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For-Profit Colleges Have Made a COVID-Fuelled Comeback

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For-Profit Colleges Have Made a COVID-Fuelled Comeback

America’s for-profit colleges and vocational schools were in a fortunate place when the pandemic arrived. Liberated by the Trump Administration from restrictions imposed by the Obama Administration, they had easy access to federal student-aid money, and, because many of their programs were already conducted online, they could pitch themselves as providers of safe and practical benefit to the homebound and the dislocated. Armed with that message, they made the most of the moment. According to the National Student Clearinghouse Research Center, while traditional institutions of higher education were losing students, enrollment at four-year, for-profit schools rose by more than five per cent last year; among students without previous college experience, the increase was nine and a half per cent.

Hundreds of thousands of Americans have made major commitments of time, effort, and money to these institutions. And many may get what they’re after, including jobs and opportunities that justify the investment. But an alarmingly large number of others, to go by the industry’s recent record, have set out on a path destined to end in dashed hopes and crushing debt—and a great many more people will be heading that way over the next few years, unless the Biden Administration does something about it.

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For-profit higher education is a world of large companies that derive most of their income—upward of seventy-five per cent, typically—from government subsidies. The industry in its modern form goes back to the late nineteen-forties, when the G.I. Bill was first rolling out. Then as now, some companies put more effort into the pursuit of federal student-aid money than into teaching or learning. The G.I. Bill is justly celebrated for helping millions of returning veterans go to college; it also set off an “explosion in misleading advertising, predatory recruitment practices, sub-standard training, outright fraud,” David Whitman writes, in his recent book “The Profits of Failure: For-Profit Colleges and the Closing of the Conservative Mind.

A slew of scandals prompted a crackdown, though, and for decades afterward such abuses could be counted on to arouse bipartisan outrage and a push for countermeasures. In the early two-thousands, however, the political dynamic shifted with the rise of giant corporate chains that spent unprecedented sums of money on lobbying and campaign donations, focussing an increased share of their attention on the Republican Party. Republican officials had, in the past, been quick—sometimes quicker than Democrats—to speak out when schools were shown to be systematically bilking the government; now (as summed up by Whitman’s subtitle) they became indiscriminate defenders of the industry and its subsidies. The later years of George W. Bush’s Presidency brought another round of scandals, involving schools that deployed armies of telemarketers to sign up people by fair means or foul. The University of Phoenix, according to the findings of a subsequent Federal Trade Commission inquiry, claimed job-placement partnerships that did not exist—with A.T. & T., Yahoo, Microsoft, Twitter, and the American Red Cross. Corinthian Colleges sent out memos (litigation would reveal) encouraging recruiters to go after “isolated” and “impatient” people with “low self-esteem.” ITT Technical Institute enrolled tens of thousands of students in computer courses that were often so hastily concocted, and generally so poorly regarded by employers, that some alums eventually decided that their job searches would have gone better if they had omitted ITT from their résumés.

The industry’s misdeeds led the Obama Administration to enact the Gainful Employment Rule, a set of regulations mandating public disclosure of key performance data, school-by-school tracking of student-debt levels and incomes, and a cutoff of federal aid to institutions that consistently overpromised and under-delivered. Those measures, on top of the bad publicity, caused ​​some of the worst institutions, including Corinthian and ITT, to shut down, while others scrambled to rebrand themselves. By the end of the Obama years, the entire concept of for-profit higher education had sunk into disrepute. Investors as well as students were fleeing. The industry needed a miracle.

It got a string of them. Donald Trump, the former principal owner of Trump University, became the President of the United States. He installed as his Secretary of Education Betsy DeVos, a privatization zealot with an extensive record of investments in companies associated with for-profit schools. DeVos put a roster of industry executives and lobbyists into top policy jobs, and she and her team made their contempt for the Gainful Employment Rule very clear, first by neglecting it, and then, in July of 2019, by repealing it.

Since the start of Biden’s Presidency, there have been widespread calls for the rule’s restoration. The Department of Education, now headed by Miguel Cardona, is in a position to fulfill that wish, thanks to a 2020 lawsuit filed on behalf of students by the National Student Legal Defense Network. Cardona and his team could propose a settlement reversing their predecessors’ repeal of the rule, as the plaintiffs have requested. In a brief filed at the end of October, however, government lawyers said they would prefer to leave the repeal in place.

It was a startling statement. The Administration had shown its concern for victims of industry deceit by reviving a loan-forgiveness program for borrowers who commit themselves to public service, and by supporting a pandemic-related repayment freeze—a policy recently extended until May of 2022. The government did not dispute the plaintiffs’ characterization of the repeal as a procedurally flawed move based on inaccurate evidence. Two of the Department of Education’s top officials have, in other capacities, defended the importance of the borrower protections at the heart of the Gainful Employment Rule; in fact, the department is currently laying plans for a new rule-making initiative aimed at developing even stronger safeguards. (One of the goals of that rule-making is to carry out a provision of the American Rescue Plan, reinforcing a ninety-per-cent limit on how much of a school’s revenue can come from public funds.)

Why, then, was the Administration not seizing the opportunity to put the old rule back in place? In a supporting affidavit submitted along with the October brief, James Kvaal, the Under-Secretary of Education, bewilderingly explained that such an effort would cause “considerable disruption and diversion of resources from the Department’s priorities, which include restoring the student protections in this rule.”

The intentions sounded good, but the logic was screwy, confusing a long-term project with a short-term need. A new rule-making could easily take several years. (Nearly five years went into the development and implementation of the Gainful Employment Rule.) Meanwhile, a vast number of people will be selecting schools and programs without access to crucial information.

In an amicus brief, a California group called Housing and Economic Rights Advocates set forth a series of real-life stories about what can happen to those who choose badly. Eric Luongo, hoping for a career in Web graphic design, settled on DeVry University, he said, after being told that its graduates routinely made upward of eighty thousand dollars a year. Luongo, a Navy veteran, should have been able to cover much of the cost with G.I. Bill benefits and other grants, but the school, according to the brief, misled him into taking out unnecessary loans. After he graduated, he failed to land a design job and was stunned to learn that he owed more than a hundred thousand dollars. Mallory Peck came away from her studies at the Art Institutes International Minnesota with nearly forty thousand dollars in outstanding loans and a degree that had proved to be “useless.” Kareem Britt decided to study heating, ventilation, and air-conditioning after coming across an ad for Florida Career College addressed to those who were tired of “ramen noodles” and “ready to step up to steak.” The instruction turned out to be sketchy, according to Britt, and practice tools and equipment were “at best limited, and at worst nonexistent.” He wound up struggling to repay thousands of dollars in loans while working as a cook—the same job he had held before.

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For-Profit Colleges Have Made a COVID-Fuelled Comeback