For-profit universities are institutions operated by private, for-profit businesses that receive fees from each student they enroll. For-profit education is common in many parts of the world, making up more than 70% of the higher education sector in India, Japan, Malaysia, South Korea, Indonesia (Shah & Nair, 2013).
Not so long ago, these institutions were touted as the future of higher education in the US largely because they targeted non-tradition students – meaning they were drawing from a population of older people with jobs who can’t or don’t necessarily want to attend school full-time. Many schools marketed heavily in the business sector, looking to draw students from the corporate world. The selling point was at lower costs, students could attend classes online, and take as many or as few classes as they wanted. There was a boom in enrollment from 1990-2010.
What has happened since 2010? Regulators started cracking down on the industry’s misdeeds. Here are a few examples.
For-profit colleges are far more expensive than community colleges, their closest peers, but, according to a 2013 study by three Harvard professors, their graduates have lower earnings and are actually more likely to end up unemployed. To make matters worse, these students are usually in a lot of debt. Ninety-six per cent of them take out loans, and they owe an average of more than forty thousand dollars (Surowiecki, 2015).
In an incident involving Corinthians Colleges (with over 24 campuses in the US and Canada) investigators found the school lied about job-placement rates nearly a thousand times. In a 2010 undercover government investigation of fifteen for-profit colleges found that all fifteen “made deceptive or otherwise questionable statements” (Surowiecki, 2015). Corinthians and 24 of its subsidiaries filed for bankruptcy in 2015.
President Barack Obama worked to stop many of the abuses of for-profit schools by cracking down on the industry-which was later blamed for pushing Corinthian Colleges and ITT Tech into bankruptcy.
Enter Betsy DeVos. Her connection to for-profit institutions is deep. Recently she hired former DeVry Institute Dean Julian Schmoke who made headlines last year, as he was under fire from state prosecutors and the Federal Trade Commission. DeVry agreed to pay $100 million to students who complained that they had been misled by its recruitment pitch.
DeVos also hired Robert Eitel who now serves as a special assistant to the secretary. Eitel’s former job was as a corporate owner of for-profit colleges. He spent the last 18 months as a lawyer for a company facing government investigations-one that ended with a settlement of over $30 million over deceptive student lending (Halperin, 2017).
Trump’s pick to be the Education Department’s general counsel, Carlos Muñiz, is a lawyer who provided consulting services to Career Education Corp. which is a for-profit education company under several investigations.
Betsy DeVos’ department is hell-bent on removing many of the Obama administration’s regulations governing the for-profit college sector. Here’s one example:
DeVos has stopped approving new student-fraud claims brought against for-profit schools. The Education Department has a backlog of more than 87,000 applications from students seeking to have their loans forgiven on the grounds they were defrauded, some of which date to the previous administration (Collins, 2017).
As a result, in July 18 states and the District of Columbia filed a lawsuit against DeVos over the decision to freeze Obama’s borrower defense to repayment which helped forgive student loan debt for people whose for-profit colleges closed amid fraud accusations, leaving students without degrees and with piles of debt.
Since the election last November, stocks of for-profit institutions have soared as Trump made clear he supports any plan which will slash government regulations (Cohen, 2017).
Sarah Dieffenbacher borrowed $50,000 in federal student loans to attend Corinthian’s Everest College from 2007 to 2012. While waiting for a reply to her claim to have her loans discharged, she had her wages garnished. Though a federal judge ordered the Education Department in June to rule on her application, they have not rendered a decision (Cohen, 2017).
Senator Patty Murray (D-WA) the ranking Democrat on the Senate Health, Education, Labor and Pensions Committee said in September, “It’s telling that Secretary DeVos is once again quick to blame students who were victims of fraud, including many of our nation’s veterans, rather than the predatory for-profit colleges who defrauded them” (Douglas-Gabriel, 2017).
Hard to say what DeVos loves more – unregulated charter schools or unaccountable for-profit universities.
These are my reflections for today.
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