Monday, January 31, 2011

Assistant Secretary of Ed endorses gainful employment rules

Scott Jaschik reports in Inside Higher Ed:

On Friday, the Assistant U.S. Secretary of Education for Postsecondary Education, Eduardo M. Ochoa, told a meeting of college presidents that the Department was proceeding with "gainful employment" regulations that would bar federal aid from career-oriented programs at which large percentages of graduates fail to earn enough money to pay back their student loans.

The proposed regulations have been opposed by the for-profit higher education industry -- which would feel most, but not all, of the impact. Last week Ochoa gave another talk in which he suggested that there would be major changes in the next version of the regulations. The next version will be "significantly different," Ochoa said in a talk at the meeting of the Council for Higher Education Accreditation.

But on Friday, Ochoa spoke only positively of the regulations. He acknowledged that the regulations represented “a new direction for federal regulation” of higher education in that they moved beyond reliance on accreditation for quality control. But he said that the additional oversight they involved was appropriate, and was required by statute. In the interview, he sidestepped questions about whether his position had changed since he predicted major changes in the regulations earlier in the week. But he said that the talk here was to a different audience and with a “different context.”

Ochoa also reassured those here that they need not fear that the regulations would be applied to all of higher education – as some advocates for for-profit colleges have suggested would be appropriate. And recent articles about the high prices and questionable job outcomes for graduates of law and other professional schools have also raised this possibility.

He said he understood that some educators at colleges not covered by the regulations have “a legitimate concern about the danger of conflating the operational definition of quality” with the debt/income ratios in the proposed rules. The concern, he said, is that such a policy would “flatten the definition of quality.” Ochoa said he wanted “to assure you that the department is fully cognizant” of the role of “liberal education as the foundation not only of degrees in liberal arts and sciences but also for professional degrees.” He said that, as a business dean earlier in his career, he was aware of the importance of courses outside the business school to broaden his students’ education.

Educational quality, Ochoa said, “cannot be reduced solely to the ability to get a first job after graduation.” But at the same time, he said, for career-related programs, definitions of quality “must include employability,” and “that’s what gainful employment is all about

Friday, January 28, 2011

Students Petition Washington Post Company to Fix or Close Kaplan U.-Sign the Petition

A petition urging the Washington Post Company to make changes at its lucrative Kaplan University, or shut it down, has garnered more than 7,000 signatures, 5,000 yesterday alone, and the number is rising rapidly.

Each signature generates an e-mail message to Donald E. Graham, chairman of the Washington Post Company, and several other Post officials. The messages ask them to stop admissions to the for-profit university, the source of the Post's profits, until it develops an "independent, third-party" system to investigate student complaints.

The petition was posted on a little over a week ago. It was initiated by a group of about 25  disaffected former Kaplan students.

The leader of the group, 40-year-old Shannon Croteau, said she was swindled by the university when she enrolled in its paralegal bachelor's-degree program. Ms. Croteau said the company had stuck her with $30,000 in debt for a loan she never took out, and refused to offer her any more financial aid, claiming it had "run out." She later discovered that her program had actually been an associate-degree program that isn't accredited in her home state of New Hampshire.

Kaplan is one of several for-profit colleges such as Corinthian College and Phoenix University that have come under criticism for duping students into taking out huge student loans for programs whose credits do not transfer or lead to gainful employment. The result-huge profits for for-profit colleges while students are left with broken dreams and mountains of debt.

Sign the petition!

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Thursday, January 27, 2011

Consumer and minority groups urge tougher rule on for-profit colleges

A broad coalition of student, consumer and minority groups on Wednesday exhorted President Obama to issue a "strong and enforceable" rule aimed at ensuring that vocational programs prepare their students for "gainful employment."

The letter from 38 groups cites a series of practices in which "some" career education programs have deceptively recruited students, inflated and falsely reported job placement statistics, and buried students in debt, and urges the administration not to back away from its tough but "common sense" regulation. "We will support you every step of the way," they write, a nod to the intense lobbying in which opponents of the rule have engaged.

The signatories to the letter include higher education associations like the American Association of Collegiate Registrars and Admissions Officers and the Student Senate for California Community Colleges, unions like the American Federation of Teachers and the American Association of University Professors, and consumer groups such as the National Consumer Law Center and Public Citizen. But it may be most notable for the large number of minority advocacy groups represented, since advocates for for-profit colleges have lined up numerous minority lawmakers and business groups to laud the institutions' success in educating black and Latino students. Signers of Wednesday's letter include the League of United Latin American Citizens, the NAACP, and the National Council of La Raza.

The letter is linked here.

Tuesday, January 25, 2011

There is no social security crisis

Alarmists like Wisconsin Congressman Paul Ryan inaccurately claim that the Social Security System is on the verge of bankruptcy. This is patently untrue.

The Social Security System is currently running a surplus and will continue to do so for several years.

As New York Times columnist Bob Herbert writes: ...there is no Social Security crisis. There is a foreseeable problem with the program’s long-term financing, but it can be fixed with changes that do no harm to its elderly beneficiaries. One obvious step would be to raise the cap on payroll taxes (currently $106,000) so that wealthy earners shoulder a fairer share of the burden."

Herbert's column is linked here.

Monday, January 24, 2011

For-profit colleges sue U.S. to stop rules protecting students

By Diane Bartz Diane Bartz – Fri Jan 21, 2011

A group of for-profit schools sued the U.S. government on Friday, seeking to overturn three rules that are part of a federal crackdown on the sector.

The rules are part of a larger package of new regulations being imposed on for-profit schools, accused of churning out poorly educated students with large debts.

The Association of Private Sector Colleges and Universities (APSCU), which represents more than 1,500 for-profit schools, filed the lawsuit in the U.S. District Court for the District of Columbia. It asked the court to toss out the rules, which are due to go into effect on July 1.

One rule challenged by the suit would stop deceptive advertising by schools, another bars recruiters from being paid based on how many students they enroll and a third requires states to authorize post-secondary schools for their students to be eligible for federal loans.

The lawsuit did not challenge the yet-to-be-finalized and most controversial of the reforms -- the "gainful employment" rule.

That rule would require schools to show that students are paying back federal loans or can do so. Students at schools that fall short would be barred from receiving federal loans, which would cripple many schools.

APSCU members include Career Education Corp, which owns the Sanford-Brown schools; Corinthian Colleges, DeVry Inc; Education Management Corp; ITT Educational Services; and Lincoln Educational Services.

The pending reforms have rocked shares in the sector over the past few months and Friday's suit failed to give the overall sector a lift. The Standard & Poor's education index closed 1.1 percent lower on Friday.

Shares of sector leader Apollo Group, which does not belong to APSCU, fell 2 percent.

Harris Miller, head of the trade group, said the rule barring misrepresentation by the schools was poorly done so that inadvertent misstatements by a single employee would be treated the same as intentional deception.

"We certainly oppose any misrepresentation to any actual or potential students," he said.

The Education Department defended the rules.

"We're confident that the published regulations will do the best job of protecting students and taxpayers," said department spokesman Justin Hamilton in an emailed statement.

Sector analyst Jeff Silber of BMO Capital Markets said the lawsuit was not a surprise since schools had been threatening to file suit.

"But it shows the industry is using all angles to try and fight this. I wouldn't be surprised to see the same strategy used once the final gainful employment regulations are posted," he said in an emailed comment.

The prospect of the rules has already roiled the sector as some schools tighten enrollment standards in a move to push down their loan default rates and increase graduation rates.

On Thursday, Career Education said it would cut about 600 jobs over the next several months and close a culinary school in Pittsburgh because of lower enrollment.

Apollo cut about 700 jobs in late November amid a 40 percent drop in new enrollments at its flagship University of Phoenix. Washington Post's education unit, Kaplan Higher Education, slashed about 770 positions.

(Reporting by Diane Bartz; Editing by Andre Grenon and Tim Dobbyn)

Thursday, January 20, 2011

Bloomberg News: For-Profit College Grads Earn a Life of Debt

Ronnie Franklin borrowed to pay his tuition at a for-profit college that advertised its success in preparing graduates for better jobs. The decision still haunts him. Despite graduating from RETS Technical Center in Boston in 2000, he found himself so strapped for money that he and his two sons lived in a homeless shelter last year. Frustrated that his degree didn't lead to work in electronics, Franklin—now a $12-an-hour housepainter—decided to go to a community college this year. He can't qualify for a federal grant that would pay the cost because he has defaulted on $20,000 of his earlier U.S. student loans.

Students seeking to move up in life by getting a degree from a for-profit college are being trapped in a growing underclass of education debtors. Under U.S. law, their loan obligations can rarely be discharged in bankruptcy, making them more onerous than credit-card debt or subprime mortgages. Defaults can subject students to government confiscation of salaries, tax refunds, and Social Security payments—and disqualify them for aid to get more marketable degrees.

Students at for-profit colleges carry the biggest loans in U.S. higher education. Bachelor's degree recipients at for-profits have median debt of $31,190 compared with $17,040 at private, nonprofit institutions and $7,960 at public colleges, according to Washington-based nonprofit Education Trust.

While currently enrolling one in eight U.S. students, for-profit colleges account for almost one in two federal-loan defaults. The Obama Administration wants to curb rising default rates and the threat of student destitution by cutting off federal funds to for-profit college programs whose students have the worst loan-repayment rates and lowest incomes relative to debt, which suggests their degrees aren't translating into higher salaries. That's if a degree is earned: The graduation rate for first-time, full-time candidates for four-year degrees at for-profit colleges is 22 percent, compared with 55 percent at state colleges.

For-profit colleges have higher student-loan default rates and dropout rates because they serve lower-income students, minorities, immigrants, and working adults, says Harris Miller, president of the Association of Private Sector Colleges and Universities, a trade group.

Don Harris, president of RETS at the time Franklin attended, says 80 percent of RETS graduates succeeded in finding jobs related to their fields within 60 days of graduating. Washington Post's (WPO) Kaplan Higher Education bought RETS in 2002. About 20 percent of students at the school, now called Kaplan Career Institute, default in the first two years they're required to make payments—more than three times the rate at public colleges. That figure reflects the low-income backgrounds of Kaplan students, spokeswoman Melissa Mack says. "Most Americans are willing to take some risk with a student loan, knowing the payoff for them individually can be quite significant," Miller says.

The degree didn't pay off for Franklin. "I got an outstanding student loan, I got no job, and I'm further and further in debt," he says. "It's basically crippling me from doing a lot of things to improve my living condition."

The bottom line: Students at for-profit colleges graduate with higher debt loads and loan default rates than those who attend conventional schools.

John Hechinger is a reporter for Bloomberg News.

Monday, January 17, 2011

Dr. Martin Luther King died fighting for public employees

As we celebrate Rev. Martin Luther King Jr., it is important to remember that Dr. King viewed ther right to organize as one of the nation's most important civil rights. Virtually his last act was in support of that right, for he was killed on April 4, 1968 as he prepared to lead striking Memphis garbarge workers on another march for union recognition.

King's assassination brought to bear tremendous public pressure on behalf of the strikers in Memphis.

Dick Meister writes; President Lyndon Johnson sent in federal troops to protect them and assigned the undersecretary of labor to mediate the dispute. Within two weeks, an agreement was reached that granted strikers the union rights they had demanded.

For the first time, the workers' own representatives could sit across the table from their bosses and negotiate and air their grievances and demands for remedies. They got their first paid holidays and vacations, pensions and health care benefits. They got the right to overtime pay and raises of 38 percent on wages that had been so low - about $1.70 an hour - that 40 percent of the workers had qualified for welfare payments.

They got an agreement that promotions would be made strictly on the basis of seniority, without regard to race, assuring the promotion of African-Americans to supervisory positions for the first time. The strikers, in fact, got just about everything they had sought during the 65-day walkout.

William Lucy, secretary-treasurer of the strikers' union, the American Federation of State, County and Municipal Employees, saw Dr. King "bring tears to the eyes of strikers and their families just by walking into a meeting" and "the surge of confidence he inspired in the movement in Memphis."

The strikers' victory in Memphis led quickly to union recognition victories by black and white public employees throughout the South and elsewhere. They had passed a major test of union endurance against very heavy odds, prompting a great upsurge of union organizing and militancy among government workers.

As Lucy said, it was "a movement for dignity, for equity and for access to power and responsibility for all Americans."

Anyone doubting that the labor and civil rights movements share those goals need only heed the words of Martin Luther King Jr.:
Our needs are identical with labor's needs: Decent wages, fair working conditions, livable housing, old-age security, health and welfare measures, conditions in which families can grow, have education for their children, and respect in the community.... The coalition that can have the greatest impact in the struggle for human dignity here in America is that of the blacks and forces of labor, because their fortunes are so closely intertwined.