October 17, 2019

Bill in Congress Would End Taxpayer Aid to For-Profit Colleges. Good.

Bill in Congress Would End Taxpayer Aid to For-Profit Colleges. Good.

Today Representative Pramila Jayapal (D-WA) and Senator Sherrod Brown (D-OH) introduced a bill that would bar the Department of Education from sending federal student grants and loans to for-profit colleges.

I support this legislation, at the very least for its value as a wake up call to a bad-behaving industry and its paid cheerleaders in Washington.

There are powerful reasons for even some advocates for students to oppose the Jayapal-Brown bill. I’ll present those reasons from worst to best.

First, some of the major funders of higher education advocacy organizations have ties to for-profit education companies, and some groups are loathe to antagonize their donors.

Second, it sounds more politically reasonable to say you don’t oppose for-profit companies getting federal aid to educate students; you just want to be sure the money is used wisely.

Third, I believe that, in fact, there is merit in allowing for-profit companies to compete with non-profits in the education space, to see who can be more innovative and efficient.

But in reality, the 47-year experiment in sending taxpayer money to for-profit colleges has been a failure.

I hope every member of Congress agrees with these three principles: (1) Government should be vigilant against waste, fraud, and abuse with taxpayer dollars; (2) If government commits taxpayer dollars, there should be real performance standards, to make sure we get what we pay for; and (3) Government investment should not make the intended beneficiaries worse off than when they started.

The federal investment in student grants and loans, as applied to the for-profit college industry, has flunked all three tests for decades.

Historically there have been some good for-profit education programs, and in theory for-profit colleges could collectively play a constructive role in higher education — provided there are strong accountability rules and oversight to protect students and taxpayers against abuses.

In practice, for-profit colleges have aggressively lobbied to defeat accountability rules and oversight, and bought the allegiance of politicians in both parties to help get their way.  Also a result, bad actors in the industry have been able to engage in predatory practices that have harmed a generation of veterans, single parents, and others seeking a better future.

Now, Donald Trump and his Education Secretary Betsy DeVos have trashed even the weak accountability rules on the books and given the worst actors almost complete immunity. Cynical corruption is at work: DeVos and her top lieutenants at the Department, including Diane Auer Jones and Robert Eitel, have been financially tied to bad-behaving for-profit colleges, as, of course, was Trump.

$13 billion in Department of Education student aid, plus more in VA and Pentagon student aid, went to for-profit colleges last year — down from a historic high of $32 billion in 2010, before the industry was engulfed in scandal, but still an awful lot of money, especially given that many of the students enrolling with that money are left under-educated, without the careers they sought, and deep in debt, their financial futures ruined.

Rep. Jayapal has assembled some of the dismal statistics: On average, students attending for-profit colleges earn no more than those who did not attend college at all. The average for-profit college certificate or associate degree program costs about four times as much as at a public college, and for-profit students are four times as likely to default on their loans. Many for-profit colleges have been sued or investigated for fraud and abuse by federal and state law enforcement agencies.

Given this reality, it’s not clear that allowing federal aid to for-profit colleges still makes sense. That’s the case even though there are some quality for-profit programs that would lose access to federal money. Passage of this legislation would end jobs for some good instructors and staff, and hurt some good operators; over the years I have met a number who have been trying to do the right thing. But federal policy must put the interests of students over profits for college owners.

The good schools should blame not Rep. Jayapal and Sen. Brown for their reform proposal.  They should blame their bad-acting colleagues for their flagrant abuse of the privilege of receiving taxpayer aid — and blame themselves for not reining in the abusers. The industry has had decades to clean up its act, and it hasn’t.

The Jayapal-Brown bill is valuable, because it pushes this debate about the best way to provide for effective career education.

The bill is also smart, because it plugs a potential loophole: the growing trend of for-profit schools converting to non-profit status, yet continuing to funnel big money to private parties, and thus continuing to have incentives to fleece students and taxpayers.  Such covert for-profits, as carefully defined by the legislation. also would lose eligibility for federal aid.

Remember this: The bill would not require for-profit schools to shut down; it would simply say that they can no longer receive our taxpayer dollars. Some for-profit schools thrive without federal aid; and such schools are often more honest, more fair-priced, better schools.

An alternative to cutting off federal aid to all for-profit schools would be to create effective performance standards to separate good schools from bad; say, if your school charges so much money and produces such poor educational outcomes that many of your graduates can’t afford to pay back their loans, you would eventually lose access to the aid.  Great idea!  And courts already have ruled that the Department of Education has ample legal authority to issue such a regulation, derived from a statutory provision called “gainful employment.”

You could call it the “gainful employment rule.”

Except, that’s what the Obama administration did, and hundreds of for-profit colleges lobbied aggressively to weaken and defeat the gainful employment rule at the Department, in Congress, and in the courts, until the Trump administration outright killed it this year.

So enough of this failed, ugly, corrupt experiment. Support the Jayapal-Brown bill, along with the comprehensive higher education reform bill introduced this week by House Education Committee chairman Bobby Scott (R-VA). If for-profit schools want to stay in the federal aid business, their whole industry will have to earn it by actually helping students, and do so at a reasonable price, under reasonable accountability rules.