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Ellen Belcher is the Dayton Daily News opinion pages editor. She writes about state government, education, the environment, higher education and all things Dayton.
Martin Gottlieb is an editorial writer and columnist for the Dayton Daily News opinion pages. He focuses on the political process itself and does such national issues as war, the economy, taxes and Social Security, as well as a hodge-podge of local and state issues.Home > Blogs > A Matter of Opinion > Archives > 2010 > June > 27 > Entry
Ellen Belcher: For-profit colleges have no cause to complain
Ohio’s overseer of colleges, Eric Fingerhut, tells a great story about wanting to check out a course catalog from a for-profit college in Ohio.
He couldn’t do it online without first giving his name and a telephone number, which, sure enough, resulted in a follow-up call. Within minutes, the chancellor of Ohio’s public colleges was talking to a recruiter, who Fingerhut assumes was operating out of a call center.
Fingerhut has heard too many stories about for-profit colleges promising young people, out-of-work people and often low-income people that if they register now, they can be in school next week, graduate on a fast track and be earning middle-class salaries in no time.
The high cost, however, is in the fine print. A two-year degree from a for-profit school can cost four to five times what you’d pay at a community college.
For-profit schools are under scrutiny in Congress, with hearings going on last week.
The impetus is multi-faceted: students complain that they’ve been sold false promises about job placements and their colleges’ accreditation; taxpayers are shelling out billions for students to go to these colleges; and many for-profit schools have stunning dropout and student-loan default rates.
At the same time, defenders of the schools are absolutely right that community colleges — which are most often their competitors — are struggling to meet the demand for classes and training.
The result is that for-profits are a phenomenal growth business. According to the New York Times, “While overall post-secondary enrollment increased 31 percent from 1998 to 2008, the for-profits’ enrollment grew by 225 percent.”
Meanwhile, for-profits are taking in almost 25 percent of federal student aid, though their students represent under 10 percent of people in college.
The bill is big: In 2008-09, they received $4.3 billion in federal Pell grants and $19.6 billion in Stafford loans, which are guaranteed by the federal government.
The Education Department is in the process of handing down new regulations for the for-profit schools, but it’s at least temporarily backed off a controversial idea that would have cut off federal aid for students if they couldn’t reasonably expect to earn enough to pay back their loans in 10 years, assuming they were setting aside 8 percent of their pay.
Absolutely, that rule would be a nightmare to enforce, but there’s still a problem to be addressed: People are taking out loans in the hope of getting jobs that won’t pay them enough to cover their debt. If they default, the schools don’t lose; taxpayers do.
Ohio has made it a bit more difficult for the for-profit schools to put students over a financial barrel; how that happened is telling.
To save money, the state has stopped giving grants to students going to for-profit schools. Chancellor Fingerhut told lawmakers that if scholarships for Ohio students had to be cut, the state should invest its money in those going just to the state’s colleges. The for-profit schools were all over Fingerhut for this pitch, but he said he lost all sympathy for them when he figured out this:
The federal government has something called a “90-10” rule. It says that for-profit schools can’t get more than 90 percent of their money from the federal government. The rationale is that students should have to have some skin in the game; otherwise, they probably aren’t committed enough to be going to college. And a college ought to be able to attract some students who can afford to pay.
Then there’s also this: If a college is totally dependent on students who are relying exclusively on grants and loans, it’s putting the government’s money at risk because it’s catering to people who are good candidates to default.
A big reason Ohio’s for-profit colleges fought so hard to keep their students eligible for Ohio’s scholarship money is that they were using those state tax dollars to meet the requirement that 10 percent of their revenue had to come from someplace other than federal tax dollars, Fingerhut said. Relying on state tax money, of course, pretty much defeats the feds’ effort.
For-profit school advocates insist that the country needs their businesses if all the people who want degrees are going to get them. It’s a compelling point. But these businesses would be out of business in the blink of an eye if the government weren’t shelling out so much money to them.
It’s they — not the public — who should be grateful. Considering some of the practices that are commonplace in their industry, they can’t complain about the new regulations that they invited the government to impose.
Permalink | Comments (3) | Post your comment | Categories: Columns, Education, Ellen Belcher, Ohio government
Comments
By Max
June 27, 2010 10:30 AM | Link to this
“The Education Department is in the process of handing down new regulations for the for-profit schools, but it’s at least temporarily backed off a controversial idea that would have cut off federal aid for students if they couldn’t reasonably expect to earn enough to pay back their loans in 10 years, assuming they were setting aside 8 percent of their pay.”———Well, ODE steps around the main issue, as usual. ‘For-Profit Colleges’ used to be called ‘diploma mills’ until their lobby in D.C. got them certified to receive federally backed loans for tuition. ODE is as corrupt and short-sighted as those they are madated to regulate.
By joe_mamma
June 29, 2010 1:31 PM | Link to this
So let me get this straight….you are complaining that students who receive financial aid from the government can use that at a for profit school and that they are too expensive. So essentially what you are saying is that giving money to potential students might actually artificially increase the demand for education which in turn raises the cost to go to school? Well if that’s true for for-profit-schools then isn’t it true for non-profit schools and state schools?
By Anthony Bieda
July 2, 2010 9:19 AM | Link to this
The Dayton Daily News and Ohio higher ed officials are aware but sometimes are reluctant to acknowledge to of a basic but undeniable fact: Without direct and recurring access to state and federal funding sources – including GI bill, Title IV, state general fund, local property taxes and state student grants, NONE of the higher ed sector – public, private, non-profit or for-profit — would be financially viable today. By eliminating the only state grant program dedicated to career college students — many of whom are working, single parents — Ohio took away a critical avenue that made college and promising careers possible for these students. The accredited, high-quality career colleges and schools will continue to operate as viable enterprises. Only Ohio’s working adults are victimized by the arbitrary road block they confront in gaining access to state aid. A. Bieda Director - External Affairs, Accrediting Council for Independent Colleges and Schools (ACICS) Washington, D.C.