Just yesterday, President Obama unveiled a plan to regulate private, for-profit colleges, saying the new rules were needed to protect students who were running up huge tuition bills but getting few practical job skills. According to the president, for-profits are taking advantage of students who fund their education with federal student loans, accepting them into programs that are highly unlikely to enable them to land gainful employment. As a result, the students are straddled with debt while the institutions make out like bandits.
On the surface, this may seem like it is a noble gesture. But in reality, it's just another example of President Obama forcing his big government philosophy on the private sector, disguised as an attempt to protect the poor students who are getting the short end of the stick.
One thing that has been really interesting about this new policy is the diversity of groups that are opposed to it. It should come as no surprise that the plan has been decried by several congressional Republicans, who are pushing for smaller government and less regulation of the private sector. Obviously, the for-profit colleges themselves have been very outspoken in expressing their opposition as well.
But one might be surprised to find out that several minority groups have joined forces with the for-profits and Republicans in criticizing this move. Why? If for-profit colleges fail the new litmus test, then they are at risk of no longer being able to accept students paying with federal money. This is a restriction that could force some institutions to close their doors, and several of these institutions enroll a high percentage of minority students. Translation: it would mean less educational opportunities and less career options for minority students from lower socioeconomic backgrounds.
I understand all of these arguments, and I obviously oppose the new regulation imposed on the for-profits. Being a diehard conservative, it is no secret that I believe in smaller government and less regulation of the private sector. But quite honestly, there are other reasons, far more pressing ones in fact, that cause me to label these new regulations as misguided and unfair.
As a seasoned college administrator with over a decade of experience working at non-profit colleges, I can attest to the fact that their practices are no different. I have blogged about this topic before, but allow me to go over it again so that you can see the hypocrisy in President Obama's approach to this problem.
In all institutions of higher education, enrollment projections are set for the following academic year in order to prepare the budget. Once the projections are set, the task is clear: administrators are pressured to do what needs to be done in order to meet those projections. Failure to meet your enrollment projections is equivalent to a sales rep at a corporate institution failing to meet his sales quota. The results too are often the same. Fail to meet the goals that have been set for you, and it's grounds for being terminated. In this way, higher education, even non-profit, is no different than Wall Street.
As crunch time approaches, college administrators monitor their enrollments closely to see if they're "on target." At some point leading up to the deadline, a competent administrator will be able to project whether or not he is going to meet his enrollment goal. If he does, then he can breathe a sigh of relief. But if it becomes crystal clear that the enrollment projections will not be met, then a difficult choice comes into play.
That choice is this: do you lower your admissions standards to boost enrollment and meet your projections, or stand firm and risk not meeting them? Almost every college administrator, at least those in charge of academic programs, have faced this situation at one time or another. Unfortunately, sometimes this choice could be the determining factor in saving your job. If you've already been warned by your dean or vice president that enrollment projections MUST be met, then what would you do?
It should therefore come as no surprise that many programs lower their admissions standards to meet enrollment requirements. I've seen this happen at a private, non-profit college. I've seen it happen at a public, non-profit university. I know for a fact that it goes on at several other non-profits as well. That being the case, the president can't pull the wool over my eyes. I see what he's doing, and it's anything but noble.
Obama had his Secretary of Education, Arne Duncan, explain the plan to the media. Essentially, they're going to force for-profit colleges to be "at least 35 percent effective" in getting their students to start repaying their student loans within three years. Also, the estimated loan payment of a typical graduate cannot exceed 30 percent of discretionary income. Nor can it exceed 12 percent of total earnings. If an institution fails in all three of these categories, then it will no longer be permitted to receive federal student loan money.
So the measure of success is 35 percent, hey? Well, let's take a look at what has been going on at the non-profit colleges and universities in the great state of New Jersey. According to the most recent statistics, only 4 out of 27 graduate more than 50 percent of their students in 4 years. Twelve of these institutions have graduation rates less than 35 percent. Even if you extend the length of time to six years, there are still 9 colleges that graduate less than 50 percent of their students. So you tell me: do you think that many of these institutions would pass the litmus test being applied to the for-profits? I highly doubt it.
Why is this happening? Granted, there are several reasons. But no one can tell me that one of the biggest reasons has to do with institutions lowering admissions standards to meet enrollment goals. Are these non-profits thus not taking advantage of low-income, minority students by admitting them and taking their student loan money even when their chances of succeeding in college are very slim? It's all done in the name of "universal access to higher education." But in reality, this practice is no different than that for which the for-profits are being indicted by President Obama.
Mr. President, if you really do believe in this policy, then hold the non-profits accountable as well. Picking on the for-profits is, as I've already said, misguided, hypocritical, and unfair. Hold everyone to the same standard, and then you'll see where the incompetence and unscrupulous practices really do reside. The results may surprise you.
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