March 14, 2018

DeVos Gives Away Store, But For-Profit Colleges Want More

DeVos Gives Away Store, But For-Profit Colleges Want More

Across the full range of federal agencies, the “drain the swamp” Trump presidency is giving swampy corporations and special interests everything they want, by getting rid of health, safety, environmental, worker, civil rights, and consumer protection rules. Much of this organized corruption in favor of GOP donors, like oil companies, occurs on paper and behind the scenes — agencies propose cancellations of regulations, citizen groups mail in rebuttals, agencies reject those pleas. But the Department of Education normally requires that rules be developed through a process called negotiated rule-making, where a range of stakeholders sit around a table for long days and weeks, debate issues, and try to forge consensus before the Department drafts a rule.

So you get to see the owning of our government by wealthy interests play out in real time.

That’s what’s going on right now for two Obama-era rules that Trump education secretary Betsy DeVos, an enthusiastic privatizer and investor in for-profit education programs, is seeking to repeal and replace: the 2016 borrower defense rule, which would give students deceived and abused by their colleges a path to having their federal loans cancelled; and the 2014 gainful employment rule, which would, eventually, cut off taxpayer dollars to high-priced career college programs that consistently leave graduates with more debt than they can afford to repay.

These rules were issued after government and media investigations revealed widespread fraud at many for-profit colleges, with former students — low-income, single moms, veterans — left unemployed and deep in debt. But buoyed by DeVos’s blatant handover of policy and key policy jobs to their industry, for-profit college representatives in these rule-making meetings are unabashed — demanding elimination of virtually every safeguard for students and taxpayers. The DeVos Department has complied, submitting at every phase of these meetings draft rules that are comically one-sided.

For example, the Department has not only dramatically lowered the standards for passing the gainful employment rule’s measures of excessive debt; it also has stripped the rule of any meaningful sanctions for violations. Instead, schools that flunked the new, weaker test would have to notify prospective students. The for-profit representatives bristled even at that, and urged revising the warning to be so vague as to be meaningless.

The Department is moving ahead without evidence. At this week’s final round of gainful employment meetings, negotiators representing a range of interests asked the Department why it had not provided sufficient data underlying its proposals. Chris Gannon of the U.S. Student Association bluntly questioned the Department’s decision to renegotiate the rule without real data. Greg Martin, a career Department official, responded by repeating what he’s said before: the change stems from a fundamental difference in policy views in this administration as compared to the previous one. The Department would be offering no new data to justify the rule.

When Gannon, consumer negotiator Whitney Barkley-Denney, legal services lawyer Johnson Tyler, and even some school negotiators asked if there could a fourth week of meetings next month after the Department had produced new data, Martin invoked authority from on high: “senior leadership,” the powerful DeVos lieutenants who are monitoring the proceedings from a remote location, and occasionally weigh in with bottom line, generally anti-student positions. There would be no fourth week.

Some of the for-profit college representatives on these rule-making panels are the kind of sophisticated operators who have skillfully advanced the positions of large predatory college chains like Ashford, Westwood, and Vatterott. Others are owners of smaller mom-and-pop schools, some strategically put forward and selected by the DeVos Department as the hard-working, friendly face of the industry.

But all of the for-profit industry representatives are united in the implicit position that their own schools (as opposed to a few unnamed “bad apples”) are entitled to a permanent flow of federal grants and loans, and that any rule that could interrupt that flow is inherently invalid.

Tony Mirando, executive director of the National Accrediting Commission of Career Arts and Sciences, which provides cosmetology schools with the accreditation they need to be eligible for financial aid, pushed back even on notification requirements where schools failed to meet federal standards. Mirando declared that “right is right and wrong is wrong,” and that what is wrong would be a college that is doing a “good job” having to make a disclosure to students “based on some artificial metric.”

Mirando added that as an accreditor he can’t imagine putting forth accrediting standards that would hurt some of the schools he accredits.

Accreditors are supposed to demand quality from schools, and so is the Department of Education, because both are charged with protecting students and the taxpayer investment in education.

To be clear, the for-profits’ complaints cannot rationally be about getting government off the backs of private enterprise; many for-profit colleges get 80 percent, 90 percent, or more of their revenue from the Department of Education, Department of Defense, and the VA. Yet the for-profit negotiators indignantly insist that the government has no business making rules that might cause them to make adjustments or sacrifices.

The for-profit lobbyists also repeatedly blame students for over-borrowing, saying that students take out loans for personal purchases like automobiles or new phones. That’s sometimes true, but what they don’t say is that for-profit college recruiters have been caught dangling such opportunities as enticements to get students to enroll.

Some of the for-profit college representatives in these meetings are sincerely working at their schools to help students, and they can point to success stories. But many colleges have, instead, engaged in blatant fraud and abuse; and many such bad schools are still in business, still enrolling students right now.

If you examine the January 2017 list of programs that flunked the first round of gainful employment measures, you will see a major overlap with companies and schools that have been the subject of law enforcement investigations for deceptive business practices — EDMC (the Art Institutes), Career Education Corp. (Sanford Brown), Kaplan University, Brightwood (formerly Kaplan College), ITT Tech, University of Phoenix, Everest, Globe University, Marinello School of Beauty, Vatterott, Westwood, and more.

Also on the list are programs with no law enforcement problems, and no doubt some of them are well-meaning programs that help students. Many schools that flunked, or came close to flunking, have a story about how the rule is uniquely unfair to them.

For-profit negotiators, like Jennifer Blum of Laureate Education, talk about how schools could fail gainful employment measures “through no fault of their own,” such as when graduates of the program enter low-paying fields like teaching.

But the issue is not whether the school bears some “fault.”

Even if a college’s programs are good quality, and even if the operators aren’t intentionally deceiving students or the government, the results for students can be bad — if, for example, tuition is too high in proportion to the expected salaries of graduates, or if the school habitually admits many students who are unlikely to benefit from the program and end up dropping out or not getting a job.

School operators and lobbyists sometimes describe the admission of such students as kind-hearted gestures on their part, or beyond their capacity to discern, but in such circumstances the for-profit school gets paid for its expensive tuition no matter what; almost all the risk is on the student, as well as the taxpayer.

The issue is whether the for-profit and career college operators are entitled to block any rule that would create obstacles for anyone they say are good, or even are objectively good — even if that rule could do enormous amount of good for students and taxpayers. The Obama gainful employment rule was designed to prevent bad outcomes for students, whether the school was malevolent or not.

Federal courts upheld the rule as a reasonable implementation of the Department of Education’s obligations.

During a break in the meeting, one lobbyist for a chain of for-profit schools acknowledged that ultimately all his schools were able to comply with these Obama standards, but he said that the compliance efforts cost perhaps $500,000. That sounded like a lot, until I remembered that I know a number of individual for-profit college students, from low-income backgrounds, who ended up with $125,000 in student loan debt after obtaining degrees that haven’t helped them a bit. They’ve been paying down these loans, and they’re broke. The for-profit colleges got $125,000 each time.

Rep. Mark Takano (D-CA) appeared this morning, in the public comments section of the meeting, to argue that good schools “should be the most forceful champions for the gainful employment rule” because it would separate good actors from bad. He said that the demonstrated pattern of bad behavior by many for-profit colleges should put the burden on the industry to show quality and entitlement to federal dollars. And he said that intense resistance to rules like gainful employment would ultimately harm the industry.

The for-profit college negotiators subsequently made plain that they were unmoved by Mr. Takano. Lucky for them, the head of Trump University is in the White House, and Betsy DeVos runs his Department of Education. So they will be getting the rule they want.

While this negotiating room is full of hard-working, well-compensated industry lawyers, lobbyists, and small school owners, at this point, it’s a sideshow, because the outcome is pre-ordained. The real players, the wealthiest CEOs and private equity operators, will be gathering in a few weeks at a conference to celebrate and advance their latest scam — converting their schools to bogus non-profits that allow them to evade the stigma and the few remaining rules applied to for-profits, while continuing to earn big money.