Attacking For-Profit Schools Threatens Training, Opportunity

Sen. Tom Harkin (D-IA) has chaired a series of hearings by the Senate Health, Education, Labor, and Pensions Committee to pummel for-profit, private colleges as exploiters of students and the working class. The hearings reinforce the Obama Administration’s regulatory “crack down” on the institutions, which attempts to deny their students access to federal financial aid.

One of the primary documents used to justify these attacks was a report delivered last August to the Senate HELP Committee from the Government Accounting Agency. As Mark Hyman chronicles at The Washington Examiner, the report, which lambasted the colleges’ financial aid practices, proved to so flawed — a “fraud” — that the GAO withdrew it and quietly reissued a new report. Still, the continuing attacks and Obama Administration’s regulations caused the educational companies’ stocks to drop. And now we learn of serious allegations of insider trading at the Department of Education.

As Hyman calls it, it’s “the biggest GAO scandal you never heard about.” (See also Heritage’s Tina Korbe, “Government made major revisions to for-profit colleges report, didn’t tell public.”)

Alarms have been raised about recruiters making misleading pitches and students surprised by the debt they assumed. OK, let’s apply regulation, oversight, enforcement and a renewed sense of caveat emptor to put a stop to the practices.

But we also know that for-profit colleges provide a valuable educational resource for many students, especially adults looking for new career paths or training not immediately available elsewhere. These schools adapt to the needs of the students. Yet these  businesses offering a service to willing buyers are being demonized in the political sphere.

A group of Republican Senators is now saying knock it off. From The Washington Times, “GOP senators may boycott hearing on for-profit schools“:

Agreeing that skyrocketing tuition rates and the rising number of student-loan defaults are serious concerns, Republicans want Mr. Harkin to focus on finding solutions for all colleges and universities, not just nontraditional ones. If the tentatively scheduled May 10 hearing – the fifth in Mr. Harkin’s series – goes on as currently planned, Republicans say they won’t show up.

“The need to address these problems does not warrant the biased and unprofessional conduct we have witnessed during the past four hearings,” reads a portion of the letter, signed by the 10 Republican HELP committee members. “It is unacceptable and uncharacteristic of the way this committee or this institution has historically conducted its business.”

Why the fierce attacks? Glenn Reynolds at Instapundit suspects “the defense of a traditional Democratic constituency against new forms of competition.” Reynolds has been documenting the potential collapse of a “higher-ed bubble,” and those who benefit from a bubble often try to keep it inflated through politics, regulation and rent-seeking.

The Association of Private Sector Colleges and Universities, the trade association for these career-oriented schools, has been defending itself admirably from the attacks. In January, the association sued the Department of Education over the regulations:

“APSCU members believe in fair regulatory oversight to protect students, institutions and taxpayers,” said Harris Miller, president and CEO of APSCU. “But these regulations as written are not fair, lawful or workable.

The association filed the suit the same week the President signed his Executive Order calling for regulatory restraint and transparency. Yet the Department of Education’s proposed rules are exactly the kind of regulatory overreach President Obama was claiming to oppose. (The Department of Justice last month moved to dismiss the lawsuit.

Rep. John Klein (R-MN), chairman of the House Education and Workforce Committee, also ried to block the regulations with amendment to the recent budget agreement, succeeding in the House but failing in the Senate. (APSCU news release.)

Those in Congress and the Administration mounting these attacks against the career colleges need to re-evaluate their priorities to put the students first. Looking to improve their knowledge, skills and attractiveness to employers, more and more students are finding that private, for-profit colleges do a pretty good job. As APSCU’s Miller writes in a recent op-ed at

No sector of higher education is perfect. Private-sector colleges and universities make their share of mistakes — as do all types of postsecondary institutions. If the question is about education quality, frame the debate in that light and include all players, not just some players. If the question is about debt, look at ways of limiting borrowing so that student loans do not become personal loans.

The public understands the relationship between choice, education and jobs. Time for Washington to understand it, too, and to stop experimenting, especially when the livelihoods of hardworking New Yorkers hang in the balance.

Hardworking Americans, too.

(For purposes of disclosure: The NAM’s affiliated Manufacturing Institute has partnered with the University of Phoenix on workforce training programs).

Join the discussion 2 Comments

  • AH says:

    I completely agree with SongDog.

    Private for profit colleges are, in principle, a great free market innovation that are revolutionizing education.

    But federally backed student loans are helping to inflate a bubble in higher education. Many of these private for profit colleges are of poor quality but charge top dollar, because they can, but getting foolish young people to take on ridiculous amounts of non-dischargeable debt.

    It is like the real estate bubble but worse, because the debt is non-dischargeable.

  • SongDog says:

    The Democrats know no shame and even fewer limits when it comes to using the apparatus of government to punish, even destroy, their political enemies, or just competitors of their political allies. We in Texas have been on the receiving end of Obama’s pique for some time now, but the national press didn’t notice until the absurd decision to send the last orbiter to New York for display instead of Houston. It is tribalism writ large, not the rule of law, when they are successful.

    That said, I have little sympathy for colleges and universities, for-profit or otherwise, all of whom have pushed the tuition envelope to the limits of the federal loan system in recent years. I cannot believe their costs have been rising so much faster than inflation, and the net effect is to pick the pockets of their students and use the federal government as their collection agency. If your kid were saddled with a college loan of $50K or more, you would understand how devastating is to start adult life with a negative net worth and a big loan payment that comes first, before a vehicle, before a house, etc.

    More’s the pity, because the model of the for-profit schools may hold some promise for lowering costs. Using adjuncts for classroom instruction, the internet wherever possible, and renting unused office buildings after hours for classrooms could keep the cost of education for the average student at a reasonable level. As long as they can charge the full load and have the feds pay for it, however, they will, for-profit and otherwise.

    It’s a situation that definitely needs some re-thinking.

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