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In the wild, predators often prey on the weak, attacking the young, sick and injured. In online education, for-profit universities also go after the most vulnerable, often leaving hapless students with insupportable debt and few marketable skills. Predators in the wild hunt and kill out of biological necessity; cruelly, for-profits go in for the kill to make a buck.
James Surowiecki, The New Yorker finance columnist, says for-profits “invested heavily in online learning, which enabled them to operate nationwide and to keep costs down.” Of the 1.3 million enrolled in for-profit colleges, online students represent about 15 percent.
With a college education as the enticing brass ring for those who fall off the American dream merry-go-round, for-profits, exploiting shrewd—often deceptive—come-ons, promise a second chance for many who don’t think they can get into a local college or university. Students enrolled in for-profits tend to be at higher risk—older, poorer, minority, nontraditional. Under the gun, they suffer from a barrage of blows—serious drop-out rates (with some as high as 66 percent), higher tuition than at state schools, with appalling student-loan default rates and, worst of all, miserably poor post-graduation employment.
A Brookings Institution report claims that the student loan crisis in the U.S. “is largely concentrated among nontraditional borrowers attending for-profit schools and other non-selective institutions, who have relatively weak educational outcomes and difficulty finding jobs after starting to repay their loans. In contrast, most borrowers at four-year public and private non-profit institutions have relatively low rates of default, solid earnings, and steady employment rates.” For-profit student debt has grown from $39 billion in 2000 to $229 billion in 2014. While they account for just 13 percent of U.S. college students, for-profit students—on campus or online—are responsible for nearly half of all loan defaults.
Much of the debt is fuelled by federal support for students who can’t afford increasingly stiff tuition at the nation’s universities. Pell grants and other programs step in to allow low-income families to send their kids to college. Insidiously, corporations wormed their way into this federal slush fund. A U.S. Senate committee report revealed that 15 publicly traded for-profit education companies received nearly 90 percent of their revenues from federal tuition-assistance programs. In 2009-2010, for-profit colleges received $32 billion from these programs, 25 percent of the total spent at all colleges and universities in the U.S. The other major source of federal money for for-profit schools comes from military and veteran tuition assistance benefits.
For-profits have failed to propel the economic and status levels of their students, a socially productive force that U.S. colleges have historically promised the middle and working classes. Instead, for-profit students remain stuck—and probably worse off—than they were before they signed-up because now they’re saddled with unsustainable student loans. As the son of an immigrant tailor, had I gone to a for-profit, rather than Brooklyn College, then a free city university school, chances are I would not have held jobs at New York University and other academic and commercial institutions in my career.
For-profits have no financial interest in nurturing students, in helping them graduate or get good jobs. Just like magazine promotion schemes in the old print days that thrived on accumulating subscribers, rather than readers, corporate higher education makes its money on the “churn,” unconcerned with how many get through to the end, focusing their enormous Wall Street resources and superior digital skills at the front end—on the thousands who enroll and pay tuition up front. If your principal interest is in generating big enrollments fast, why would you care if students actually learned anything or went on to live a purposeful life? As commercial entities, for-profits don’t enroll students, but customers, with courses offered as products. A U.S. Senate report documents how disgracefully the churn works. More than 60 percent of students who enrolled at the University of Phoenix in 2008-2009, dropped out in four months in the middle of 2010, leaving them not only without a diploma, but disheartened.
Alert to the dangers, the previous administration stepped in to protect the helpless. In a muscular campaign to reduce the force of for-profits, former U.S. Department of Education Secretary Arne Duncan declared, “We want to protect students from enrolling in poorly performing programs that leave them with debt they cannot pay and a degree they cannot use.”
In a cynical about-face from its campaign, buddying-up to working-class voters, the present administration is seeking to open the gates, permitting the return of predators—with open season to exploit defenseless citizens who elected them. Almost immediately, U.S. Secretary of Education Betsy DeVos moved to dismantle key elements of the government’s protective apparatus—
Delay and renegotiate key provisions of the gainful-employment rule. The Obama-era gainful employment regulation penalizes programs whose student loan payments exceed a set percentage of graduates’ earnings. If learners—residential or digital—borrow money to attend a for-profit, but end up unable to find jobs that allow them to re-pay the loans comfortably, the program is marked as “failing” and could lose access to federal financial aid. About 300 for-profits buckled under the rule and shut down.
Delay and renegotiate the borrower-defense rule. A regulation that was supposed to take effect this year, but has now been put on hold, gives defrauded borrowers the right to apply for loan forgiveness. It also assures students in closed schools that they will have their loans forgiven. The giant for-profit company, Corinthian, is a prime example. It shut down, leaving more than 10,000 students stranded. Merely 3,000 of them so far have had their loans forgiven. Altogether, Corinthian students owe more than $3 billion.
Hire former aggressive for-profit executives. One example is the hiring of Robert S. Eitel, a top executive at Bridgepoint Education, a big for-profit college company. Now senior counselor to Secretary DeVos, he is the department’s regulatory reform officer whose job it is to trim rules that protect students. Writing in the “Upshot” column of The New York Times, commentator Kevin Carey concludes that if these Obama-era rules are decimated, “Ms. DeVos will have destroyed a highly effective tool for protecting students from for-profit colleges that offer few job prospects and mountains of debt.” (Note: This paragraph has been updated to correct the name of Eitel's former institution.)
Corporations have invaded nearly every sector of the nation’s economic life, unnaturally in zones where we once imagined capitalism had no place—day care, hospitals, nursing homes, prisons—and our universities. So let’s nail a “do not enter” sign on higher education, barring any further corporate encroachment. The nation’s universities—one of America’s most prized achievements—are where they don’t belong. We do not need for-profit police or for-profit firefighters; nor do we need for-profit universities. Like the contradictory term, “alternative facts,” “for-profit university” is an oxymoron.
At their best, the nation’s universities represent the finest and noblest qualities—serious scholarship, investigative research, deep learning—properties prized for their own sake, not for what you can take to the bank. The for-profit industry exhibits none of these treasured attributes. Instead, they dishonor higher education’s socially responsible participation in the nation’s life with fraud, greed, theft.
It’s time to roll-back the corporate invasion. The Obama administration successfully closed down hundreds of predatory for-profits. Let’s finish the job and shut them all down.
