How For-Profit Colleges Benefited From Trump Administration Policies

How For-Profit Colleges Benefited From Trump Administration Policies

The pandemic has hit higher education hard, with falling enrollments in most types of colleges over the past year. A notable exception, though, are for-profit colleges, where overall enrollments held steady during that period, and first-time student enrollment is up, according to the latest data from the National Student Clearinghouse.

Some higher-ed watchers say that Trump administration policies and practices have led for-profit colleges to rebound since he took office, even though for-profits tend to cost students more and yield lower student outcomes than nonprofit colleges.

From the start of Donald Trump’s time as president, his Department of Education, led by Betsy DeVos, signalled its friendliness to the for-profit sector, says A.J. Angulo, a professor of education at the University of Massachusetts at Lowell and author of “Diploma Mills: How For-Profit Colleges Stiffed Students, Taxpayers, and the American Dream.”

“Even simply having Trump in the White House signaled to a lot of institutions: Here is one of our own,” he says, noting that Trump long ran an unaccredited for-profit real estate-training business called Trump University, which faced a federal lawsuit by students who said they were duped by it. (The lawsuit was settled in 2018.) “And having Trump in the White House signaled a tremendous green light to a lot of folks in the industry to expand and even push the envelope.”

Angulo notes that just after DeVos was confirmed, her team hired Taylor Hansen, a former lobbyist for the for-profit industry’s largest trade group, the Career Education Colleges and Universities (CECU). Hansen had previously fought against Obama administration regulations including the so-called “gainful employment” rule, that lets the Department of Education disqualify colleges from eligibility for federal student aid if large numbers of their graduates fail to land good jobs that would allow them to repay their debts. Many critics of Hansen’s hire, including Senator Elizabeth Warren, called it a conflict of interest, and he later stepped down.

DeVos did end up rolling back many oversight efforts aimed at the for-profit college industry that the Obama administration had put in place, including the gainful employment rule.

Trump’s Education Department also reversed Obama administration policy regarding the Accrediting Council for Independent Colleges & Schools, which oversees many for-profit colleges. One of the final acts of Obama’s Education Secretary John King Jr. was to revoke recognition of the accrediting body, citing multiple cases of compliance failures. But in 2018, DeVos recommended restoring the group’s full status, meaning its colleges would once again qualify for federal student aid.

A report last month from the Brookings Institution called the recent rise in for-profit enrollment “alarming,” arguing that some students are taking on large student debt for educations that do not tend to pay off.

The author of the report, George Washington University professor Stephanie Riegg Cellini, said in an interview that one reason for-profits’ enrollments are going up even though those at lower-cost community colleges are falling is that for-profits spend big on marketing.

“For-profits spend $400 per student on commercial advertising, compared to $14 per student by public institutions,” she says. “They are able to craft a story.”

“But one question is, is that story true or not that they’re trying to sell,” she adds, noting that in some cases, for-profit colleges have been found to mislead students about their success rates.

For-profit proponents, meanwhile, say that the moves by the Obama administration unfairly targeted for-profit colleges. “The Trump administration believes in more transparency and less regulation, and we believe that’s the right approach,” Steve Gunderson, who leads CECU, the trade group of for-profit colleges, told EdSurge this week. He called the Obama administration’s approach an “ideological attack on our sector” and said that recent information published by the Ed Department about how students fare after graduation should help consumers make informed decisions without requiring regulations. “Some of the removal in regulation was welcomed by everyone in higher ed, not just us,” he argued.

But Cellini countered that simply having the government publish consumer data—on sites like the recently expanded College Scorecard—does not do enough to equally inform all those who need it. She says that research shows that low-income students are often unaware of such data. And she says that education is what economists call “an experience good,” in that “you don’t really know what you’re getting until you’re there.”

Angulo says that consumers assume that if a for-profit college is allowed to operate, it must be offering a quality service. “As Americans we tend to be very optimistic—that maybe there was a problem with these institutions in the past, but surely somebody would have put a stop to them [if something was really wrong],” he says.

Gunderson, of the for-profit trade group, responds that the way data on for-profits is reported paints them unfairly. “It’s really important to separate 4-year online liberal arts for-profits from 2-year onsite for-profits,” he says. “Clearly the exclusively or primarily liberal-arts schools have some challenges. Their outcomes are poor, but their enrollments are large. You’ve got to really look at those two different numbers.”

Expecting a Shift

Until Trump took office, for-profit colleges had seen steep enrollment declines for years. In 2010, the private for-profit sector enrolled more than 2 million students, but by 2016 it was down to about 1.2 million, according to the National Center for Education Statistics. While enrollment was even lower by 2018, the most recent year of the group’s data, it fell at a much less steep rate, to about 982,000 students.

Some observers say that since so many for-profits run fully online programs, they were well positioned for the pandemic, which has led to shut-downs and restrictions of in-person instruction for health reasons.

Gunderson stressed that the sector is still declining. “Some schools are still dealing with the PR assault during the Obama years and haven’t been able to recover,” he says. And some had grown too fast and were “caught with a large number of operating leases.”

Despite the more friendly regulatory environment after Trump took office, though, some for-profits have re-incorporated as nonprofit institutions in recent years. The most notable conversions were Purdue University’s purchase of for-profit Kaplan University and the University of Arizona’s purchase of for-profit Ashford University.

Robert Kelchen, an associate professor of higher education at Seton Hall University, said in an email interview that the Biden administration will likely give far more scrutiny to any future efforts for a non-profit college to purchase a for-profit one.

“The incoming Biden administration is likely to go back to Obama-era regulations on for-profit colleges at the very least,” he adds. “They may also try to limit the amount of federal funds that for-profits can get by tightening the current 90/10 rule that allows for-profits to get up to 90 percent of total funds from federal financial aid (excluding veterans’ benefits).”

The biggest change, though, could be a shift to a focus on the community college sector, which first lady Jill Biden knows well as a current professor at Northern Virginia Community College and a proponent of free-college efforts. (She even wrote her dissertation about retention at community colleges.)

Cellini, of George Washington University, says that a policy shift to two-year colleges will likely improve awareness of such programs.

“It’s great advertising for public community colleges if you will,” she says, noting that some two-year colleges are already effectively free for low-income students—or nearly so—but that students may not realize it until things like free college programs highlight the option. “When we fund public community colleges, students seem to shift away from for-profits.”

Meanwhile, the outgoing DeVos this week made her opposition to free college clear during an online conference of the Federal Student Aid office, calling it a “truly insidious notion of government gift giving.”

“Make no mistake,” she said of proposals to offer free college. “It is a socialist takeover of higher education.”

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