Skip to comments.Obama weighs crackdown on for-profit college industry
Posted on 06/01/2014 2:32:22 PM PDT by Libloather
It's decision time for the Obama administration on a major rule designed to crack down on colleges that saddle students with a mountain of debt without preparing them for the job market.
The Education Department is under intense pressure as the agency prepares to finalize its highly anticipated "gainful employment" regulations, aimed squarely at for-profit college programs seen as predatory.
Go too far, business groups warn, and the Obama administration risks denying millions of students a higher education.
Yet the agencys draft rule, issued in March, has come under fierce criticism by some congressional Democrats and advocates, including former Homeland Security Secretary Janet Napolitano, who say it is too weak.
In its current form, the proposed rule is meaningless, sets the compliance bar far too low, and will not stem the flow of federal dollars to poorly-performing institutions, even in the most egregious circumstances, Napolitano, now the president of the University of California system, said Tuesday in a letter to the Education Department.
The missive was part of a deluge of responses to the proposal received by the agency ahead of the close of a formal public comment period. Officials must now sort through the submission as the agency crafts final language.
Regulators have no specific timetable for issuing the rule, according to Education Department spokeswoman Jane Glickman, who said only that it was expected sometime in 2014.
The agencys balancing act is complicated by federal judges decision in 2011 to toss out the agencys initial attempt at the regulation.
This time around, opponents including the for-profit college industry and the U.S. Chamber of Commerce are launching a pre-emptive strike.
The Chamber, in comments submitted to the agency, described the March proposal as overzealous.
The proposed one-size-fits-all system of higher education where winners and losers are picked by regulatory fiat would not allow for the diversity of educational programs needed to narrow (an) ever-increasing skills gap, the Chamber argues. Graduates from traditional institutions alone cannot meet employer demand for an educated workforce, which prohibits growth and competitiveness for businesses of all sectors and sizes.
The regulations, due to take effect by late 2016, would impose a new set of metrics that colleges must meet to be eligible to participate in federal loan and grant programs.
First, the estimated annual loan payments for graduates must not exceed 20 percent of their discretionary earnings. Second, the default rate on loans taken out by former students must not exceed 30 percent.
Institutions would be required to certify that all gainful employment programs are accredited and have the proper state and federal licenses. And they would be subject to new public disclosures to better inform students about the costs of the programs.
Critics say the new rules are unlawful, unfairly target private programs and would ultimately backfire.
The Association of Private Sector Colleges and Universities (APSCU) points to a new study showing the regulations would have an adverse impact on millions of students.
The APSCU-commissioned study, conducted by Northwestern University Economics Professor Jonathan Guryan, estimates that between 2 and 7.5 million students would be denied access to postsecondary education by 2020 under the proposal.
Guryan argues that the Education Department has overestimated the number of students that would be able to enroll in alternative programs.
Our analysis shows that much fewer reasonable alternatives actually exist for students and that the Departments assumptions are overly optimistic , according to the study.
The concerns were echoed in a letter signed last week by nearly three dozen House members from both sides of the aisle, seeking language in appropriations legislation expressly prohibiting the Education Department from enacting the law.
But other federal lawmakers are urging the administration to go bold on the rule.
Sens. Richard Durbin (D-Ill.), Tom Harkin (D-Iowa) and others have called out schools like the University of Phoenix and Corinthian Colleges, noting while only one in 10 students attend for-profit colleges, they account for almost half the countrys student loan defaults.
They wont deny it; they cant deny it, Sen. Dick Durbin (D-Ill.) said this month. When it comes to the facts of the matter, this sector of higher education is disgraceful and scandalous.
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For starters, state universities should not divert income from tuition payments into their general fund. Such monies should go into the operating expenses of the universities. As greed for that tuition money goes up, the students are saddled with increasing debt that outweighs any income advantage that their degree gives them.
Good to know that the not for profit schools are not loading up students with debt and find all of them jobs when they graduate.
Sorry, I left reality there for a minute. Back now.
They're making money, too.
That pretty much describes every social science college in the United States. Does anyone think they will question the $160,000 in tuition/room/board that public universities get in exchange for handing out degrees in feminist studies and other nonsense?
Most of the leftists I know hate Kaplan University and University of Phoenix and any other place that is not a haven for leftist thought. Sounds like Hussein is paying back his base.
If the estimated annual loan payment is not to exceed 20 percent of students' 'discretionary' earnings, does this mean that there will be stricter qualification for loan amounts? What is discretionary? What if a student decides to marry and become a homemaker and has no personal income? What about students who become professional students? Will universities become collection agencies for the federal government? How does this replace personal responsibility for not researching a career path and/or taking a loan in the first place? And lastly, how much did Obama pay for his education and can he get a refund?
It wouldn't be a problem if the gov would get out of the student loan business. Then, if these colleges gave the students a payment plan they'd be more accountable for turning out employable students.....if they wanted their money back.
Instead, Obama wants the feds to choose the winners and losers in the college game. And what about state colleges and universities who take a percentage of students (and their loan money) knowing full well they aren't qualified for college?
The problem is that too many students go to college. The enabler is the federal gov.
Better to have the colleges in deep debt so government can bail them out whereby they tell what those colleges can or cannot teach. And how to.
“It’s decision time for the Obama administration on a major rule designed to crack down on colleges that saddle students with a mountain of debt without preparing them for the job market.”
So the adults that sign up for these loans voluntarily, and take these classes voluntarily is totally lost on these idiots?
I think student loans should be regulated more heavily, in the sense of making them comply with NORMAL rules for loans - collateral, expectation of payment, default rates, bankruptcy, etc. Many of the places giving loans would shut down ASAP if they had to show WHY they expected someone with C grades in high school to pass an RN program, or why they think loaning someone $100K for feminist studies was a good idea.
And if former students could get rid of their debt using standard bankruptcy, then many loan agencies would again shut down.
Once the money spigot was turned off, all universities would have to become realistic about their cost structure.
“Most of the leftists I know hate Kaplan University and University of Phoenix and any other place that is not a haven for leftist thought. Sounds like Hussein is paying back his base.”
The online places have to be watched because some are simply diploma mills to drive up the earnings of public school teachers; under their work rules they get thousands upon thousands in pay increases for additional degrees (regardless of need or subject matter), and some schools and teachers have been caught in the scam. The teachers do no real course work, receive the degree and accompanying wage increases, and happily part with thousands of dollars (a fraction of their first year’s raise) for the “diploma”...
“So the adults that sign up for these loans voluntarily, and take these classes voluntarily is totally lost on these idiots?”
How many 18 year old adults are prepared to make decisions affecting their finances for the next 30 years? As a parent, I can refuse to loan them money or to co-sign a loan. But I cannot prevent an 18 or 19 year old from taking out a loan on their own, without telling me.
My son did that. In his case, he borrowed about $30K, did not pass, and then spent a year in Iraq to make the money to pay off his debt right away. It was a good life lesson, but not one I think should be encouraged by government policy.
Anything Obama proposes is wrong. However I did note this statement “Second, the default rate on loans taken out by former students must not exceed 30 percent.”
30%?? Why would anyone loan money at such a high rate and why would anyone accept such a ridiculous loan? Not sure why the feds have to police it but anyone dishing out 30% loans needs to have their ass kicked
“So the adults that sign up for these loans voluntarily, and take these classes voluntarily is totally lost on these idiots?”
I’m all for holding people accountable for their actions, but the amount of misinformation and outright lies swirling about make it nearly impossible to make a truly informed decision. Our government can’t be honest with people about how bleak the future is for many Americans because they would have a revolution; they maintain the illusion that higher education will provide everyone with a worthwhile job to obscure the reality while keeping the education industry employed. In fact, there just isn’t enough work left for many Americans, and that won’t be changing any time soon without massive decreases in taxation and regulation.
But they are legally allowed to enter into contracts.
These places SHOULD emphasize what borrowing money entails and clearly spell out what they will be required to pay back, but it isnt their fault when a legal adult signs up for it.
I did that back in the 90s, I was appalled at what I did (I never saw that much money in my life), and cut off any more loans after my first year. I was one of the lucky ones. Thankfully it wasn’t much.
No grants and loans for College. Just scholarships.
Scouts Out! Cavalry Ho!
This problem has been created by the Federal Government flooding the market with non-dischargeable student loans and encouraging students to take on debt regardless of how feasible or practical the course of study is.
The free market could solve this mess within a few months, but this would take a lot of gravy away from the Democrat’s allies in the worthless Women’s and Minority Studies programs throughout the nation.
Besides, the only way to address distortions created by government intervention is through more government intervention.
Sir, the statement has to do with the percentage of students who default (i.e., don’t pay back) on paying back their loans, not the interest rate charged.
Ah, busy promoting the public SEIU sector, I see. There can be some fine public universities...well, at least, there once were, until “open admissions” and affirmative action destroyed them...and many of the high-end private universities are a waste of time because they’re so PC.
But that’s if you really want an education. If you don’t, you get a lot more bang for your buck by going to a private institution, because the whole thing with college really isn’t where you go or how you do, but who you meet.
If you really want an education, however, I’m not sure where you’d go now.
The big “not for profit” colleges and state colleges & universities provide as many graduates who do not get a job needing their college degree as do the for-profit schools. Obama is not going after the big “not for profit” schools or the states’ university and college systems because that branch of academia considers itself Obama’s friend, and he theirs.
“but it isnt their fault when a legal adult signs up for it.”
Actually, someone who issues you a loan you have no reasonable hope of repaying IS at fault in many loan agreements. For example, if they give you a loan for a home and you don’t qualify for that loan due to credit history, low income, etc, then there are federal regulations to punish the folks who issued the loans.
When someone struggled to get Cs in high school and a private college arranges private loans to ‘allow’ him to study medicine...yeah, they KNEW he would not pass. But he still was on tap to pay them back, and he did...by spending a year in Iraq with the CA Army Guard. Good recovery by him and a good life lesson, but the private college and private loan company were engaged in legal fraud!
But my point is that we regulate the loan business in most areas to prevent loan sharks and the issuing of loans designed to harm the folks who get them. Why not do the same with student loans?
For example, tie permissible loan amounts to expected employment rates and pay scales for a given field. Want a loan for petroleum engineering, and have the test scores to show you can probably make it? Fine. Want to get an MA in hairstyles of black women - an actually Master’s Degree I saw in the news the other day? Well, then you can borrow 25 cents because you have no hope of repaying the loan.
OTOH, want to defer your loan payment by staying in school? That ought to be illegal. Pay up when you should be able to graduate.
“No grants and loans for College. Just scholarships.”
That is what I’m telling my youngest daughter. Since she watched her older brother get taken, I think she understands that stupidity has bad consequences for the stupid person.
Yet another example of Government attempting to fix something Government royally effed up.
Not long ago, tuitions were affordable and great colleges were modest affairs. Then the government loans to students and grants to schools and professors started. It’s been all downhill since.
Side effect: The colleges are no longer responsive to parental desires at all - instead, they have become havens for PC madness in every evil form.
Think of the power, the control you can have...
"I'm sorry, Mary, but we just don't have a place for you in our student body. Our records show your parents gave to the wrong political groups..."
"The IRS tells me your parents are loaded. That's why your tuition is so high, you're paying for others not so fortunate..."
"Sorry, Dean, but we can't support a school that's teaching the wrong things. That Professor you have in the Math dept. will have to go..."
"Can't teach that subject in a gov't-supported entity - separation of church and state, you know..."
"Bible Club? No way..."
Ok thanks! It says “rate” in the context of a discussion on loans. That tells me “interest rate”. But I am delighted that is not what the crappy journalist meant. Appreciate the info.
And the flip side, of course...
"What? You don't have an LGBT Club? You don't have a quota for LGBT representatives in the Student Assembly? Dean, you have the right to remain silent..."
Scouts Out! Cavalry Ho!
Students should understand that college and uni are what they make of it. Faculty isn’t there to guide and coddle them. It’s not high school.
Our biggest problem is how so many students try to take their high school experiences and attitudes and try to replicate them in college and university life.
So instead of studying and networking, they in fact extend the partying years and basically mess up there because they don’t get it that teachers are no there to motivate them.