As a result of recent federal scrutiny, the for-profit higher education industry and its supporters have begun to turn their protests toward the unfairness of singling out the for-profit companies while ignoring traditional higher education’s non-profit institutions, particularly public community colleges and four year institutions.
Congressional scrutiny of for-profit education companies comes at the same time that the Obama administration has been pushing new Department of Education regulations that would use three tests– debt-to-earnings ratio for students, debt-to-discretionary income ratio for students, and the loan repayment rate of students—to determine whether a for-profit program would be eligible for federal financial aid funds under Title IV. A large lobbying effort led to over 90,000 public comments on these “gainful employment” regulations, causing the Department to delay publication of the rule.
Opponents of these rules and hearings include Republicans and Democrats as well as various interest groups, many of whom receive large sums of money from the for-profit education industry. The sector’s industry group, the Association of Private Sector Colleges and Universities (known up until September 22 as the Career College Association), institutions, and other stakeholders have spent millions waging a campaign against further regulation. Notably, these lobbying efforts include Chairman and CEO Donald Graham whose Washington Post Company owns Kaplan as well as an 8% stake in Corinthian Colleges, both giants in the for-profit education sector that currently provide over 60% of the Post’s annual revenue. The Post has been called to task for using its opinion and editorial pages to argue against the regulations.
At a HELP Committee hearing on September 30th, three Republican Senators, Richard Burr (NC), John McCain (AZ) and the committee’s ranking minority member Mike Enzi (WY), emphasized their disappointment that the scope of the hearings did not include non-profit institutions. Additionally, for-profit institutions have funded two reports claiming that for-profit colleges are more efficient at producing graduates, and more responsible with taxpayer dollars than non-profit institutions, including community colleges, public four years and private four years. The increased aggressiveness with which proponents of for-profit education are attacking traditional higher education with misleading information and data is troubling. The market share of for-profit institutions continues to rapidly grow alongside ambitions to compete with traditional institutions.
Ultimately, federal attention paid to this issue is a possible harbinger of increased scrutiny for all of higher education. The federal government spends over $170 billion dollars on student aid (loans and grants) each year, potentially providing powerful grounds for increased federal oversight. Looking forward, some of the same questions being asked of for-profit colleges about debt burden, retention, and completion could be asked of the non-profit sector as well. The combination of rapidly rising tuition in an economic crisis, concerns about US competitiveness in the global economy, and the aggressive goals to nearly double the portion of Americans with some level of higher education may create a compelling case for increased federal attention.
The atmosphere was tense on the morning of September 30th as attendees, many of them proponents of the for-profit higher education sector, overflowed into a second room to witness a hearing held by the US Senate Committee on Health, Education, Labor, & Pensions (HELP). The hearing, The Federal Investment in For-Profit Education: Are Students Succeeding, was the third in a series held by the HELP committee under the leadership of its Chairman, Senator Tom Harkin (D-IA).
A GAO report on the results of an undercover operation that investigated 15 for-profit education companies revealed “misleading, deceptive, overly aggressive or fraudulent recruitment” practices at all 15 schools visited. Two reports by Senator Harkin’s staff, Emerging Risk?: An Overview of Growth, Spending, Student Debt and Unanswered Questions in For-Profit Higher Education, and The Return on the Federal Investment in For-Profit Education: Debt Without a Diploma, provided even more detail, drawing on nationally available data as well as data that Senator Harkin requested directly from 30 of the largest privately held and publicly traded education companies.
Some of the facts revealed in these publications:
- Less than 10% of postsecondary students are enrolled in for-profits, yet they receive 23% of federal aid, and account for 44% of all loan defaults.
- 95% of all students at for-profits borrow money to attend, compared to less than a quarter of community college students, 64% of students at public four year institutions, and 72% at private four year institutions.
- Almost 60% of students at for-profits drop out within 2 years of enrolling.
- Student enrollment has grown exponentially. For example, in 1991, the University of Phoenix had 7,000 students. Today it has 475,000 and is the 2nd largest higher education system in America, enrolling more students than the Big 10.
- On average, 90% of all revenue comes from federal student aid dollars (a $24b annual taxpayer investment), belying claims of being purely private sector institutions.
As the hearings have uncovered more information about these companies, Chairman Harkin’s resolve to continue the fact finding mission has strengthened, and he has pledged to sponsor legislation aimed at tightening regulations. Harkin called fundamentally flawed and unconscionable a system that funnels taxpayer dollars through poor students to line the pockets of the wealthy, leaving many students with no diploma, all students with heavy debt, and the taxpayers, who have guaranteed that debt, at risk.
The next hearing will be held in early December.
In our next post we will consider the implications that this issue might have for traditional institutions of higher education like the UW.
After five years, $4 million and a lot of effort across many institutions, the National Research Council has released an update to their 1995 assessment of doctoral programs. A Data-Based Assessment of Research-Doctorate Program in the United States analyzes 2005-06 academic year data collected from over 5,000 doctoral programs at over 200 universities. The NRC collected data directly from faculty, students, graduate programs, and institutions. The Graduate School coordinated UW participation in the assessment, which you can learn more about on their website.
Programs are ranked on the same 21 key variables by two different methodologies, the results of which are reported separately. These methodologies were very complex, but, essentially, the “S” (Survey-Based) rankings weight the relative value of the 21 key variables by program, based on faculty ratings of the relative value of each variables in a given discipline. For example, in the physical sciences, the number of external grants won is weighted more heavily than it would be for an English program. Alternatively, the “R” (Regression-Based) ratings are more similar to the traditional ‘reputation ranking’ where faculty were asked to rank a set of random programs, and then the key variables most associated with the highest ranked programs were assigned the most weight in the overall analysis of programs. Both sets of rankings are reported as ranges (e.g. a program might be ranked as somewhere between 3rd and 11th, at a 90% level of confidence).
While many UW programs do well in these rankings, criticisms of both the data and methodology are important to consider. Inside Higher Ed weighs in with an assessment of the ambivalence surrounding the veracity of the rankings, and the UW’s own Dean of Engineering, Matt O’Donnell, released a statement about possible shortcomings. UW Computer Science & Engineering also issued a strong critique, on which the Chronicle of Higher Education reported. The Chronicle also compiled these data in an easy to use format and offered its own analysis of the report’s delay and overall worth.
How meaningful these rankings are will be debated in the days ahead, but there is at least one important and indisputable conclusion included in the report, which is that public universities play an outsized role in educating our nation’s graduate students:
“Seventy-one percent of the programs ranked in the NRC study are in public universities. The proportion of programs in the universities with the largest programs is similar (70 percent). Among the 37 universities that produced 50 percent of Ph.D.’s from 2002 to 2006, 70 percent were public. Although public universities rely increasingly on nonpublic sources of funding, cutbacks in public funding for universities has a powerful effect on doctoral education simply because of how many large Ph.D. programs exist in public universities.”
The National Academy of Sciences, National Academy of Engineering, and Institute of Medicine have sponsored an update to their consequential 2005 report entitled Rising Above the Gathering Storm: Energizing and Employing America for a Brighter Economic Future. The latest version is called Rising Above the Gathering Storm, Revisited: Rapidly Approaching Category 5, and can be read online free of charge.
The new report highlights America’s relative decline in global competitiveness by presenting statistics on patent awards, research publications, employer surveys, and student achievement levels in math and science, among other things. While recognizing current economic constraints, the report calls for major investment in and reform of K-12 education, as well as a doubling of the federal basic-research budget to help restore and maintain US competitiveness in the global economy.
One action Congress can take immediately is to reauthorize the America COMPETES Act, which was passed in 2007 largely as a result of the 2005 Gathering Storm report. This Act received one-time federal stimulus funding in 2009, and is set to expire this year without Congressional action. The UW Office of Federal Relations provides regular updates on their blog regarding the Act’s progress in Congress.
In addition to this report, The National Research Council, at the request of Congress, has created the Committee on Research Universities, a panel of business and higher education leaders, to identify the “top ten actions that Congress, the federal government, state governments, research universities, and others could take to assure the ability of the American research university to maintain the excellence in research and doctoral education needed to help the United States compete, prosper, and achieve national goals for health, energy, the environment, and security in the global community of the 21st century.”
The Committee held its inaugural meeting on September 22nd, and is scheduled to meet again in late November.
How can we tell if college is worth the cost? The economic crisis has some questioning the cost-benefit ratio for post-secondary education, claiming that higher education may be a bubble on the verge of bursting, and that the payoff might not be worth the cost. However, two in-depth reports released this summer presented ample evidence to counter these doubts.
The College Board’s Education Pays 2010: The Benefits of Higher Education for Individuals and Society highlights the demonstrated direct and indirect benefits of post-secondary education. Their analysis finds that, in 2008, median annual earnings for bachelor’s degree recipients was almost $22,000 per year more than those of high school graduates, that college graduates were more likely to have health and retirement benefits, and that the unemployment rate for college graduates was less than half the rate of high school graduates in 2009. Median earnings for those with professional and doctoral degrees were even higher, with the former earning $58,000 per year more than high school graduates in 2008, and the latter earning $66,000 more.
In addition to monetary benefits, college graduates, even after controlling for personal characteristics, are more satisfied with their jobs, healthier, and more involved citizens and parents.
So, overwhelming evidence proves college worthwhile, but will these wage and lifestyle premiums continue into the future? In June, the Georgetown University Center on Education and the Workforce released a report, Help Wanted: Projections of Jobs and Education Requirements Through 2018, that analyzed Bureau of Labor Statistics (BLS) data to project job growth and educational requirements into the future. These economists determined that, by 2018, 63% of available jobs will require at least some college education, and that, at current production rates, the post-secondary system will have produced 3 million fewer college graduates than demanded by the labor market in 2018.
The Center’s state level analysis predicted that between 2008 and 2018, over 1 million new and replacement jobs will open up in Washington, comprising:
- 94,000 openings for high school dropouts
- 257,000 openings for high school graduates
- 677,000 openings for those with some post-secondary training
Taken together, these data-driven reports clearly demonstrate that the benefits of higher education for both the individual and society are tremendous. However, they also demonstrate that access and affordability remain very real concerns that the citizens, government, and institutions must continue to address.
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