Deseret News ~ June 30, 2014. For-profit colleges and programs deserve scrutiny, particularly in light of statistics from the Department of Education that show these have lower graduation rates and their students tend to leave with higher levels of debt than at most public or nonprofit private schools.
But President Barack Obama’s recently announced plan to set tough standards that might remove federal financial aid from students attending those colleges or programs lacks one important component — input from a public process that involves Congress.
That has become all-too-common for the Obama administration, which often prefers to impose executive orders rather than to submit to the often-messy process of vetting ideas through a representative government. And yet that messy process is the one the Founding Fathers established.
In a ruling last week that set limits on what the Environmental Protection Agency can regulate, the Supreme Court decried the practice of the executive branch using “ambiguous statutory text” to claim rule-making authority that bypasses Congress.
Yet in drafting rules for for-profit colleges, the administration relies on one line from a 1965 education law that says the government has power to give financial aid to people who attend higher education programs that “lead to gainful employment ….” The administration said this gives it authority to define “gainful employment” as meaning a certain percentage of graduates obtaining a job within a time limit.
For-profit colleges would be flagged if their graduates have to pay 8 percent or more on average of their total earnings in loan payments or 20 percent or more of their discretionary earnings, as defined by a formula. Colleges whose graduates exceed a 30 percent default rate also would come under extra scrutiny. Each of these situations could result in a loss of federal student loans for that college or program.
A robust public process would be more likely to examine the possible reasons for high loan or default rates, which may have to do with the types of students attracted by for-profit colleges. That might lead to a greater scrutiny of public and private nonprofit schools that don’t admit as many low-income or non-traditional students as they should.
A recent study by The Education Trust found that the government provides about $180 billion in student aid each year, but that the United States has one of the lowest graduation rates of any developed country. Of those who begin studying at four-year institutions each year, less than two-thirds graduate within six years.
This suggests a much larger problem deserving of greater scrutiny, accountability and possible sanctions.
An aggressive approach to for-profit schools comes with enormous potential consequences. Large companies such as Corinthian Colleges are in danger of shutting down if federal loans disappear. The 72,000 students attending Corinthian centers most likely would drift toward community colleges. But community colleges have neither the resources nor the capacity to accept them.
This is one of the reasons for-profit colleges exist. They satisfy a market other schools are unwilling to serve.
In an age in which higher education seems to become more and more expensive without providing any demonstrable increase in value for students, it should be clear that accountability is key. But that accountability should apply to all schools, not just those trying to make a profit.
And that effort should involve representative government, not just Education Department bureaucrats and the nation’s chief executive.