Lawmakers and the Education Department are considering proposals that would hold for-profit schools, which critics say too often leave students with worthless degrees and dim job prospects, to the same standard as nonprofit schools for purposes of federal funding.
The department is proposing expanding an Obama administration regulation known as “gainful employment” to programs at all colleges and universities. The regulation currently looks only at vocational programs and prevents a school from receiving federal student aid, also known as Title IV funding, if a high percentage of the program’s graduates struggle to repay their student loans.
About 800 programs, with thousands of students, had a high enough percentage of graduates struggling with debt that they would have been in danger of losing their federal funding, according to January 2017 data released in the waning days of the Obama administration. The Trump administration has delayed further implementation of the regulation while it is rewritten.
“They basically opened up the floodgates of federal money for many programs that wind up leaving their graduates in poverty with a lot of debt,” said Michael Itzkowitz, a senior policy adviser at with centrist think tank Third Way. He said that while all schools should be held accountable, the gainful employment standard was initially created “because of the disproportionately poor outcomes within the for-profit space.”
Republican lawmakers, however, argue accountability should not differ due to a college’s tax status. House GOP lawmakers have introduced legislation (H.R. 4508) that would combine the definition of for-profit and nonprofit institutions and get rid of the phrase “gainful employment.”
The Senate’s education committee chairman, Sen. Lamar Alexander (R-Tenn.), also considered that possibility at a hearing this week when he asked if “relying on the outcomes of different universities and campuses is more important than looking at whether they’re for-profit or non-profit.”
Anthony Carnevale, director of Georgetown University Center on Education and the Workforce, told Alexander that while for-profits had raised a number of issues with their behavior, he agreed “what’s good for the goose is good for the gander.”
“If we set standards and they don’t make them, then they don’t get Title IV money,” he said, referring to for-profits. “But that should also be true for the rest of the higher education system.”
The area is likely to be a bone of contention among Republicans and Democrats. Sen. Elizabeth Warren (D-Mass.) began her questions during the hearing with half dozen statistics highlighting concerns with for-profit colleges. She said students who attend for-profit schools are more likely to default on their loans and file claims that they were defrauded.
“For-profit colleges are different,” Warren said. “And when the federal government pours billions of dollars into these colleges, we should put some restriction on the money that recognize those differences.”
To contact the reporter on this story: Emily Wilkins in Washington at email@example.com
To contact the editor responsible for this story: Paul Hendrie at firstname.lastname@example.org
Copyright © 2018 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)