Students attending for-profit colleges fare worse than similar students at community colleges and public and private nonprofit institutions, according to a new study reported on in the Chroncile of Higher Education.
Six years after they enter college, students from for-profit institutions are employed at lower rates and earn between $1800 and $2000 a year less than their peers.
For profit college students also have significantly higher default rates.
Among students in the data set who had racked up between $5,000 and $10,000 in cumulative student-loan debt by 2009, 26 percent of those from for-profit colleges had defaulted, while 10 percent of those from community colleges and 7 percent of those from nonprofits had done so. As the level of debt increased to $20,000, the discrepancies grew wider: The default rate among for-profit-college students was 16 percent, compared with 3 percent for community-college students and 2 percent for those from four-year colleges.
The study is linked here.
Showing posts with label Chronicle of Higher Education. Show all posts
Showing posts with label Chronicle of Higher Education. Show all posts
Friday, February 24, 2012
Wednesday, May 11, 2011
Faculty at For-Profits Allege Constant Pressure to Keep Students Enrolled
The Chronicle of Higher Education reports that faculty at for-profits colleges are under constant pressure to keep students enrolled.
Faculty report that they were pressured to ignore plagiarism and inflate grades to keep enrollments high and federal funds, the source of up to 90% of for-profit college revenues, flowing. Not surprisingly Corinthian College's trade school, Everest College, and the Educational Development Management Corporation's (EDMC) Art Institutes are two of the diploma mills whose practices are scrutinized in this front page expose. Both recently opened operations in Milwaukee.
Kelly Field writes:
In interviews with The Chronicle and lawsuits filed around the country, more than a dozen current and former professors from six of the seven largest publicly traded education companies say they were leaned on to dumb down courses, offer lengthy extensions, and change failing grades. They describe a system in which expectations are low, cheating is tolerated, and faculty are under tremendous pressure to keep students enrolled.
"We were supposed to keep students in the classroom by any means necessary," says Luccia Rogers, a former professor at Career Education Corporation's Collins College, who says the college fudged grades and forgave repeated plagiarism—claims that the college denies. "It was all about keeping people in the seats to keep the federal money coming in."
In interviews with The Chronicle, current and former professors from a wide range of for-profit colleges said they were pressured—and in some cases ordered—to offer extensions, forgive plagiarism, and inflate grades to keep students enrolled and the federal aid flowing.
Kate M. Burkes, who has taught online courses for the University of Phoenix, said plagiarism is widespread at the college. She said she reported one student for plagiarism seven times.
Faculty complaints about grade changes are widespread in the for-profit sector. In recent years, faculty members from several for-profit colleges have filed lawsuits alleging that they had been fired after reporting altered grades or refusing to raise grades. Two such lawsuits are pending against ITT Educational Services, which paid $725,000 to California in 2005 to reimburse the state for Cal Grants awarded to academically ineligible students. The payment settled the state's portion of a lawsuit filed by two former employees that accused the company of falsifying grades to qualify the students for the grants, a claim the company denied.
At some for-profit companies, the link between faculty compensation and retention is explicit. The American Public University System pays adjunct faculty members by the student rather than the course, offering $130 per student in undergraduate courses and $150 per student in graduate courses. But students must complete 60 percent of the class for the faculty member to receive the full amount; if a student drops the course before then, the professor gets only 45 percent of the fee, or $58.50 for an undergraduate. Full-time faculty, which make up a quarter of the total, receive a salary.
At Everest College Phoenix online, 15 percent of a professor's evaluation is based on his or her efforts to track down absent and at-risk students to offer "assistance and encouragement."
Some campuses of Heald College base 20 percent of each faculty evaluation on "student outcomes," a category that takes into account student surveys as well as retention and pass rates. The target rate for each is 85 percent, according to Ayn Embar-Seddon O'Reilly, an instructor who has taught online courses for both Everest College Phoenix and Heald. She says professors with high retention and pass rates are rewarded with pay raises and additional classes.
Both colleges are owned by Corinthian Colleges Inc, which enrolls 102,000 students at 120 campuses in the United States and Canada.
The entire expose is linked here.
Faculty report that they were pressured to ignore plagiarism and inflate grades to keep enrollments high and federal funds, the source of up to 90% of for-profit college revenues, flowing. Not surprisingly Corinthian College's trade school, Everest College, and the Educational Development Management Corporation's (EDMC) Art Institutes are two of the diploma mills whose practices are scrutinized in this front page expose. Both recently opened operations in Milwaukee.
Kelly Field writes:
In interviews with The Chronicle and lawsuits filed around the country, more than a dozen current and former professors from six of the seven largest publicly traded education companies say they were leaned on to dumb down courses, offer lengthy extensions, and change failing grades. They describe a system in which expectations are low, cheating is tolerated, and faculty are under tremendous pressure to keep students enrolled.
"We were supposed to keep students in the classroom by any means necessary," says Luccia Rogers, a former professor at Career Education Corporation's Collins College, who says the college fudged grades and forgave repeated plagiarism—claims that the college denies. "It was all about keeping people in the seats to keep the federal money coming in."
In interviews with The Chronicle, current and former professors from a wide range of for-profit colleges said they were pressured—and in some cases ordered—to offer extensions, forgive plagiarism, and inflate grades to keep students enrolled and the federal aid flowing.
Kate M. Burkes, who has taught online courses for the University of Phoenix, said plagiarism is widespread at the college. She said she reported one student for plagiarism seven times.
Faculty complaints about grade changes are widespread in the for-profit sector. In recent years, faculty members from several for-profit colleges have filed lawsuits alleging that they had been fired after reporting altered grades or refusing to raise grades. Two such lawsuits are pending against ITT Educational Services, which paid $725,000 to California in 2005 to reimburse the state for Cal Grants awarded to academically ineligible students. The payment settled the state's portion of a lawsuit filed by two former employees that accused the company of falsifying grades to qualify the students for the grants, a claim the company denied.
At some for-profit companies, the link between faculty compensation and retention is explicit. The American Public University System pays adjunct faculty members by the student rather than the course, offering $130 per student in undergraduate courses and $150 per student in graduate courses. But students must complete 60 percent of the class for the faculty member to receive the full amount; if a student drops the course before then, the professor gets only 45 percent of the fee, or $58.50 for an undergraduate. Full-time faculty, which make up a quarter of the total, receive a salary.
At Everest College Phoenix online, 15 percent of a professor's evaluation is based on his or her efforts to track down absent and at-risk students to offer "assistance and encouragement."
Some campuses of Heald College base 20 percent of each faculty evaluation on "student outcomes," a category that takes into account student surveys as well as retention and pass rates. The target rate for each is 85 percent, according to Ayn Embar-Seddon O'Reilly, an instructor who has taught online courses for both Everest College Phoenix and Heald. She says professors with high retention and pass rates are rewarded with pay raises and additional classes.
Both colleges are owned by Corinthian Colleges Inc, which enrolls 102,000 students at 120 campuses in the United States and Canada.
The entire expose is linked here.
Thursday, September 16, 2010
Student-Loan Defaults rise; Momemtum for Gainful Employment rule grows
The Chroncile of Higher Education's Kelly Fields reports:
The percentage of borrowers defaulting on their student loans has risen for a third year in a row, reaching an 11-year high of 7 percent, according to U.S. Education Department data released on Monday.
As usual, the "cohort default rate" for 2008, the most recent data available, is highest at for-profit colleges, averaging 11.6 percent, a 0.6-percent increase over the previous year. The rate for public colleges is 6 percent, up from 5.9 percent. For private colleges, the rate is 4 percent, up from 3.7 percent.
The numbers represent the share of students who entered repayment in the 2008 fiscal year and defaulted by the end of last September.
In a news release, Education Department officials used the data to make their case for a crackdown on for-profit colleges. This past summer the department issued a package of proposed rules aimed at protecting students and taxpayers from the consequences of student-loan defaults, particularly at proprietary institutions. Final rules are due by November 1.
"While for-profit schools have profited and prospered thanks to federal dollars, some of their students have not," Secretary of Education Arne Duncan said in the news release. "Far too many for-profit schools are saddling students with debt they cannot afford in exchange for degrees and certificates they cannot use."
Lobbyists for for-profit colleges say the recent rise in defaults is a reflection of the weak economy, not the quality of their institutions. In a news release, the Career College Association argued that default rates should not be used "as a proxy on the value of our schools or the education we provide."
"In a climate marked by near double-digit unemployment, it is not surprising that former students continue to find it more difficult to repay their student loans," said Harris N. Miller, the association's president.
Under federal rules, colleges with default rates greater than 25 percent for three consecutive years, or 40 percent for a single year, can lose their eligibility to award federal student aid.
This year two colleges exceeded the first cap: the Charleston School of Beauty Culture, in Charleston, W.Va., and Human Resource Development & Employment-Stanley Technical Institute, in Clarksburg, W.Va. Three colleges had rates of greater than 40 percent: Cuttin' Up Beauty Academy, in Denver; Academy of Healing Arts, in Las Vegas; and Clinton Junior College, in Rock Hill, S.C.
Monday's data release fell less than a week after the end of a public-comment period on the most controversial of the department's proposals designed to protect students and taxpayers, known as the "gainful employment" rule. The department received close to 85,000 comments on that rule, which would cut off aid to programs whose students have the highest debt burdens and lowest loan-repayment rates. For-profit colleges say the rule would ravage their revenues and force them to close thousands of programs serving low-income and minority students.
The government's annual cohort default rate is a snapshot in time, reflecting the share of students who default on their loans within two years of leaving college. As such, the data capture only a sliver of the defaults that occur over the life of a loan, a recent Chronicle analysis found. According to that analysis, one in every five government loans that entered repayment in 1995 has gone into default.
The percentage of borrowers defaulting on their student loans has risen for a third year in a row, reaching an 11-year high of 7 percent, according to U.S. Education Department data released on Monday.
As usual, the "cohort default rate" for 2008, the most recent data available, is highest at for-profit colleges, averaging 11.6 percent, a 0.6-percent increase over the previous year. The rate for public colleges is 6 percent, up from 5.9 percent. For private colleges, the rate is 4 percent, up from 3.7 percent.
The numbers represent the share of students who entered repayment in the 2008 fiscal year and defaulted by the end of last September.
In a news release, Education Department officials used the data to make their case for a crackdown on for-profit colleges. This past summer the department issued a package of proposed rules aimed at protecting students and taxpayers from the consequences of student-loan defaults, particularly at proprietary institutions. Final rules are due by November 1.
"While for-profit schools have profited and prospered thanks to federal dollars, some of their students have not," Secretary of Education Arne Duncan said in the news release. "Far too many for-profit schools are saddling students with debt they cannot afford in exchange for degrees and certificates they cannot use."
Lobbyists for for-profit colleges say the recent rise in defaults is a reflection of the weak economy, not the quality of their institutions. In a news release, the Career College Association argued that default rates should not be used "as a proxy on the value of our schools or the education we provide."
"In a climate marked by near double-digit unemployment, it is not surprising that former students continue to find it more difficult to repay their student loans," said Harris N. Miller, the association's president.
Under federal rules, colleges with default rates greater than 25 percent for three consecutive years, or 40 percent for a single year, can lose their eligibility to award federal student aid.
This year two colleges exceeded the first cap: the Charleston School of Beauty Culture, in Charleston, W.Va., and Human Resource Development & Employment-Stanley Technical Institute, in Clarksburg, W.Va. Three colleges had rates of greater than 40 percent: Cuttin' Up Beauty Academy, in Denver; Academy of Healing Arts, in Las Vegas; and Clinton Junior College, in Rock Hill, S.C.
Monday's data release fell less than a week after the end of a public-comment period on the most controversial of the department's proposals designed to protect students and taxpayers, known as the "gainful employment" rule. The department received close to 85,000 comments on that rule, which would cut off aid to programs whose students have the highest debt burdens and lowest loan-repayment rates. For-profit colleges say the rule would ravage their revenues and force them to close thousands of programs serving low-income and minority students.
The government's annual cohort default rate is a snapshot in time, reflecting the share of students who default on their loans within two years of leaving college. As such, the data capture only a sliver of the defaults that occur over the life of a loan, a recent Chronicle analysis found. According to that analysis, one in every five government loans that entered repayment in 1995 has gone into default.
Friday, September 10, 2010
For-profit colleges face closure because of fraudulent recruiting practices
Westwood College's flagship campus has been placed on probation and its three Texas campuses face losing their state licenses following a federal investigation that uncovered recruiting abuses at Westwood and several other for-profit colleges.
The Accrediting Commission of Career Schools and Colleges, a national accreditor, put the flagship campus—Westwood College-Denver North—on probation last Thursday, citing the institution's recruiting practices as well as its failure to meet the commission's benchmarks for graduation and job placement.
In a separate action, the Texas Workforce Commission, a state oversight body, notified Westwood's Dallas, Fort Worth, and Houston South campuses that it will revoke their licenses to operate in the state. The campuses have until mid-September to appeal the decision. Roughly 1,500 of Westwood's 17,000 students attend its three Texas campuses, and 800 attend the Denver-North campus, a college spokesman said. Alta Colleges Inc., which is headquartered in Denver, is Westwood's parent company.
In a letter sent to faculty and staff members last week, George A. Burnett, the system's president and chief executive, said Westwood disagreed with the Texas commission's steps, but was "working diligently with them" and remained "confident" that the Texas campuses' licenses would be renewed. He also expressed confidence that the Denver campus would regain its full accreditation when it is reviewed again in November.
The actions against Westwood are the latest fallout from a recent report by the Government Accountability Office that chronicled widespread deception, and even outright fraud, in recruiting by for-profit colleges. At Westwood's Dallas campus, an admission representative went so far as to tell an investigator posing as a student not to report $250,000 in savings so he could qualify for federal student aid. Recruiters also gave the fake students misleading or incomplete information about programs' cost and graduation rates, the work-force commission says.
The commission says those actions violated Texas law, which bars recruiters from advising prospective students about financial aid and requires them to provide students with a schedule of tuition, fees, and other charges prior to enrollment. The agency has also accused Westwood of failing to report lawsuits involving the college, also a violation of state law.
Alta Colleges Inc. and Westwood, have been the subject of a string of lawsuits by former students and employees, including several filed by the Florida-based law firm James, Hoyer, Newcomer, Smiljanich & Yanchunis. The latest lawsuits accuse the colleges of training their recruiters to systematically misrepresent not only the cost of attending, but also job prospects for graduates and the nature of the colleges' accreditation.
Westwood, which, along with Alta, has filed a defamation case against the firm, has called the allegations "opportunistic," and promised to disprove them "in the appropriate forum." Last month, after the GAO report was released, the college announced that it would eliminate incentive pay for its recruiters and tighten its admissions standards to enroll students who are more academically prepared.
By Kelly Field, Chronicle of Higher Education, September 9, 2010
The Accrediting Commission of Career Schools and Colleges, a national accreditor, put the flagship campus—Westwood College-Denver North—on probation last Thursday, citing the institution's recruiting practices as well as its failure to meet the commission's benchmarks for graduation and job placement.
In a separate action, the Texas Workforce Commission, a state oversight body, notified Westwood's Dallas, Fort Worth, and Houston South campuses that it will revoke their licenses to operate in the state. The campuses have until mid-September to appeal the decision. Roughly 1,500 of Westwood's 17,000 students attend its three Texas campuses, and 800 attend the Denver-North campus, a college spokesman said. Alta Colleges Inc., which is headquartered in Denver, is Westwood's parent company.
In a letter sent to faculty and staff members last week, George A. Burnett, the system's president and chief executive, said Westwood disagreed with the Texas commission's steps, but was "working diligently with them" and remained "confident" that the Texas campuses' licenses would be renewed. He also expressed confidence that the Denver campus would regain its full accreditation when it is reviewed again in November.
The actions against Westwood are the latest fallout from a recent report by the Government Accountability Office that chronicled widespread deception, and even outright fraud, in recruiting by for-profit colleges. At Westwood's Dallas campus, an admission representative went so far as to tell an investigator posing as a student not to report $250,000 in savings so he could qualify for federal student aid. Recruiters also gave the fake students misleading or incomplete information about programs' cost and graduation rates, the work-force commission says.
The commission says those actions violated Texas law, which bars recruiters from advising prospective students about financial aid and requires them to provide students with a schedule of tuition, fees, and other charges prior to enrollment. The agency has also accused Westwood of failing to report lawsuits involving the college, also a violation of state law.
Alta Colleges Inc. and Westwood, have been the subject of a string of lawsuits by former students and employees, including several filed by the Florida-based law firm James, Hoyer, Newcomer, Smiljanich & Yanchunis. The latest lawsuits accuse the colleges of training their recruiters to systematically misrepresent not only the cost of attending, but also job prospects for graduates and the nature of the colleges' accreditation.
Westwood, which, along with Alta, has filed a defamation case against the firm, has called the allegations "opportunistic," and promised to disprove them "in the appropriate forum." Last month, after the GAO report was released, the college announced that it would eliminate incentive pay for its recruiters and tighten its admissions standards to enroll students who are more academically prepared.
By Kelly Field, Chronicle of Higher Education, September 9, 2010
Thursday, June 24, 2010
Senate Grilling of For-Profits; Listen on Line
June 23, 2010, 03:35 PM ET
Senate Grilling of For-Profits: Join the Conversation Online
By Marc Parry Chronicle of Higher Education
All eyes will be on the for-profit-education industry Thursday as the U.S. Senate convenes the first in a series of hearings examining federal spending on proprietary colleges. If you care about online education, it's worth paying attention because for-profits are gobbling up a growing share of the e-learning market.
Here's how you can follow along and join in the conversation online:
The hearing kicks off at 10 a.m., Eastern Daylight Time, and will be Webcast here. I'll be reporting live from the event on Twitter (@marcparry). If you're on Twitter, you can contribute to our coverage by using the hashtag "#4profit." All tweets with that tag will be published in a box on The Chronicle's home page.
A key witness testifying will be Steven Eisman, a hedge-fund manager who predicted the housing bubble and is now issuing similar warnings about for-profit higher education. He played a part in Michael Lewis’s best-selling book, “The Big Short: Inside the Doomsday Machine.”
For more on the issues at play Thursday, check out this morning's story by Chronicle reporter Paul Basken: "New Grilling of For-Profits Could Turn Up the Heat for All of Higher Education." hearing.
Senate Grilling of For-Profits: Join the Conversation Online
By Marc Parry Chronicle of Higher Education
All eyes will be on the for-profit-education industry Thursday as the U.S. Senate convenes the first in a series of hearings examining federal spending on proprietary colleges. If you care about online education, it's worth paying attention because for-profits are gobbling up a growing share of the e-learning market.
Here's how you can follow along and join in the conversation online:
The hearing kicks off at 10 a.m., Eastern Daylight Time, and will be Webcast here. I'll be reporting live from the event on Twitter (@marcparry). If you're on Twitter, you can contribute to our coverage by using the hashtag "#4profit." All tweets with that tag will be published in a box on The Chronicle's home page.
A key witness testifying will be Steven Eisman, a hedge-fund manager who predicted the housing bubble and is now issuing similar warnings about for-profit higher education. He played a part in Michael Lewis’s best-selling book, “The Big Short: Inside the Doomsday Machine.”
For more on the issues at play Thursday, check out this morning's story by Chronicle reporter Paul Basken: "New Grilling of For-Profits Could Turn Up the Heat for All of Higher Education." hearing.
Wednesday, June 16, 2010
For-profit college regulations advance without gainful employment rule
The Chronicle of Higher Education reports that most of the Education Department's proposals to regulate for-profit colleges like Corinthian and the Education Development Management Corporation will move forward.
But the "gainful employment" regulation designed to protect students from crushing loads of debt, the focus of a multi-million dollar lobbying campaign by proprietory institutions, was not included in the package of reforms.
The for-profits argue that tying student aid to student debt loads and incomes would force many of them to close their doors.
But the goal of the rule is to protect students from taking on debts they have no possibility of paying back.
If the only way for-profit institutions can stay open is by deceiving students into enrolling in costly programs that do not lead to family supporting incomes, they should be shut down.
The Chronicle reports:
After an intense lobbying effort by for-profit colleges, the Education Department announced Tuesday that it will postpone the release of a rule that proprietary institutions said would shutter thousands of their programs.
The rule, which would cut off federal student aid to programs whose graduates carry high student-loan debt relative to their incomes, is one of 14 that the department and college stakeholders have been negotiating over the past eight months. The other regulations, including one that would tighten a ban on incentive compensation for college recruiters, will be made public Friday.
In a call with reporters Tuesday, an Education Department official said the agency still plans to hold for-profits accountable for preparing their graduates for "gainful employment," but needs more time to develop an appropriate measure of that outcome. The official said the proposal will be released later this summer, and will most likely be included in a package of final rules due out in November.
"We have many areas of agreement where we can move forward," Arne Duncan, the U.S. secretary of education, said in a statement. "But some key issues around gainful employment are complicated, and we want to get it right, so we will be coming back with that shortly."
The delay gives for-profit colleges more time to fight the department's proposal to bar aid for programs in which a majority of students' loan payments would exceed 8 percent of the lowest quarter of graduates' expected earnings, based on a 10-year repayment plan. The colleges have already spent hundreds of thousands of dollars pushing an alternative that would require programs to provide prospective students with more information about their graduates' debt levels and salaries.
Their lobbying and public-relations blitz has met with mixed success. While the department has not yet abandoned plans to measure graduates' debt-to-income ratios, the rules that will be released Friday would require programs to disclose their graduation and job-placement rates and median debt levels—the approach favored by for-profits.
A Welcome Delay
Trace A. Urdan, an analyst with Signal Hill Capital Group, said the delay in releasing the rest of the rule suggested that "the department has heard the message from industry and Congress, and that there was some overreaching."
"Clearly, trying to gather more data before proceeding is being responsible," he added.
For-profit colleges have complained that the department has refused to release the data it used to justify drafting the rule, and have questioned whether they even exist.
The fight over gainful employment comes amid increased federal scrutiny of the for-profit sector, which educates a growing share of students and is highly dependent on federal student aid. On Thursday, the education committee of the U.S. House of Representatives will hold a hearing to examine whether accrediting agencies are doing enough to ensure that students studying online are getting an adequate amount of instruction for the degrees they earn. The hearing will focus on a recent report by the Education Department's Office of Inspector General that questioned the decision of the Higher Learning Commission of the North Central Association of Colleges and Schools, one of the nation's major regional accrediting organizations, to approve accreditation of American InterContinental University, a for-profit college owned by the Career Education Corporation. The Senate education committee follows with a hearing next week focused on the growth of the for-profit sector and the risks that may pose to taxpayers.
In a statement issued Tuesday, the chairman of the Senate committee praised the proposed rules. "The federal government must ensure that the more than $20-billion in student aid that these schools receive is being well spent and students are being well informed and well served," said Sen. Tom Harkin, Democrat of Iowa. "For-profit colleges must work for students and taxpayers, not just shareholders."
Meanwhile, a top Republican on the panel, Sen. Lamar Alexander, of Tennessee, called the disclosures that would be required by the rules that will be released on Friday "much better than the first approach on gainful employment." Mr. Alexander, a former secretary of education, had threatened to offer an amendment to withhold the funds needed to put the rule into effect if the department followed through with its original proposal.
"Secretary Duncan is focusing on a real problem," he said. "Some students are borrowing too much and not getting enough value for what they are paying."
Tougher Stance on Recruitment
But if the department is showing signs that it may soften its stance on gainful employment, it has dug in its heels on another controversial issue: recruiter compensation. During negotiations over the rules, the department proposed striking a dozen "safe harbors" from a ban on compensating recruiters based on student enrollment. It followed through with that proposal in the rules due out Friday, while promising to provide guidance on what is—and isn't—allowed under the ban.
Congress outlawed incentive compensation in 1992 following reports that some trade institutions were enrolling unqualified students to receive their federal student-aid dollars. By prohibiting commissions, lawmakers hoped to discourage recruiters from signing up students for courses they couldn't handle. Under the law, colleges may not provide "any commission, bonus, or other incentive payment" to recruiters or admissions officers based on their success in securing enrollments or financial aid.
A decade later, the Education Department convened a committee to clarify the rules, which for-profit colleges had long complained were unclear and ambiguous. When the panel disbanded without reaching consensus, the department took action on its own, issuing regulations that outlined the 12 "safe harbors" from the law.
In the years since the safe harbors were created, some of the largest for-profit institutions have come under scrutiny by state and federal regulators, and a number of former recruiters have filed lawsuits under a whistle-blower law, the False Claims Act, that accuse colleges of improperly compensating recruiters. In one of the most high-profile lawsuits, the University of Phoenix recently agreed to pay $67.5-million to settle a False Claims lawsuit filed by two former recruiters.
Pauline Abernathy, vice president for the Institute for College Access & Success, said the changes in the proposed rule "appear to bring the department's policies more in line with federal law banning incentive compensation."
"These loopholes have led to high-pressure and deceptive sales tactics that can leave vulnerable consumers with staggering debt and no way to pay it back," she said.
But Harris N. Miller, president of the Career College Association, said he was disappointed that the department didn't include specific guidance in its rule. "This is going to harm students and make lawyers very happy," he said.
Most of the other regulations in the package to be released on Friday are aimed at protecting students and safeguarding taxpayers' investment in federal student aid. In many cases, the language mirrors agreements reached during the rule-making sessions.
They include rules that would:
Require colleges to evaluate the validity of a student's high-school diploma if either the college or the secretary of education believes that a closer examination of the diploma is warranted.
Strengthen the department's authority to take action against institutions engaging in deceptive advertising, marketing and sales practices.
Clarify the states' responsibility in approving and monitoring postsecondary programs.
Define a credit hour and establish procedures for accrediting agencies to determine whether a college's assignment of a credit hour is acceptable. The proposal also allows for a credit hour to be measured through learning outcomes instead of the customary use of "seat time."
The public will have 45 days to comment on the rules, which are expected to be finalized by November 1 and take effect in July 2011.
But the "gainful employment" regulation designed to protect students from crushing loads of debt, the focus of a multi-million dollar lobbying campaign by proprietory institutions, was not included in the package of reforms.
The for-profits argue that tying student aid to student debt loads and incomes would force many of them to close their doors.
But the goal of the rule is to protect students from taking on debts they have no possibility of paying back.
If the only way for-profit institutions can stay open is by deceiving students into enrolling in costly programs that do not lead to family supporting incomes, they should be shut down.
The Chronicle reports:
After an intense lobbying effort by for-profit colleges, the Education Department announced Tuesday that it will postpone the release of a rule that proprietary institutions said would shutter thousands of their programs.
The rule, which would cut off federal student aid to programs whose graduates carry high student-loan debt relative to their incomes, is one of 14 that the department and college stakeholders have been negotiating over the past eight months. The other regulations, including one that would tighten a ban on incentive compensation for college recruiters, will be made public Friday.
In a call with reporters Tuesday, an Education Department official said the agency still plans to hold for-profits accountable for preparing their graduates for "gainful employment," but needs more time to develop an appropriate measure of that outcome. The official said the proposal will be released later this summer, and will most likely be included in a package of final rules due out in November.
"We have many areas of agreement where we can move forward," Arne Duncan, the U.S. secretary of education, said in a statement. "But some key issues around gainful employment are complicated, and we want to get it right, so we will be coming back with that shortly."
The delay gives for-profit colleges more time to fight the department's proposal to bar aid for programs in which a majority of students' loan payments would exceed 8 percent of the lowest quarter of graduates' expected earnings, based on a 10-year repayment plan. The colleges have already spent hundreds of thousands of dollars pushing an alternative that would require programs to provide prospective students with more information about their graduates' debt levels and salaries.
Their lobbying and public-relations blitz has met with mixed success. While the department has not yet abandoned plans to measure graduates' debt-to-income ratios, the rules that will be released Friday would require programs to disclose their graduation and job-placement rates and median debt levels—the approach favored by for-profits.
A Welcome Delay
Trace A. Urdan, an analyst with Signal Hill Capital Group, said the delay in releasing the rest of the rule suggested that "the department has heard the message from industry and Congress, and that there was some overreaching."
"Clearly, trying to gather more data before proceeding is being responsible," he added.
For-profit colleges have complained that the department has refused to release the data it used to justify drafting the rule, and have questioned whether they even exist.
The fight over gainful employment comes amid increased federal scrutiny of the for-profit sector, which educates a growing share of students and is highly dependent on federal student aid. On Thursday, the education committee of the U.S. House of Representatives will hold a hearing to examine whether accrediting agencies are doing enough to ensure that students studying online are getting an adequate amount of instruction for the degrees they earn. The hearing will focus on a recent report by the Education Department's Office of Inspector General that questioned the decision of the Higher Learning Commission of the North Central Association of Colleges and Schools, one of the nation's major regional accrediting organizations, to approve accreditation of American InterContinental University, a for-profit college owned by the Career Education Corporation. The Senate education committee follows with a hearing next week focused on the growth of the for-profit sector and the risks that may pose to taxpayers.
In a statement issued Tuesday, the chairman of the Senate committee praised the proposed rules. "The federal government must ensure that the more than $20-billion in student aid that these schools receive is being well spent and students are being well informed and well served," said Sen. Tom Harkin, Democrat of Iowa. "For-profit colleges must work for students and taxpayers, not just shareholders."
Meanwhile, a top Republican on the panel, Sen. Lamar Alexander, of Tennessee, called the disclosures that would be required by the rules that will be released on Friday "much better than the first approach on gainful employment." Mr. Alexander, a former secretary of education, had threatened to offer an amendment to withhold the funds needed to put the rule into effect if the department followed through with its original proposal.
"Secretary Duncan is focusing on a real problem," he said. "Some students are borrowing too much and not getting enough value for what they are paying."
Tougher Stance on Recruitment
But if the department is showing signs that it may soften its stance on gainful employment, it has dug in its heels on another controversial issue: recruiter compensation. During negotiations over the rules, the department proposed striking a dozen "safe harbors" from a ban on compensating recruiters based on student enrollment. It followed through with that proposal in the rules due out Friday, while promising to provide guidance on what is—and isn't—allowed under the ban.
Congress outlawed incentive compensation in 1992 following reports that some trade institutions were enrolling unqualified students to receive their federal student-aid dollars. By prohibiting commissions, lawmakers hoped to discourage recruiters from signing up students for courses they couldn't handle. Under the law, colleges may not provide "any commission, bonus, or other incentive payment" to recruiters or admissions officers based on their success in securing enrollments or financial aid.
A decade later, the Education Department convened a committee to clarify the rules, which for-profit colleges had long complained were unclear and ambiguous. When the panel disbanded without reaching consensus, the department took action on its own, issuing regulations that outlined the 12 "safe harbors" from the law.
In the years since the safe harbors were created, some of the largest for-profit institutions have come under scrutiny by state and federal regulators, and a number of former recruiters have filed lawsuits under a whistle-blower law, the False Claims Act, that accuse colleges of improperly compensating recruiters. In one of the most high-profile lawsuits, the University of Phoenix recently agreed to pay $67.5-million to settle a False Claims lawsuit filed by two former recruiters.
Pauline Abernathy, vice president for the Institute for College Access & Success, said the changes in the proposed rule "appear to bring the department's policies more in line with federal law banning incentive compensation."
"These loopholes have led to high-pressure and deceptive sales tactics that can leave vulnerable consumers with staggering debt and no way to pay it back," she said.
But Harris N. Miller, president of the Career College Association, said he was disappointed that the department didn't include specific guidance in its rule. "This is going to harm students and make lawyers very happy," he said.
Most of the other regulations in the package to be released on Friday are aimed at protecting students and safeguarding taxpayers' investment in federal student aid. In many cases, the language mirrors agreements reached during the rule-making sessions.
They include rules that would:
Require colleges to evaluate the validity of a student's high-school diploma if either the college or the secretary of education believes that a closer examination of the diploma is warranted.
Strengthen the department's authority to take action against institutions engaging in deceptive advertising, marketing and sales practices.
Clarify the states' responsibility in approving and monitoring postsecondary programs.
Define a credit hour and establish procedures for accrediting agencies to determine whether a college's assignment of a credit hour is acceptable. The proposal also allows for a credit hour to be measured through learning outcomes instead of the customary use of "seat time."
The public will have 45 days to comment on the rules, which are expected to be finalized by November 1 and take effect in July 2011.
Subscribe to:
Posts (Atom)