On Friday President Obama spoke directly on his concerns about the for-profit sector of higher education, mirroring his administration’s squabbles with that segment of higher education.
At a question-and-answer session last Friday at the State University of New York at Binghamton, President Obama responded to a doctoral student’s question about for-profit colleges that the student called “predatory” in a way that inflamed for-profit officials.
While Obama agreed that some for-profits do take advantage of students – veterans in particular he feels -- he also said that such abuses were more common in the for-profit than in the non-profit sector. Yet, Obama did stress that for-profits as a whole are not inherently wrong. “For–profit institutions in a lot of sectors of our lives obviously (are) the cornerstone of our economy. And we want to encourage entrepreneurship and new ideas and new approaches and new ways of doing things. So I’m not against for-profit institutions generally,” he added.
The Problem With Some For-Profits
Obama’s gripes with for-profits were noted when he said that the student questioner was correct in voicing his concerns about problems in higher education. Money has been at the core of higher education issues over the last few years in particular, and Obama has been especially vocal on the topic. On Friday he said, “There have been some schools that are notorious for getting students in, getting a bunch of grant money, having those students take out a lot of loans, making big profits, but having really low graduation rates. Students aren’t getting what they need to be prepared for a particular field. They get out of these for-profits loaded down with enormous debt. They can’t find a job. They default. The taxpayer ends up holding the bag. Their credit is ruined, and the for-profit institution is making out like a bandit. That’s a problem.”
Obama is especially concerned about veteran students or those still in the military saying that “they’ve been preyed upon very badly by some of these for-profit institutions…” The president explained, “Because what happened was these for-profit schools saw this Post-9/11 GI Bill. That there was a whole bunch of money that the federal government was committed to making sure that our veterans got a good education, and they started advertising to these young people, signing them up, getting them to take a bunch of loans, but they weren’t delivering a good product.”
The President’s Plan
Obama pitched that the best way to deal with problems in the for-profit sector would be to adopt the same ratings system he proposed just last week for all higher education. In that system institutions with similar missions would be equally evaluated on bases of affordability, completion rates, and graduate income; students attending higher-rated institutions would then receive larger Pell Grants plus more favorable terms on student loans.
Obama explained his reasoning, “If we can define some basic parameters of what’s a good value, then it will allow us more effectively to police schools whether they’re for–profit or non-for-profit — because there are some non-for-profit schools, traditional schools that have higher default rates among their graduated than graduation rates –- and be able to say to them, look either you guys step up and improve, or you’re not going to benefit from federal dollars.”
Generally for-profit leaders have been saying something along these lines for some time — they are willing to be judged as long as it is in similar ways as the rest of higher education.
Although for-profit leaders weren’t happy with his words, Obama said that not all sectors are the same when it came to the issues he was discussing. Obama said, “So there are probably more problems in the for-profit sector on this than are in the traditional non-for-profit colleges, universities and technical schools, but it’s a problem across the board.” Obama voiced his solution, “And the way to solve it is to make sure that we’ve got ways to measure what’s happening and we can weed out some of the folks that are engaging in bad practices.”
Still, not all private sector institutions buy into the president’s one-size-fits-all proposed agenda.
Steve Gunderson, president and CEO of Association of Private Sector Colleges and Universities, the wing that lobbies on behalf of for-profit colleges, argued via email that it was not consistent for President Obama to push for all colleges to be evaluated under a similar system while at the same time the Education Department is going in a direction of negotiations over “gainful employment” regulations that would apply to vocational programs at for-profit colleges and some non-profit institutions, which Gunderson sees as “an inherent conflict with what the president and the Department of Education are trying to do…. They mention the importance of developing and implementing these long term reforms for all postsecondary institutions, but then they continue to aggressively pursue negotiated rulemaking aimed at only a select number of institutions.” Gunderson said, “… to do this process right, the department should suspend negotiated rulemaking and appropriately focus on the president’s proposal.” He continued that his suggestion is “… how we will create meaningful change that puts the interest and outcomes of students first.”
That all higher education institutions should be evaluated on school performance in relation to institutions with similar student populations, so the true value these schools deliver can be measured, is a sentiment expressed by others in the for-profit sector, including Andrew Rosen, chairman and CEO of Kaplan, Inc. Rosen said he was encouraged by Obama’s plan for a rating system, but also called for it to be a fair plan.
In a written statement referring to equal evaluation of all higher education institutions, Rosen added, “Doing so will encourage excellence in serving students of all demographics.’
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