The Department of Education Cracks Down on For-Pro

The Department of Education Cracks Down on For-Profit Colleges

Should Washington scale back its huge college subsidies instead?

It is actually happening: the U.S. Department of Education is preparing to impose “gainful employment” regulations on for-profit colleges. These rules require that before students can receive federal grants or student loans at for-profit colleges, graduates of those schools have to be employable in the fields for which they have trained.

I currently teach at a public community college. I have taught at a state university and at a for-profit technical school. There is nothing improper about the idea of a for-profit educational institution — but for-profit institutions have a different, sometimes troublesome set of incentives that aren’t shared by public or non-profit private colleges.

Employees of for-profits often have bonus or stock option arrangements associated with the corporation’s performance (and sometimes even with a particular campus’ profitability). This can create incentives to mislead or overstate how effective the training will be. PBS had a disturbing Frontline last year, “College Inc.”, that showed examples of for-profit colleges using distasteful techniques to lure in students — more akin to loan sharking and used car sales than education. This is especially worrisome because the student is usually paying his tuition with federally insured or direct federal loans, government grants, or G.I. Bill benefits. The for-profits have strong incentives to get students in the door and to pay the tuition. There is no financial downside if, after playing “Pomp and Circumstance,” those students end up with no job but keep the huge loan payments.

Let me be clear: Public institutions and private non-profits also turn out plenty of graduates who can’t get jobs — especially right now. The incentives are not quite as direct, but a college president with 20,000 students gets a higher salary than a president with 5,000 students. The fact that the Department of Education thinks that this problem only applies to for-profits suggests that there are other incentives in play here besides just concern for students.

Cites several examples of students who should not be in college .... then;

Here’s a harsh truth that few people want to hear: the government needs to stop subsidizing post-secondary education in the shotgun way that it does now. I really believe in the merits of a traditional liberal arts education — but it needs to be done in high school, where we used to do it. The government should not be making grants or loans for the overproduction of degrees in medieval French literature, history, psychology, or any of the other degrees for which there are few jobs. Nor should it be funding students who lack either the ambition or the ability to complete an educational program, whether at a for-profit institution, a non-profit private college, or a public university.

This country is about to go bankrupt. There are students out there who, to be blunt, are unqualified to be shift manager at McDonald’s. They are wasting the federal government’s grant money, and they are getting themselves in way over their heads with tens of thousands of dollars in student loans that will eventually be cleared only when they die of old age. Along the way, they will have suffered continual torment from having to service these loans. At the same time, by creating an artificial demand for education, these unqualified students are making it that much more expensive for those who might benefit from a technical or trade school. Stacked up against this grim reality, the abuses on display at America’s for-profit colleges virtually pale in comparison.