It’s Smart To Target Pell Grant Increases to Types of Colleges That Do Better For Students
Within the Build Back Better social spending bill on Capitol Hill is a provision that increases the maximum annual federal Pell grant for college students, currently $6,495, by $550. The measure excludes for-profit colleges from that modest increase. A decade of government and media investigations have shown that many for-profit colleges have offered a toxic mix of deceptive recruiting, high prices, low quality instruction, and poor job placement results, leaving many former students, dropouts and graduates alike, buried in debt they cannot repay.
Congress is smart to target scarce federal resources to types of colleges that perform better, that are more honest, that produce better outcomes for students.
But while the Biden administration is supporting the provision, which was drafted by congressional Democrats, the for-profit college industry is making a major push to defeat it. They’ve even found a dozen or so House Democrats who agreed to sign a letter opposing the measure. That’s far fewer than the scores of Democrats, many fueled by campaign contributions from for-profit schools, who were ready to do the industry’s bidding ten years ago. But in the present climate it represents a significant gesture, one that the main for-profit trade group, CECU, is publicly celebrating, even though, according to Capitol Hill and industry sources, the real movers of the letter were cosmetology schools.
The for-profit college industry and its allies are making the same claims they always make: There may be a few bad apple schools out there, but it’s unfair for Congress to paint with a broad brush and penalize all for-profit schools. They say such a measure punishes students, including many students of color, who attend for-profit colleges and trade schools.
But in fact the industry has orchards full of bad apples, even after the collapse of predatory chains Corinthian, ITT, EDMC, ECA, and CEHE, with many current industry giants — Perdoceo, Zovio, IEC, University of Phoenix, and others — as well as many smaller operations, engaged in deceptive and abusive practices and showing poor outcomes. And students, especially students of color, single mothers, and our veterans, suffer immensely as a result — deep in debt, without the jobs they sought, humiliated, lost.
There are also, as the for-profit college industry often points out, a good number of non-profit and public colleges engaged in predatory practices. But many of those are either for-profit schools that have converted to non-profit status through shady transactions, or schools that make troubling deals with aggressive online program manager (OPM) companies to sell expensive programs. This for-profitization of other higher ed sectors is troubling and demands much tougher oversight. But it doesn’t undermine the case for Congress directing more federal aid resources to the public and non-profit sectors, which include most of the good value colleges and career training schools in the country.
Yes, there are also some good for-profit college programs, although many of those remain overpriced. Yes, in a field like cosmetology, many states require training certificates to get a license, and many community colleges fail to offer the needed programs, making the for-profit sector potentially valuable.
But here’s the problem: Many for-profit colleges, including cosmetology schools, have fiercely opposed laws and regulations sought by the Obama and Biden administrations, and the Congress, to effectively separate good for-profit college programs from bad ones. They have opposed the gainful employment rule, which would penalize and ultimately end federal aid for for-profit programs, and non-profit career training programs, that consistently leave graduates unable to repay their loans. They have opposed the borrower defense regulation, which would provide effective rules for students ripped off by their colleges to have their federal loans forgiven, and which would prevent colleges getting federal aid from barring lawsuits brought by students. They have opposed reform of the federal 90-10 rule, which would protect students, especially military and veteran students, from low-quality programs. They have almost always opposed rules that would remove the most egregious abusers from the federal aid program.
These kinds of rules and laws, which Betsy DeVos cancelled and Donald Trump vetoed, provide objective bases for deciding which for-profit colleges are doing a good job for students, and for weeding out the bad actors. In the absence of these rules, there are simply for-profit colleges, and too many of them are scams that ruin students’ lives. If the industry wants more favorable treatment from Washington, it should at last get serious about policing itself, and start supporting reasonable regulation and enforcement that ensure schools are honest and provide decent value for the money.
Another reason for the proposed differential in Pell amounts: At least some academic research reveals that when federal financial aid to for-profit colleges increases, schools in the industry simply raise tuition, making their programs no more affordable.
In addition, states including California and Washington already have comparable rules to direct their own student grants toward other sectors of higher education besides the for-profits.
Despite all the documented abuses in the for-profit college industry, if its schools can keep getting cleared by the private accreditation agencies that serve as gatekeepers for federal aid, historically a very low bar, they will remain eligible for $6495 in Pell grants per student, per year, plus many other types of federal and state aid. Some of these companies have been getting billions in federal aid. Congress would be doing right by students to allocate that additional $550 per student to categories of schools that are performing better than the for-profit college industry.
UPDATE 11-18-21 1:00 pm:
Twenty-five organizations, and me, sent a letter to Speaker Pelosi and Leader Schumer supporting the Pell grant increase and the decision not to apply it to for-profit colleges.