowa) said that by extending benefits similar to the GI Bill to current veterans, "Congress may have unintentionally subjected this new generation of veterans to the worst excesses of the for-profit industry: manipulative and misleading marketing campaigns, educational programs far more expensive than comparable public or nonprofit programs, and a lack of needed services."
The for-profit colleges make big profits on federally-guaranteed loans but critics say that even students who graduate - a small percentage - aren't likely to snag the kind of high-paying positions they're led to expect.
For-profit schools exploded over the last decade. They appeal to working adults seeking training that will help them advance their careers, veterans and active-duty military hoping to smooth the transition to civilian life and, in many cases, those who did poorly in high school and are unable to gain admittance to more selective universities.
Kaplan's bubble may already have burst. Owned by the Washington Post Company, Kaplan is facing Congressional investigations and numerous lawsuits, including a whistle-blower suit filed by the school's former director of education, David Goodstein.
The lawsuits claim that Kaplan recruiters aggressively signed up students who were unqualified and enrolled students in vocational-training courses for industries that they knew to be over-staffed.
Alarmed by the reports of graduates who leave school with heavy debt only to wind up working low-paying jobs, the U.S. Department of Education has proposed regulations that would cut off federal financing to programs that have high debt-to-income ratios and low repayment rates.
One such student is Hope of Hahira, Ga. She graduated from Kaplan in 2006 with an associates degree in paralegal studies and despite having a straight-A average in school, she was fired after a year because her Kaplan education was inadequate, she said in a complaint to ConsumerAffairs.com.
"I now owe all of this student loan debt and am unable to find a job in my field and am in default of my student loans because I can't support myself," Hope said. "I wish that I had known that this school was not a school where credits are transferable and where the "material" isn't appropriate or conducive to learning how to work in the legal environment."
The Washington Post Company has been quick to defend Kaplan, its most profitable unit. It reported spending $350,000 on lobbying during the third quarter of 2010, more than any other higher-education company.
Post Company chairman Donald Graham, a powerful figure in Washington, has also put his personal influence to work, schmoozing lawmakers and regulators. The Post has editorialized against the regulations, saying they would limit students' choices.
"The aim of the regulations was to punish bad actors, but the effect is to punish institutions that serve poor students," Graham said in a recent interview with The New York Times.
But Department of Education figures show that only 28 percent of Kaplan students were repaying their student loans - well below the 45 percent level generally considered the minimum acceptable rate. At the University of Phoenix, by contrast, 44 percent of students were repaying their loans.
The Florida Attorney General has also launched an investigation of Kaplan. In a statement, the office of Attorney General Bill McCollum said the investigation concerned "alleged misrepresentations regarding financial aid; alleged unfair/deceptive practices regarding recruitment, enrollment, accreditation, placement, graduation rates, etc."
Earlier this year, Sen. Harkin's committee held hearings that included undercover videos showing high-pressure recruiting tactics by Kaplan and other for-profit colleges.
The Post Company's Graham called the videos "sickening" and said the company has done its best to clean up the abuses.
The lobbying muscle of the Post Company and other for-profit education companies may be adequate to squash further Congressional action and head off restrictive new regulations.
But the question for consumers to ponder is whether a degree or certificate from a for-profit school will carry the same weight as a similar degree from a community college or public four-year university. Returning veterans and job-seekers hoping to advance their prospects are often better off going directly to potential employers and talking with them about the requirements and aptitudes they look for in prospective employees, employment counselors say.
Tuesday, November 16, 2010
For-profit schools face new challenge
http://staugustine.com/news/local-news/2010-11-14/profit-schools-face-new-challenge
For-profit schools face new challenge
State looking into consumer complaints
The hits keep coming for Florida's embattled for-profit education industry.
After months of undercover investigations, lawsuits and scrutiny from congressional committees, the formerly fastest growing sector of higher education is facing yet another speed bump.
Florida Attorney General Bill McCollum last month launched a full-scale investigation into a handful of for-profit schools with regional outposts in Northeast Florida.
The probe started with five schools -- the University of Phoenix, Argosy University, Everest University. Kaplan Inc., and MedVance Institute -- but was expanded this month to eight. Added were Keiser University, Sanford Brown College and Concorde Career College.
Spokeswoman Sandi Copes said the investigation was spurred on by a host of consumer allegations of deception and potentially fraudulent activity at some of the schools.
The ongoing national scrutiny of proprietary education also was a driving factor, Copes said.
"The federal climate definitely played a big part in the investigation," she said.
An August study by the Government Accountability Office exposed sketchy dealings by admissions officers at 15 national for-profit schools, including a number of those listed in the Attorney General's Office probe.
"The decision was made to take a look at this after seeing the GAO report and considering all the money that's coming into these schools," she said.
For-profits enroll about 9 percent of the country's college students but account for close to half of student loan defaults. The national percentage of for-profit students who pay the principal on their loans also lags far behind the rate at public schools, according to federal data.
A breakdown of the number of consumer complaints for each of the schools wasn't available Friday, and Copes declined to estimate how many complaints were filed in total.
Subpoenas were issued to each school requesting internal documents related to the enrollment of students, hiring of teachers and staff and college accreditation.
Attorneys general in other states have taken a case-by-case approach to investigating for-profits in their regions. This appears to be the largest investigation into proprietary education by a state attorney general.
The future of the investigation, however, remains unclear.
Attorney General-elect Pam Bondi, who takes office in January, has declined to say where she stands on the issue of for-profit education. The director of her transition team, Carlos Muniz, also declined to comment on the investigation.
"Given our distance from the investigation and the relevant facts, we really don't think it would be appropriate to comment at this time," Muniz said via e-mail.
For their parts, most of the schools have adopted a wait-and-see stance for dealing with the probe.
Keiser University, a Fort Lauderdale-based for-profit that was recently embroiled in a tense legal battle with Florida State College at Jacksonville, issued a statement Friday saying school administrators were made aware of their inclusion in the probe through the media and the attorney general's website before they received a subpoena.
A university spokeswoman declined to say how the school was handling the late addition. She also wouldn't speculate on whether she felt the lawsuit against FSCJ, which was dropped Wednesday, might have led to the college's inclusion in the probe.
Kent Jenkins, a spokesman for Corinthian Colleges Inc., the parent company of Everest College in Jacksonville, said there isn't much the schools can do other than comply.
"We'll cooperate with everyone," he said. "We don't have anything to hide. Anytime someone wants to come and look at our records, we'll open them up."
The Florida investigation comes shortly after the U.S. Department of Education rolled out a series of proposed regulations that use loan repayment data and debt-to-income ratios to determine if for-profit colleges should qualify for federal financial aid.
Some schools are already dealing with the repercussions.
The Apollo Group, parent company of the University of Phoenix, announced last month that new enrollments could fall off by about 40 percent in the latest quarter due to the school changing its enrollment procedures based on the new federal regulations.
For-profit schools face new challenge
State looking into consumer complaints
The hits keep coming for Florida's embattled for-profit education industry.
After months of undercover investigations, lawsuits and scrutiny from congressional committees, the formerly fastest growing sector of higher education is facing yet another speed bump.
Florida Attorney General Bill McCollum last month launched a full-scale investigation into a handful of for-profit schools with regional outposts in Northeast Florida.
The probe started with five schools -- the University of Phoenix, Argosy University, Everest University. Kaplan Inc., and MedVance Institute -- but was expanded this month to eight. Added were Keiser University, Sanford Brown College and Concorde Career College.
Spokeswoman Sandi Copes said the investigation was spurred on by a host of consumer allegations of deception and potentially fraudulent activity at some of the schools.
The ongoing national scrutiny of proprietary education also was a driving factor, Copes said.
"The federal climate definitely played a big part in the investigation," she said.
An August study by the Government Accountability Office exposed sketchy dealings by admissions officers at 15 national for-profit schools, including a number of those listed in the Attorney General's Office probe.
"The decision was made to take a look at this after seeing the GAO report and considering all the money that's coming into these schools," she said.
For-profits enroll about 9 percent of the country's college students but account for close to half of student loan defaults. The national percentage of for-profit students who pay the principal on their loans also lags far behind the rate at public schools, according to federal data.
A breakdown of the number of consumer complaints for each of the schools wasn't available Friday, and Copes declined to estimate how many complaints were filed in total.
Subpoenas were issued to each school requesting internal documents related to the enrollment of students, hiring of teachers and staff and college accreditation.
Attorneys general in other states have taken a case-by-case approach to investigating for-profits in their regions. This appears to be the largest investigation into proprietary education by a state attorney general.
The future of the investigation, however, remains unclear.
Attorney General-elect Pam Bondi, who takes office in January, has declined to say where she stands on the issue of for-profit education. The director of her transition team, Carlos Muniz, also declined to comment on the investigation.
"Given our distance from the investigation and the relevant facts, we really don't think it would be appropriate to comment at this time," Muniz said via e-mail.
For their parts, most of the schools have adopted a wait-and-see stance for dealing with the probe.
Keiser University, a Fort Lauderdale-based for-profit that was recently embroiled in a tense legal battle with Florida State College at Jacksonville, issued a statement Friday saying school administrators were made aware of their inclusion in the probe through the media and the attorney general's website before they received a subpoena.
A university spokeswoman declined to say how the school was handling the late addition. She also wouldn't speculate on whether she felt the lawsuit against FSCJ, which was dropped Wednesday, might have led to the college's inclusion in the probe.
Kent Jenkins, a spokesman for Corinthian Colleges Inc., the parent company of Everest College in Jacksonville, said there isn't much the schools can do other than comply.
"We'll cooperate with everyone," he said. "We don't have anything to hide. Anytime someone wants to come and look at our records, we'll open them up."
The Florida investigation comes shortly after the U.S. Department of Education rolled out a series of proposed regulations that use loan repayment data and debt-to-income ratios to determine if for-profit colleges should qualify for federal financial aid.
Some schools are already dealing with the repercussions.
The Apollo Group, parent company of the University of Phoenix, announced last month that new enrollments could fall off by about 40 percent in the latest quarter due to the school changing its enrollment procedures based on the new federal regulations.
Monday, November 8, 2010
Deutsche Bank's Thoughts on Gainful Employment and For-Profit Education Stocks (ESI, EDMC, CECO)
Deutsche Bank's Thoughts on Gainful Employment and For-Profit Education Stocks (ESI, EDMC, CECO)
Read more: http://www.benzinga.com/analyst-ratings/analyst-color/10/11/589188/deutsche-banks-thoughts-on-gainful-employment-and-for-pro#ixzz14iEdp9Jo
Deutsche Bank is out with a research note this morning, where it reviews the Department of Education's hearing on Gainful Employment (GE [FREE Stock Trend Analysis]).
The analysts said that, despite expectations, Thursday and Friday's public hearings on Gainful Employment (GE) did not involve any exchange between DoE officials and speakers. The purpose of the hearings, as confirmed by a DoE official, was to not exclude anyone from the discussion on GE, and reinforces the relative unimportance of the hearings vs. the DoE's private meetings.
The analysts remarked that one of the most often raised issues about GE was its retroactive nature; many feel that introducing a rule that holds schools responsible for past student cohorts is unconstitutional. If the DoE accepts this argument, it would have to delay implementation three years to 7/1/2015 or change the look back period for the repayment rate.
The analyst said, “While most of the public For Profits participated in private meetings with the DoE, a handful of schools also had representatives speak at the hearing including ITT Educational Services, Inc. (NYSE: ESI), Education Management Corporation (NASDAQ: EDMC), and Career Education Corporation (NASDAQ: CECO) [via] Le Cordon Bleu.”
Read more: http://www.benzinga.com/analyst-ratings/analyst-color/10/11/589188/deutsche-banks-thoughts-on-gainful-employment-and-for-pro#ixzz14iEuUPPv
Read more: http://www.benzinga.com/analyst-ratings/analyst-color/10/11/589188/deutsche-banks-thoughts-on-gainful-employment-and-for-pro#ixzz14iEdp9Jo
Deutsche Bank is out with a research note this morning, where it reviews the Department of Education's hearing on Gainful Employment (GE [FREE Stock Trend Analysis]).
The analysts said that, despite expectations, Thursday and Friday's public hearings on Gainful Employment (GE) did not involve any exchange between DoE officials and speakers. The purpose of the hearings, as confirmed by a DoE official, was to not exclude anyone from the discussion on GE, and reinforces the relative unimportance of the hearings vs. the DoE's private meetings.
The analysts remarked that one of the most often raised issues about GE was its retroactive nature; many feel that introducing a rule that holds schools responsible for past student cohorts is unconstitutional. If the DoE accepts this argument, it would have to delay implementation three years to 7/1/2015 or change the look back period for the repayment rate.
The analyst said, “While most of the public For Profits participated in private meetings with the DoE, a handful of schools also had representatives speak at the hearing including ITT Educational Services, Inc. (NYSE: ESI), Education Management Corporation (NASDAQ: EDMC), and Career Education Corporation (NASDAQ: CECO) [via] Le Cordon Bleu.”
Read more: http://www.benzinga.com/analyst-ratings/analyst-color/10/11/589188/deutsche-banks-thoughts-on-gainful-employment-and-for-pro#ixzz14iEuUPPv
Monday, September 27, 2010
Regulation on for-profit schools could be delayed
http://news.yahoo.com/s/nm/20100923/us_nm/us_education
Thu Sep 23, 2:57 pm ET
BANGALORE/WASHINGTON (Reuters) – The U.S. Education Department's schedule for implementing proposed regulations on for-profit schools is not final, according to a media report that caused share prices in the sector to rise.
"We are keeping our options open," Education Secretary Arne Duncan was quoted as saying when asked about a possible delay in finalizing the regulations. His comments appeared in a blog run by Washington publication The Hill.
The remark pushed up share prices for the schools, which have been volatile on news that the Education Department may declare some programs ineligible for financial aid.
Shares of Corinthian Colleges were up 10.53 percent at midafternoon at $6.80. Apollo Group was up 2.91 percent at $51.91. DeVry Inc was up 3.7 percent at $45.96 and Career Education Corp was up 6.22 percent at $22.01.
The share prices rose on hope that the Education Department would push back plans to implement the rules.
"There has been a hearing scheduled for next week in the senate. ... I think there is a continued optimism perhaps that the gainful employment rules maybe delayed or perhaps modified. And I think that is what is driving the group up a little bit," said ThinkEquity LLC analyst James Maher.
The Education Department declined to comment on the scheduling. "Tomorrow we will announce our timeline for moving forward with gainful employment," said spokesman Justin Hamilton in an email.
The scrutiny follows criticism that the schools produce poorly prepared students with big debts, often financed with federal aid.
The department's proposed rules said for-profit schools would have to prove that their former students were either paying off loans or were capable of doing so in order for the schools' current students to receive federal loans. Duncan has predicted that 5 percent of programs would lose those funds.
Under the proposed rules, the federal government would no longer lend to programs if more than 65 percent of former students failed to pay the principal on federal loans, and if their graduates' debt was more than 30 percent of discretionary income and 12 percent of total income, the department said.
The department is also tightening rules against deceptive advertising and would close loopholes on paying recruiters in hopes of removing incentives for them to enroll unqualified pupils or deceive prospective students.
The institutions would be required to ensure that their students have a valid high school diploma or otherwise show that they are ready for college.
For-profit schools enroll around 12 percent of all U.S. post-secondary students, but receive 23 percent of all federal student aid.
(Reporting by Megha Mandavia in Bangalore and Diane Bartz in Washington; Editing by Saumyadeb Chakrabarty, Vyas Mohan and Robert MacMillan)
Thu Sep 23, 2:57 pm ET
BANGALORE/WASHINGTON (Reuters) – The U.S. Education Department's schedule for implementing proposed regulations on for-profit schools is not final, according to a media report that caused share prices in the sector to rise.
"We are keeping our options open," Education Secretary Arne Duncan was quoted as saying when asked about a possible delay in finalizing the regulations. His comments appeared in a blog run by Washington publication The Hill.
The remark pushed up share prices for the schools, which have been volatile on news that the Education Department may declare some programs ineligible for financial aid.
Shares of Corinthian Colleges were up 10.53 percent at midafternoon at $6.80. Apollo Group was up 2.91 percent at $51.91. DeVry Inc was up 3.7 percent at $45.96 and Career Education Corp was up 6.22 percent at $22.01.
The share prices rose on hope that the Education Department would push back plans to implement the rules.
"There has been a hearing scheduled for next week in the senate. ... I think there is a continued optimism perhaps that the gainful employment rules maybe delayed or perhaps modified. And I think that is what is driving the group up a little bit," said ThinkEquity LLC analyst James Maher.
The Education Department declined to comment on the scheduling. "Tomorrow we will announce our timeline for moving forward with gainful employment," said spokesman Justin Hamilton in an email.
The scrutiny follows criticism that the schools produce poorly prepared students with big debts, often financed with federal aid.
The department's proposed rules said for-profit schools would have to prove that their former students were either paying off loans or were capable of doing so in order for the schools' current students to receive federal loans. Duncan has predicted that 5 percent of programs would lose those funds.
Under the proposed rules, the federal government would no longer lend to programs if more than 65 percent of former students failed to pay the principal on federal loans, and if their graduates' debt was more than 30 percent of discretionary income and 12 percent of total income, the department said.
The department is also tightening rules against deceptive advertising and would close loopholes on paying recruiters in hopes of removing incentives for them to enroll unqualified pupils or deceive prospective students.
The institutions would be required to ensure that their students have a valid high school diploma or otherwise show that they are ready for college.
For-profit schools enroll around 12 percent of all U.S. post-secondary students, but receive 23 percent of all federal student aid.
(Reporting by Megha Mandavia in Bangalore and Diane Bartz in Washington; Editing by Saumyadeb Chakrabarty, Vyas Mohan and Robert MacMillan)
Wednesday, September 22, 2010
New For-profit Education Loan Rule Brought About Party Conflict
New For-profit Education Loan Rule Brought About Party Conflict
The Government's drive to mediate student loan defaults and for-profit schools has brought about contradicting stands from the Democrats and spawn a new list of clientele for Washington's top firms.
An unusual mix of Liberals, Blue Dogs, members of the Congressional Black Caucus and committee chairmen, all critics of the new rule are now urging the Obama administration to postpone changes to give way to further studies. They postulated that changes with the ruling would affect college enrollment among low-income students attending for-profit institutions.
The issue at hand is the new rule that would entail for-profit schools show their graduates’ annual loan payments to be less than 8% of their starting salaries. The reason behind this is the ballooning loan debts of for-profit graduates. Also, this is to ensure that students enter a well paying job for them to be able to pay their off their loans.
For-profit school programs who fail to meet the standards is at the risk of losing the financial aid they receive from the government. This is a colossal hit to for-profit schools since they were receiving billions of dollars from government aid- $24 billion federal tuition subsidies to be exact was given to them last year.
The Podesta Group, Heather Podesta + Partners and Brian Moran, former gubernatorial candidate of Virginia and brother of Representative Jim Moran (D-Va.) are working hand in hand with for-profit institutions to lobby the delay of the new ruling.
Meanwhile, former special counsel to President Bill Clinton (and columnist for The Hill), Lanny Davis, is advising the Coalition for Educational Success, which represents for –profit institutions.
Industry schools like the University of Phoenix, Kaplan Inc. and the Career College Association (CCA), the main industry organization have exhausted a rough estimate of $2.25 million in order to lobby for the first half of the year. Other investors and industries are also turning to K Street for back up.
Anne Duncan, DOE Secretary said that the purpose of this ruling is to prevent schools from burdening students with debts they can’t pay in exchange for a degree and some certificates they cannot purely utilize. But many Democrats are not in favor of this, warning that instead of helping students, this “would dramatically limit the programs available to minority and other at-risk students.” 47 other Democrats agreed to similar conclusions including Sen. Bill Nelson and Rep. John Spart and Debbie Wasserman Schultz.
“These programs are vital to educational achievement of students who would otherwise consider postsecondary education out of reach,” wrote one group of lawmakers, led by Rep. Edolphus Towns (D-N.Y.), chairman of the House Oversight Committee.
Change “could end up closing down hundreds of programs and leave hundreds of thousands of students without options” said Harris Miller, CEO and President of CCA.
Stirring the debate, a series of recent reports have suggested that the industry is plagued by aggressive recruiting and even fraud, which puts taxpayers on the hook when students can’t pay back their federal loans.
Last month, for instance, the Government Accountability Office (GAO) detailed cases where for-profit recruiters obscured the true costs to attend institutions; exaggerated post-graduation salaries and employability in the fields students were entering; and encouraged applicants to lie on submission forms to tap federal loans for which they weren’t eligible.
Top Senate Democrats including Dick Durbin and Tom Harkin, who chairs the Education Committee, recommended that the Government adopt the new gainful employment rule as written
“High student loan debt coupled with low repayment rates signal a questionable investment for students and taxpayers,” the senators wrote. “We encourage swift implementation of the gainful employment regulation and would be concerned with any efforts to weaken the proposal.”
Harris argued Wednesday that many of the industry criticisms — particularly the charge of fraud — target practices that are already illegal.
“You don’t need new rules for that,” he said. “That’s just plain-old against the law.”
Meanwhile, some of the Democratic strategists lobbying against the reforms are defending their break from the White House.
“If you’re a well-connected person or well-connected Democrat and you don’t have a client, you might want to rethink your line of work,” said one such lobbyist.
By the start of November, the Department of Education is expected to finalize the rules. They did not return requests for comment.
SOLARIA SUN
Sources:
Solaria Sun
The Government's drive to mediate student loan defaults and for-profit schools has brought about contradicting stands from the Democrats and spawn a new list of clientele for Washington's top firms.
An unusual mix of Liberals, Blue Dogs, members of the Congressional Black Caucus and committee chairmen, all critics of the new rule are now urging the Obama administration to postpone changes to give way to further studies. They postulated that changes with the ruling would affect college enrollment among low-income students attending for-profit institutions.
The issue at hand is the new rule that would entail for-profit schools show their graduates’ annual loan payments to be less than 8% of their starting salaries. The reason behind this is the ballooning loan debts of for-profit graduates. Also, this is to ensure that students enter a well paying job for them to be able to pay their off their loans.
For-profit school programs who fail to meet the standards is at the risk of losing the financial aid they receive from the government. This is a colossal hit to for-profit schools since they were receiving billions of dollars from government aid- $24 billion federal tuition subsidies to be exact was given to them last year.
The Podesta Group, Heather Podesta + Partners and Brian Moran, former gubernatorial candidate of Virginia and brother of Representative Jim Moran (D-Va.) are working hand in hand with for-profit institutions to lobby the delay of the new ruling.
Meanwhile, former special counsel to President Bill Clinton (and columnist for The Hill), Lanny Davis, is advising the Coalition for Educational Success, which represents for –profit institutions.
Industry schools like the University of Phoenix, Kaplan Inc. and the Career College Association (CCA), the main industry organization have exhausted a rough estimate of $2.25 million in order to lobby for the first half of the year. Other investors and industries are also turning to K Street for back up.
Anne Duncan, DOE Secretary said that the purpose of this ruling is to prevent schools from burdening students with debts they can’t pay in exchange for a degree and some certificates they cannot purely utilize. But many Democrats are not in favor of this, warning that instead of helping students, this “would dramatically limit the programs available to minority and other at-risk students.” 47 other Democrats agreed to similar conclusions including Sen. Bill Nelson and Rep. John Spart and Debbie Wasserman Schultz.
“These programs are vital to educational achievement of students who would otherwise consider postsecondary education out of reach,” wrote one group of lawmakers, led by Rep. Edolphus Towns (D-N.Y.), chairman of the House Oversight Committee.
Change “could end up closing down hundreds of programs and leave hundreds of thousands of students without options” said Harris Miller, CEO and President of CCA.
Stirring the debate, a series of recent reports have suggested that the industry is plagued by aggressive recruiting and even fraud, which puts taxpayers on the hook when students can’t pay back their federal loans.
Last month, for instance, the Government Accountability Office (GAO) detailed cases where for-profit recruiters obscured the true costs to attend institutions; exaggerated post-graduation salaries and employability in the fields students were entering; and encouraged applicants to lie on submission forms to tap federal loans for which they weren’t eligible.
Top Senate Democrats including Dick Durbin and Tom Harkin, who chairs the Education Committee, recommended that the Government adopt the new gainful employment rule as written
“High student loan debt coupled with low repayment rates signal a questionable investment for students and taxpayers,” the senators wrote. “We encourage swift implementation of the gainful employment regulation and would be concerned with any efforts to weaken the proposal.”
Harris argued Wednesday that many of the industry criticisms — particularly the charge of fraud — target practices that are already illegal.
“You don’t need new rules for that,” he said. “That’s just plain-old against the law.”
Meanwhile, some of the Democratic strategists lobbying against the reforms are defending their break from the White House.
“If you’re a well-connected person or well-connected Democrat and you don’t have a client, you might want to rethink your line of work,” said one such lobbyist.
By the start of November, the Department of Education is expected to finalize the rules. They did not return requests for comment.
SOLARIA SUN
Sources:
Solaria Sun
Enzi Blasts 'Gainful Employment' Proposal on For-profit Schools
http://www.careercollegecentral.com/news/enzi_blasts_gainful_employment
Enzi Blasts 'Gainful Employment' Proposal on For-profit Schools
Sen. Mike Enzi (Wyo.), senior Republican on the Senate education committee, is slamming a White House proposal designed to prevent students at for-profit career colleges from defaulting on their loans.
The proposal, Enzi said in comments submitted this month to the Department of Education (DOE), would not only disadvantage for-profit schools relative to their nonprofit competitors, but also limit access for many low-income and minority students, who tend to enroll in for-profits disproportionately.
"Admissions at for-profit institutions may become more selective, and otherwise academically qualified students may be denied admittance," Enzi wrote. "This outcome is contrary to nearly 50 years of Congressional efforts to make postsecondary education accessible to all Americans."
The comments echo those of scores of other lawmakers — many of them Democrats — who are pushing the administration to delay the rule until the issue can be studied further.
The issue is of great importance for the health sector because an enormous number of the nation's health professionals — from nurses to medical technicians — get their training at for-profits.
Under the proposed rule, for-profit programs would have to demonstrate that annual loan payments among recent graduates are less than 8 percent of their starting salaries. The idea is to ensure that graduates will be earning enough to pay off their debts after graduation.
The penalty for non-compliance is steep: Programs that fail to meet the standards could lose access to federal financial aid — of which 23 percent ($24 billion) went to for-profit schools last year.
Enzi said applying the new standards only to for-profit schools "will be sending the message that the Federal government is not concerned with the outcomes for over 75 percent of the Federal investment in student financial assistance."
Moreover, Enzi argued, it's not the government's role to ensure that students' educational choices "pay off."
"Federal student financial assistance has historically been provided to increase access and help make postsecondary education more affordable," Enzi wrote. "It does not remove the responsibility of students and their families to make informed choices and to understand the financial consequences of those decisions."
The comments put Enzi at sharp odds with Sen. Tom Harkin (D-Iowa), the chairman of the Senate education committee who's urging the White House to adopt the so-called "gainful employment" rule as quickly as possible.
“High student loan debt coupled with low repayment rates signal a questionable investment for students and taxpayers,” Harkin wrote to the DOE on Sept. 9. “[W]e encourage swift implementation of the gainful employment regulation and would be concerned with any efforts to weaken the proposal.”
Bolstering Harkin's argument, the Education Department this month issued new figures showing that the student-loan default rate at for-profits rose from 11 percent in 2007 to 11.6 percent in 2008 — much higher than default rates at nonprofit schools.
"While for-profit schools have profited and prospered thanks to federal dollars, some of their students have not," DOE Secretary Arne Duncan said in a statement announcing the figures.
Still, not all liberals are supporting the rule. Jesse Jackson, head of the Rainbow PUSH Coalition, is on Enzi's side, arguing that the change, while well intended, would hurt minority students.
"The amount of debt a student incurs and the student’s ability to repay that debt are not reflections of the quality of an institution," Jackson wrote in his own comments submitted to DOE. "To apply a standard that looks at debt and repayment as a measure of quality misses a greater opportunity to hold all institutions to a higher standard of student outcomes, namely, graduation rates and successful post-graduation careers."
The DOE is hoping to finalize its rule by Nov. 1.
THE HILL
Sources:
The Hill
Enzi Blasts 'Gainful Employment' Proposal on For-profit Schools
Sen. Mike Enzi (Wyo.), senior Republican on the Senate education committee, is slamming a White House proposal designed to prevent students at for-profit career colleges from defaulting on their loans.
The proposal, Enzi said in comments submitted this month to the Department of Education (DOE), would not only disadvantage for-profit schools relative to their nonprofit competitors, but also limit access for many low-income and minority students, who tend to enroll in for-profits disproportionately.
"Admissions at for-profit institutions may become more selective, and otherwise academically qualified students may be denied admittance," Enzi wrote. "This outcome is contrary to nearly 50 years of Congressional efforts to make postsecondary education accessible to all Americans."
The comments echo those of scores of other lawmakers — many of them Democrats — who are pushing the administration to delay the rule until the issue can be studied further.
The issue is of great importance for the health sector because an enormous number of the nation's health professionals — from nurses to medical technicians — get their training at for-profits.
Under the proposed rule, for-profit programs would have to demonstrate that annual loan payments among recent graduates are less than 8 percent of their starting salaries. The idea is to ensure that graduates will be earning enough to pay off their debts after graduation.
The penalty for non-compliance is steep: Programs that fail to meet the standards could lose access to federal financial aid — of which 23 percent ($24 billion) went to for-profit schools last year.
Enzi said applying the new standards only to for-profit schools "will be sending the message that the Federal government is not concerned with the outcomes for over 75 percent of the Federal investment in student financial assistance."
Moreover, Enzi argued, it's not the government's role to ensure that students' educational choices "pay off."
"Federal student financial assistance has historically been provided to increase access and help make postsecondary education more affordable," Enzi wrote. "It does not remove the responsibility of students and their families to make informed choices and to understand the financial consequences of those decisions."
The comments put Enzi at sharp odds with Sen. Tom Harkin (D-Iowa), the chairman of the Senate education committee who's urging the White House to adopt the so-called "gainful employment" rule as quickly as possible.
“High student loan debt coupled with low repayment rates signal a questionable investment for students and taxpayers,” Harkin wrote to the DOE on Sept. 9. “[W]e encourage swift implementation of the gainful employment regulation and would be concerned with any efforts to weaken the proposal.”
Bolstering Harkin's argument, the Education Department this month issued new figures showing that the student-loan default rate at for-profits rose from 11 percent in 2007 to 11.6 percent in 2008 — much higher than default rates at nonprofit schools.
"While for-profit schools have profited and prospered thanks to federal dollars, some of their students have not," DOE Secretary Arne Duncan said in a statement announcing the figures.
Still, not all liberals are supporting the rule. Jesse Jackson, head of the Rainbow PUSH Coalition, is on Enzi's side, arguing that the change, while well intended, would hurt minority students.
"The amount of debt a student incurs and the student’s ability to repay that debt are not reflections of the quality of an institution," Jackson wrote in his own comments submitted to DOE. "To apply a standard that looks at debt and repayment as a measure of quality misses a greater opportunity to hold all institutions to a higher standard of student outcomes, namely, graduation rates and successful post-graduation careers."
The DOE is hoping to finalize its rule by Nov. 1.
THE HILL
Sources:
The Hill
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