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California Association of Private Postsecondary Schools

After Being Unfairly Characterized by Regulators, For-Profit Institutions Slowly Rebranding Image

11/12/2013

FTC Beat.  November 8, 2013.  For-profit education needs rebranding. With the recent appointment of Michael Dakduk as key advisor to the Association of Private Sector Colleges and Universities, the sector has made a step in the right direction. The onslaught of negative news against for-profit educators has severely impacted industry growth. Recent reports on drops in enrollment (and thus earnings) at Bridgepoint Education, Inc.,Strayer Education, Inc., Education Management Corp. and Apollo Group Inc. demonstrate just how hard the sector has been hit.

A central problem is for-profit education’s extreme unpopularity among government regulators – thanks, largely, to some bad actors overselling their programs and pressuring prospective students. Regulators both perceive and characterize for-profit educators as unscrupulous opportunists. Unfortunately for the industry, this is a characterization regulators like to broadcast to the public without much qualification. (Query: since when did it become okay for government representatives to lambast whole industries – and imperil jobs in those industries – for the actions of a few?).  Most recently, the FTC has launched a campaign to warn veterans about for-profit education:

  • “Colleges are there to help you, right? Hmm, not so fast. Not every school has got your back. Some for-profit schools may care more about boosting their bottom line with your VA education benefits. Some may even stretch the truth to persuade you to enroll, either by pressuring you to sign up for courses that don’t suit your needs or to take out loans that will be a challenge to pay off.”  (http://www.consumer.ftc.gov/blog/veterans-dont-get-schooled)
  • “[S]ome schools manipulate the data or lie about how well their graduates fare.” (http://www.consumer.ftc.gov/articles/0395-choosing-college)

The FTC’s campaign, published in a news release and articles on the FTC’s consumer page, provides the above warnings about for-profit schools, offers questions to ask when choosing a school, and furnishes a link to filing a complaint with the FTC, should a consumer believe a school hasn’t lived up to its promises. The hyperlink to a consumer complaint page suggests that the FTC is actively seeking cases to pursue against for-profit educators. Any FTC enforcement action would likely involve allegations that a school deceived students about the cost, quality, or outcome of its program offerings – as the FTC is charged with protecting consumers from deception and unfairness in the marketplace.  (Section 5 of the FTC Act broadly prohibits ‘‘unfair or deceptive acts or practices in or affecting commerce.’’)

The FTC’s campaign follows statements made by President Obama this summer that “soldiers and sailors and Marines and Coast Guardsmen, they’ve been preyed upon very badly by some of these for-profit institutions.” The message publicly broadcast over and over decries the supposed predatory practices of for-profit institutions. It is an unfair stereotype with a significant impact on these educators, harming their enrollment numbers and forcing institutions to lay off employees and shutter campus locations.  Yes there have been bad actors; but both state and federal enforcement agencies have been active in investigating and addressing predatory and/or deceptive practices. Blackening the eyes of all for-profit educators, which results from statements such as those of the President or the FTC, is overreach.

Part of the problem for government regulators maybe their difficulty accepting that educators could legitimately make money while students earn a degree. They may have the same reservations expressed by a representative from Student Veterans of America: “I am always professionally skeptical about any institution that must answer to shareholders and investors before students and customers.” But having to answer to shareholders and investors is not necessarily a bad thing. It can serve as a check on institutions to ensure they are running their programs effectively and efficiently; it can motivate institutions to be innovative and find better ways to meet their consumers – i.e. their students – needs and demands.  For-profit educators are responsible for advancements in online education and other innovations that make education more accessible.The result: for-profit educators are to thank for opening education opportunities to many underserved groups, like single mothers.

For-profit educators are in definite need of some effective marketing to promote their benefits and to dispel the negative conceptions presumed by and relayed by government regulators and outspoken detractors. They are making steps in the right direction with APSCU’s recent appointment of Mr.Dakduk. Dakduk is a former Marine and the former executive director of Student Veterans of America.

APSCU President Steve Gunderson said Dakduk’s hiring “builds on our member institutions’ commitment to excellence in post secondary education for military and veteran students.” With Dakduk’s presence, the industry may better overcome the flinching bias of so many regulators. Dakduk has built a reputation for success in his work advocating for veterans’ education. While at SVA, he grew the organization from a small group to one with chapters at over 900 campuses nationwide.

Dakduk’s move to APSCU is even a little ironic: In one of the FTC’s articles that warn veterans about for-profit education, the agency suggests veterans consult the SVA on the credibility of schools they are considering. Dakduk’s replacement at the SVA, D. Wayne Robinson, is a graduate of Trident University, a for-profit school.

For-profit education has had its bad actors, but problems in higher education span the spectrum of colleges and universities, and it is unfair – and ultimately detrimental to students and communities – to single out for-profit institutions. Dakduk understands this and should help for-profit educators improve their image.