tag:theconversation.com,2011:/global/topics/for-profit-colleges-31475/articlesFor-profit colleges – The Conversation2023-06-08T12:28:49Ztag:theconversation.com,2011:article/2046712023-06-08T12:28:49Z2023-06-08T12:28:49ZCost and lack of majors are among the top reasons why students leave for-profit colleges<figure><img src="https://images.theconversation.com/files/530677/original/file-20230607-19-4hpib6.jpg?ixlib=rb-1.1.0&rect=25%2C142%2C8621%2C5613&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Students who attend for-profit colleges on average have higher student loan debt than those who attend public institutions.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/photo/female-university-students-studying-royalty-free-image/1389976884?phrase=for+profit+college&adppopup=true">FatCamera via Getty Images</a></span></figcaption></figure><p>For the <a href="https://files.eric.ed.gov/fulltext/ED618012.pdf">majority of students</a>, the college where they enroll is often the one from where they will graduate. But not so for the approximately <a href="https://nces.ed.gov/ipeds/TrendGenerator/app/answer/2/4">1 million students who transfer each year</a> from one school to another. Of these 1 million, <a href="https://nces.ed.gov/ipeds/TrendGenerator/app/answer/2/4?f=1%3D3">about 100,000 students transfer</a> from one of the <a href="https://nces.ed.gov/fastfacts/display.asp?id=1122">approximately 2,300 for-profit</a> universities that exist in the U.S. That’s a sizable portion of the <a href="https://nces.ed.gov/programs/coe/indicator/cha/undergrad-enrollment">approximately 777,000 students</a> who attend for-profit colleges.</p>
<p>As <a href="https://scholar.google.com/citations?user=dGUoEiAAAAAJ&hl=en">researchers</a> who <a href="https://scholar.google.com/citations?user=uZ06NAUAAAAJ&hl=en&oi=ao">specialize in higher education</a>, we are especially interested in why students leave for-profit universities. These schools have been criticized for <a href="https://www.forbes.com/sites/michaeltnietzel/2021/10/08/the-ftc-takes-new-aim-at-deceptive-for-profit-colleges/">deceptive recruiting practices</a>, being <a href="https://www.journals.uchicago.edu/doi/pdf/10.17310/ntj.2012.1.06?casa_token=OjUw_dCAQ60AAAAA:Lm8qBtC3q6lpKYHyAYsyaPRJuNBnJo-d0-XUbLFeIK4Qtk51n_LLu_fWjhfcKa8AFLp1v8y7QPJq">overpriced</a> and <a href="https://www.edworkingpapers.com/sites/default/files/ai21-398.pdf">failing to adequately prepare graduates for well-paying jobs</a>.</p>
<p>In an effort to better understand the reasons behind the transfers, <a href="https://doi.org/10.1177/15210251231161828">we interviewed 12 students</a> who transferred from a private for-profit to a public university in the fall of 2021. Below are four main themes that emerged from our conversations.</p>
<h2>1. Too expensive</h2>
<p>Affordability came up repeatedly among the students we interviewed. A quarter said attending a for-profit initially seemed less expensive than a public university option. However, after they enrolled, the costs went up. They initially received a scholarship from the for-profit but did not realize it was only for the first year and nonrenewable. Their experiences are not unusual. Financial aid offers are often <a href="https://www.washingtonpost.com/business/2022/12/07/financial-aid-gao-report/">vague about the total costs</a> that students are expected to pay. </p>
<p>Half of those we interviewed also shared that despite receiving some institutional scholarships, they had to take out loans to cover the balance. As they watched their debt grow, particularly in cases in which their initial scholarships expired, they realized transferring to a public university would be cheaper. </p>
<p>Their experiences are consistent with national trends that show college students who attend for-profits are more likely to have student loan debt - with higher balances - than people enrolled at other types of schools. A 2019 study found that <a href="https://edworkingpapers.com/sites/default/files/ai21-398.pdf">74% of full-time students who attended for-profit colleges</a> had outstanding loans, compared to 21% at community college and 47% at four‐year public schools. On an annual basis, for‐profit students borrowed about $8,000, compared to the average community college student’s debt of approximately $4,700 and four‐year public student average of $7,000. </p>
<p>As of the 2020-2021 academic year, the <a href="https://nces.ed.gov/programs/coe/indicator/cua">average net cost of attendance</a> at for-profit institutions was $24,600, while it was $14,700 at public institutions.</p>
<h2>2. Lack of majors</h2>
<p>About half of those we interviewed transferred in part because their original school did not offer their desired major. Some initially chose the for-profit for reasons like convenient location, easy admission process or perceived affordability. Later they realized none of the majors offered were exactly what they wanted. For others, their interests shifted over time.</p>
<p>For-profit universities mainly offer majors that are <a href="https://www.booksfree.org/wp-content/uploads/2022/04/EARNING-FROM-LEARNING-THE-RISE-OF-FOR-PROFIT-David-W-Breneman-Brian-Pusser-Sarah-E-Turner.pdf#page=68">vocationally oriented and do not cost much to teach</a>, such as business, engineering-related technologies and health professions. Nonprofit institutions tend to have more diverse offerings. </p>
<p>We found that before deciding to transfer, most students asked their academic advisors to help identify alternative majors. Though this may seem like a good idea, the reality is many for-profit universities, in an effort to keep revenue flowing, often <a href="https://tressiemc.com/uncategorized/how-admissions-works-differently-at-for-profit-colleges-sorting-and-signaling/">direct their employees to find ways to keep students enrolled</a>. </p>
<p>Indeed, several students told us their advisors recommended staying and switching to a different major rather than exploring options at other schools that may better align with their interests. The advisor for one aspiring lawyer initially suggested the for-profit’s justice studies major. After taking introductory courses, the student realized justice studies was intended for future law enforcement officers, not lawyers. The advisor then placed her in the university’s government program, which was also not a good fit.</p>
<p>The student independently researched the best majors for future lawyers and determined that political science would be the best preparation. Since the for-profit university did not have a political science program, she transferred to a public university. </p>
<figure class="align-center ">
<img alt="Several college students shown from behind carrying backpacks." src="https://images.theconversation.com/files/530707/original/file-20230607-9278-bn46kk.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/530707/original/file-20230607-9278-bn46kk.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/530707/original/file-20230607-9278-bn46kk.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/530707/original/file-20230607-9278-bn46kk.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/530707/original/file-20230607-9278-bn46kk.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/530707/original/file-20230607-9278-bn46kk.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/530707/original/file-20230607-9278-bn46kk.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Students report that lack of majors and limited course offerings were among the reasons they left for-profit colleges.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/photo/male-and-female-adult-students-walking-at-campus-royalty-free-image/1171000142?phrase=college+students+&adppopup=true">Klaus Vedfelt via Getty Images</a></span>
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<h2>3. Inflexible schedules</h2>
<p>Unlike students at nonprofit and public universities, students at for-profit universities don’t get to pick the classes they take. Students are enrolled in courses each term by their academic advisors without much choice over the course’s topical focus, the professor who’ll teach it or the day and time that the class is taught.</p>
<p>The predetermined structure of for-profit degree programs <a href="https://files.eric.ed.gov/fulltext/ED547411.pdf">appeals to some students</a>, such as those with caretaking responsibilities or inflexible work schedules. However, we found the practice also motivated many to transfer. While they valued advisors’ input, the students we interviewed wanted more transparency, control and freedom over their schedules, instructors and course topics. </p>
<h2>4. Questions of quality</h2>
<p><a href="https://www.thirdway.org/report/paying-more-for-less-a-new-classification-system-to-prioritize-outcomes-in-higher-education">Scholars</a> and <a href="https://www.help.senate.gov/ranking/newsroom/press/harkin-report-reveals-troubling-realities-of-for-profit-schools">policymakers</a> have long called the quality of for-profit colleges into question. However, only two students we interviewed mentioned quality as a reason for transferring. They had concerns that instructors were inexperienced and courses were too easy.</p>
<p>The Biden administration recently proposed new <a href="https://www.ed.gov/news/press-releases/department-education-releases-proposed-rules-accountability-certificate-and-profit-programs-and-transparency-unaffordable-student-debt">rules</a>, referred to as gainful employment regulations, aimed at ensuring degrees lead to positive employment outcomes for graduates. The rules would revoke the ability of schools to offer students federal financial aid <a href="https://www.insidehighered.com/news/government/student-aid-policy/2023/05/18/new-stronger-gainful-employment-regs-released">if graduates’ student loan payments exceed 8% of their income or 20% of their discretionary income</a>. The U.S. Department of Education states that <a href="https://www2.ed.gov/policy/highered/reg/hearulemaking/2021/gainful-employment-and-transparency-fact-sheet.pdf?utm_content=&utm_medium=email&utm_name=&utm_source=govdelivery&utm_term=">the objective</a> is to “ensure quality and accountability in postsecondary education.”</p>
<h2>Here’s what students can do</h2>
<p>To avoid the potential pitfalls associated with for-profit colleges, we suggest a few options that students can explore prior to enrollment.</p>
<p>They may want to pay special attention to academic program structure, costs and quality. Seeking information from sources unaffiliated with any specific university is a good strategy. The Bureau of Labor Statistics’ <a href="https://www.bls.gov/ooh/">Occupational Outlook Handbook</a> has good information about majors that lead to different jobs. Schools that do not offer the degrees in majors that lead to a student’s desired career should be avoided.</p>
<p>The <a href="https://collegescorecard.ed.gov/">College Scorecard</a>, an online tool provided by the Department of Education, lets people search for schools according to majors offered, location and other criteria. With this information, the scorecard provides earnings and student debt data of recent graduates. </p>
<p>Students should also pay close attention to the <a href="https://www.washingtonpost.com/business/2022/12/07/financial-aid-gao-report/">fine print of financial aid packages</a>. Especially, students should ask explicitly whether scholarship offers are renewable. If the answer is yes, it pays to clearly understand the criteria required in order to maintain eligibility.</p>
<p>If scholarships are not renewable, students should account for this when estimating the overall cost of attending the school over the expected span of time it takes to earn a degree. <a href="https://doi.org/10.1177/15210251231161828">Our research shows</a> that for-profit institutions may be less affordable in the long run than they initially appear. Conversely, nonprofit institutions that initially seem more expensive than for-profit institutions may be more affordable over the course of a student’s degree.</p><img src="https://counter.theconversation.com/content/204671/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Thomas Zimmerman is affiliated with New Jersey Office of the Secretary of Higher Education. His position in the office is not a political appointment, and his viewpoints expressed here are not to be taken to represent the positions of the agency.</span></em></p><p class="fine-print"><em><span>Molly Ott does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Students told researchers that the cost of going to a for-profit college changed over time and eventually became too much to bear.Molly Ott, Associate Professor of Higher & Postsecondary Education, Arizona State UniversityThomas Zimmerman, PhD Candidate in Higher Education, Rutgers UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1486192020-11-17T13:22:01Z2020-11-17T13:22:01ZWhy for-profit college enrollment has increased during COVID-19<figure><img src="https://images.theconversation.com/files/368404/original/file-20201109-23-jtctv5.jpg?ixlib=rb-1.1.0&rect=60%2C0%2C6720%2C4416&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The convenience of distance learning at for-profit colleges has contributed to their rising enrollment. </span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/photo/young-woman-having-video-call-on-laptop-computer-at-royalty-free-image/1221479489?adppopup=true">damircudic/E+ via Getty Images</a></span></figcaption></figure><p>When COVID-19 hit the U.S., many experts warned that America’s colleges and universities could be devastated. Some of them predicted <a href="https://www.insidehighered.com/admissions/article/2020/04/29/colleges-could-lose-20-percent-students-analysis-says">enrollment declines of up to 20%</a>.</p>
<p>So far, those initial forecasts were worse than what has actually taken place. One month into the fall semester of the 2020-2021 academic year, overall enrollment was <a href="https://nscresearchcenter.org/stay-informed/">only 3% lower</a> than at the same time a year earlier.</p>
<p>One kind of school, however, is faring better: for-profit colleges. Their average enrollment is <a href="https://nscresearchcenter.org/stay-informed/">up by 3%</a>.</p>
<p>In contrast, at public and private nonprofit four-year universities, enrollment fell by <a href="https://nscresearchcenter.org/stay-informed/">about 1.4% and 2%</a>, respectively.</p>
<p>Enrollment has declined much more at community colleges, which had <a href="https://nscresearchcenter.org/stay-informed/">9.4% fewer</a> students this year. This change occurred even though <a href="https://www.urban.org/sites/default/files/publication/102778/how-might-covid-19-affect-fall-2020-higher-education-enrollment.pdf">some experts anticipated</a> community colleges would be more <a href="https://ccrc.tc.columbia.edu/easyblog/covid-community-college-enrollment.html">attractive in the COVID-19 era</a> because of their lower costs and flexible transfer policies.</p>
<h2>Factors behind the trend</h2>
<p>Why are more students attending for-profit colleges in the middle of a pandemic?</p>
<p>This growth is even more surprising given that enrollment at for-profit schools – often criticized as being <a href="https://www.thebalance.com/what-is-a-for-profit-college-4778544">high priced</a> and <a href="https://www.usnews.com/education/best-colleges/paying-for-college/articles/the-real-cost-of-for-profit-colleges">low quality</a> – had fallen <a href="https://nscresearchcenter.org/wp-content/uploads/CTEE_Report_Fall_2019.pdf">by an average of 10.5% annually</a> between 2015 and 2019.</p>
<p>As a <a href="https://scholar.google.com/citations?user=uZ06NAUAAAAJ&hl=en&oi=ao">higher education researcher</a>, I see several factors at play.</p>
<p>For-profit colleges and universities tend to be highly experienced with remote learning, they have more flexibility to deploy financial resources as needed and they have enjoyed favorable policies under the Trump administration, which notably <a href="https://www.wsj.com/articles/trump-administration-revokes-obama-era-rule-on-for-profit-universities-11561763021">rescinded an Obama-era rule</a> meant to hold them accountable for ensuring that graduates are gainfully employed.</p>
<p>Given the recent presidential election results, I also suspect the increase in for-profit enrollment may be <a href="https://www.insidehighered.com/news/2020/10/23/new-education-department-spirit-under-biden">short-lived</a>. Graduates of for-profit colleges are <a href="https://www.brookings.edu/research/the-looming-student-loan-default-crisis-is-worse-than-we-thought/">defaulting on their tuition loans at higher rates</a>, and President-elect Joe Biden has vowed to <a href="https://www.forbes.com/sites/wesleywhistle/2020/09/14/how-for-profit-colleges-might-fare-under-joe-biden-and-kamala-harris/?sh=7696559e33ac">stop these schools from “profiteering off of students</a>.” </p>
<h2>Recognized in remote learning</h2>
<p>More than <a href="https://www.nature.com/articles/d41586-020-02419-w">1,000 U.S. colleges and universities</a> – over one-fourth of the nation’s postsecondary institutions – started the fall 2020 semester with some form of in-person instruction. But the face-to-face learning environment has been transformed by COVID-19 prevention measures: social distancing, mask wearing, virus testing requirements, hybrid attendance options and serious restrictions on extracurricular activities, such as sports and clubs.</p>
<p>What you may think of as the “traditional” college experience – where students live, learn and socialize in close physical proximity – is <a href="https://www.insidehighered.com/views/2020/06/02/what%E2%80%99s-needed-make-campus-safe-now-odds-iconic-college-experience-people-crave">largely not happening this year</a>. </p>
<p>Rather than paying full tuition, housing expenses and – in some cases – <a href="https://www.collegiateparent.com/finances/coronavirus-and-remote-learning-fees/">extra coronavirus fees</a> for restricted in-person conditions, some students chose not to attend traditional colleges.</p>
<p>Others <a href="https://www.usatoday.com/story/news/education/2020/08/12/covid-colleges-reopen-high-risk-students-fear-being-forgotten/3320133001/">did not want to risk contracting the coronavirus</a> while attending classes on campus.</p>
<p>Although exact numbers are unknown, some opted for a “<a href="https://www.edsurge.com/news/2020-08-17-unprecedented-numbers-of-students-are-taking-a-gap-year-what-should-they-do-with-the-time">gap year</a>.”</p>
<p>Facing a <a href="https://www.politico.com/news/2020/10/23/coronavirus-reshaping-job-market-431383">dismal labor market</a>, others sought fully online programs that were more established than the “<a href="https://www.sbstatesman.com/2020/09/19/zoom-university-is-cheating-students-out-of-a-proper-education/">Zoom U</a>” options hastily implemented in the spring of 2020.</p>
<p>For better or for worse, for-profit universities are <a href="https://ticas.org/wp-content/uploads/2020/01/the-evolution-of-the-for-profit-college-industry.pdf">recognized brands in distance education</a>. That likely attracted some students seeking safe, reliable learning options during the pandemic.</p>
<p>Support for this idea can be found in the fact that – at universities with established online programs – fall 2020 undergraduate enrollments were <a href="https://nscresearchcenter.org/stay-informed/">up by 6.8%</a> compared with last year. </p>
<p>For-profits are part of this figure. However, a few nonprofit schools that have invested considerably in online education over the past decade also saw enrollment increases. These include public institutions, such as where I work, <a href="https://www.statepress.com/article/2020/08/spcommunity-university-reports-second-largest-freshman-class">Arizona State University</a>, as well as private nonprofits, such as <a href="https://research.schev.edu/enrollment/EEE_Report.asp">Liberty University</a> and <a href="https://hechingerreport.org/high-school-graduates-shun-college-in-the-covid-fall-of-2020/">Western Governors University</a>. </p>
<figure class="align-center ">
<img alt="DeVry University's Chicago campus in the winter time." src="https://images.theconversation.com/files/368413/original/file-20201109-21-5mo76m.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/368413/original/file-20201109-21-5mo76m.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/368413/original/file-20201109-21-5mo76m.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/368413/original/file-20201109-21-5mo76m.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/368413/original/file-20201109-21-5mo76m.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/368413/original/file-20201109-21-5mo76m.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/368413/original/file-20201109-21-5mo76m.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">DeVry University is a major player in online education.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/sign-indentifies-devrys-chicago-campus-on-february-10-2014-news-photo/468356579?adppopup=true">Scott Olson/Getty Images</a></span>
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<h2>More unrestricted money</h2>
<p>Many traditional universities incurred considerable costs to resume teaching and research safely on campus in the fall of 2020.</p>
<p>For example, North Carolina State University <a href="https://www.insidehighered.com/news/2020/10/09/trying-curb-covid-19-campus-expensive-whether-colleges-plans-work-or-not">spent an estimated US$5.2 million</a> on measures to protect students, staff and faculty from COVID-19. Despite that investment, an outbreak forced administrators to <a href="https://www.ncsu.edu/coronavirus/nc-state-reducing-campus-housing/">close the residence halls</a> only a few weeks after reopening. </p>
<p>For-profits have <a href="https://ticas.org/wp-content/uploads/2020/01/the-evolution-of-the-for-profit-college-industry.pdf">considerably more online programs than their nonprofit counterparts</a>. For that reason, they did not need to spend nearly as much to operate safely this fall.</p>
<p>For-profits are also generally more <a href="https://www.nacubo.org/-/media/Nacubo/Documents/products/CFOPerspectivesDeColfmacker.ashx">financially nimble</a> than public and private nonprofit colleges and universities. They often maintain <a href="https://hechingerreport.org/could-the-online-for-profit-college-industry-by-a-winner-in-this-crisis/">considerable cash reserves</a> with minimal limitations on spending.</p>
<p>Nonprofit universities, especially publics, typically have less cash on hand because they tend to run on annual operating budgets that <a href="https://www.higheredjobs.com/HigherEdCareers/interviews.cfm?ID=445">redirect surpluses back into programs and services</a>. And even those with significant endowments <a href="https://www.acenet.edu/Documents/Understanding-Endowments-White-Paper.pdf">face restrictions on how they may spend that money</a>. </p>
<p>During the pandemic, for-profits have had more resources available than their counterparts. They subsequently expended more on marketing efforts. For example, of the 10 U.S. universities that spent at least $1.2 million on Google advertisements in March 2020, <a href="https://tcf.org/content/report/college-marketing-covid-19-economy/?agreed=1">six – or 60% – were for-profits</a>, even though for-profits represent only <a href="https://nces.ed.gov/programs/digest/d18/tables/dt18_317.10.asp">17%</a> of all four-year institutions. </p>
<p>In addition to stepped-up advertising, for-profit institutions also <a href="https://news.phoenix.edu/press-release/university-of-phoenix-pledges-to-use-every-cares-act-dollar-for-direct-financial-assistance-to-students-urges-other-higher-ed-institutions-to-prioritize-direct-assistance-to-students/">expanded financial aid</a> when the pandemic hit. This gave students even more of an incentive to enroll.</p>
<h2>Evolving federal policies</h2>
<p>Over the past decade, shifting federal policy has had a major impact on for-profits’ ability to attract students. During the 2008 recession, the sector experienced <a href="https://www.insidehighered.com/news/2014/11/18/enrollment-numbers-grew-during-recession-graduation-rates-slipped">huge enrollment increases</a>.</p>
<p>Unfortunately, <a href="https://tcf.org/content/report/college-complaints-unmasked/?agreed=1">some for-profits used deceptive tactics</a> and persuaded students to assume <a href="https://capseecenter.org/the-public-and-for-profit-college-sectors-a-direct-economic-comparison/">large tuition loans that would allegedly pay off with lucrative jobs</a>. Their promises misled thousands of graduates, who <a href="https://libertystreeteconomics.newyorkfed.org/2017/11/who-is-more-likely-to-default-on-student-loans.html">defaulted on their debt</a>. </p>
<p>In response, the Obama administration implemented the “<a href="https://www.ed.gov/news/press-releases/obama-administration-announces-final-rules-protect-students-poor-performing-career-college-programs">gainful employment</a>” rule. Schools were required to demonstrate that their graduates were employed and include employment figures in advertisements. Research shows the regulation <a href="https://aefpweb.org/sites/default/files/webform/42/JFountain_Effects%20of%20Gainful%20Employment%20on%20Enrollment%20at%20Forprofit%20Colleges.pdf">reduced for-profit enrollments</a> relative to other sectors. </p>
<p><a href="https://www.nytimes.com/2018/08/10/us/politics/betsy-devos-for-profit-colleges.html">Some for-profit executives</a> argued that for-profits were unfairly penalized by “gainful employment.” The Trump administration agreed and officially <a href="https://www.nytimes.com/2019/06/28/us/politics/betsy-devos-for-profit-colleges.html">repealed the rule in 2019</a>. This policy change likely helped boost for-profits’ enrollment in 2020.</p>
<p>In 2021, however, the federal approach will surely shift again. I expect that the Education Department – under the leadership of President-elect Joe Biden and Vice President-elect Kamala Harris – will more aggressively regulate for-profit institutions in ways that will likely reduce the share of students who attend them.</p>
<p>As California’s attorney general, Harris <a href="https://www.insidehighered.com/quicktakes/2020/08/12/kamala-harris-has-battled-profit-colleges">successfully sued the predatory chain Corinthian Colleges for fraud</a>. As a U.S. senator, she <a href="https://www.harris.senate.gov/news/press-releases/harris-colleagues-urge-senate-to-protect-covid-19-relief-funds-from-predatory-for-profit-college-industry">opposed allocating federal funds to predatory for-profit schools</a>. </p>
<p>Biden’s <a href="https://joebiden.com/beyondhs/">higher education platform</a> would restore the gainful employment rule. The incoming administration also proposes eliminating a legal loophole that allows for-profits to disproportionately <a href="https://www.ed.gov/news/press-releases/new-analysis-finds-many-profits-skirt-federal-funding-limits">recruit military service members and veterans</a>. </p>
<p>[<em>Deep knowledge, daily.</em> <a href="https://theconversation.com/us/newsletters/the-daily-3?utm_source=TCUS&utm_medium=inline-link&utm_campaign=newsletter-text&utm_content=deepknowledge">Sign up for The Conversation’s newsletter</a>.]</p>
<p>Most significantly, Biden supports authorizing <a href="https://www.politico.com/news/2020/11/07/joe-biden-policies-education-433633">two years of free community college</a> for all Americans. He also calls for <a href="https://www.marketwatch.com/story/new-analysis-estimates-the-financial-cost-and-benefits-of-bidens-free-college-plan-11601962724">free tuition at public universities for families who earn less than $125,000</a> per year.</p>
<p>I believe Biden’s proposed policies would deter many future students from choosing for-profit universities. Research suggests that employers don’t value for-profit degrees any more than those from <a href="https://www.insidehighered.com/news/2014/08/18/community-colleges-and-profits-fare-similarly-new-study-employer-responses">community colleges</a> or <a href="https://www.nber.org/system/files/working_papers/w20528/w20528.pdf">other four-year equivalents</a>. If the Biden administration ensures that the cost of attending nonprofit colleges and universities – including those with established online degree programs – is substantively reduced, persuading students to enroll in for-profit alternatives will be very difficult.</p><img src="https://counter.theconversation.com/content/148619/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Molly Ott does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>For-profit colleges’ heavy investment in distance learning has led to a 3% increase in enrollment during the pandemic.Molly Ott, Associate Professor of Higher & Postsecondary Education, Arizona State UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1348722020-04-10T12:12:39Z2020-04-10T12:12:39ZGoing back to school to deal with hard times? For-profit schools could make things even harder<figure><img src="https://images.theconversation.com/files/326555/original/file-20200408-118674-r9yv17.jpg?ixlib=rb-1.1.0&rect=8%2C5%2C1908%2C1258&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Many students scammed by for-profit colleges are still looking for student loan relief.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/ruby-maldanado-a-medical-assistant-student-checks-a-note-news-photo/471369136?adppopup=true">Al Seib/Getty Images</a></span></figcaption></figure><p>During recessions or times of high unemployment, there tends to be an <a href="https://www.nber.org/chapters/c12862">increase</a> in the number of people who enroll in college.</p>
<p>Due to the economic fallout from COVID-19, it is expected many people are likely to return to college once again. Indeed, a <a href="https://www.stradaeducation.org/publicviewpoint/">survey</a> from March found that one-third of American workers felt that if they lost their job because of COVID-19-related events, they would need additional education or training to get another job that pays the same. Asked if they had US$5,000 to spend on their future education or training, 26% of survey respondents said they would attend an online college or university.</p>
<p>If people rush to enroll in college during harsh economic times, they may not weigh whether they choose to apply to a for-profit institution or a more traditional nonprofit or public university. As <a href="https://education.asu.edu/molly-ott">scholars</a> of <a href="https://isearch.asu.edu/profile/867996">higher education</a> who have observed the <a href="https://money.com/can-the-university-of-phoenix-rise-from-the-ashes/">ups and downs</a> of for-profit colleges, we think that would be a big mistake.</p>
<p>As the term “for-profit” implies, these schools exist to make money for investors. A 2019 report found that relative to other postsecondary institutions, for-profit colleges <a href="https://tcf.org/content/report/much-education-students-getting-tuition-dollar/?agreed=1">spend the least</a> on instruction – less than half of all the tuition they collect from students – and tend to <a href="https://tcf.org/content/report/much-education-students-getting-tuition-dollar/?agreed=1">spend heavily on marketing and advertising</a>.</p>
<p>Public universities, on the other hand, often <a href="https://tcf.org/content/report/much-education-students-getting-tuition-dollar/?agreed=1">spend relatively more on instruction</a>. So do many nonprofit private institutions. That matters because the more a school spends on instruction, research shows, <a href="https://doi.org/10.1111/ecin.12336">the better its students tend to do</a> in terms of getting full-time jobs and bigger salaries.</p>
<h2>A history of deception</h2>
<p>For-profit colleges are positioned to capture a substantial share of students <a href="https://www.insidehighered.com/news/2020/03/19/how-will-profit-colleges-fare-recession">in the near future</a> as the U.S. and the world respond to the economic fallout of COVID-19. </p>
<p>There are currently about 500 or so <a href="https://www.onlinecolleges.net/for-students/for-profit-colleges-student-guide/">for-profit colleges and universities in the United States</a>, and they <a href="https://nces.ed.gov/programs/coe/indicator_csb.asp">enroll about a million of the nation’s 20 million college students</a>. While these schools have created many opportunities for people to attend college who <a href="https://www.chronicle.com/article/The-Unheralded-Mettle-of/239948">otherwise would not have been able to go</a>, we believe the foundational mission of a for-profit institution – to make money for its owners – can have a negative impact on students.</p>
<p>Several for-profit colleges have <a href="https://www.theatlantic.com/business/archive/2016/02/for-profit-college-fraud/462219">a history of deception</a> when it comes to things like their true costs, educational quality, and students’ chances of graduating and finding a good job. For instance, the University of Phoenix advertises close relationships with more than 2,000 corporate partners like Microsoft, Adobe, Yahoo, Twitter and the American Red Cross. According to the Federal Trade Commission, some of the university’s TV and radio ads falsely <a href="https://www.insidehighered.com/news/2019/12/11/ftc-and-university-phoenix-settle-over-long-running-investigation-advertisements">implied</a> these companies were directly involved in creating course materials and facilitating job opportunities for Phoenix graduates. In December 2019 the university agreed to pay a <a href="https://www.ftc.gov/news-events/press-releases/2019/12/ftc-obtains-record-191-million-settlement-university-phoenix">$191 million settlement</a> to resolve the charges.</p>
<p>And the University of Phoenix is not alone. In 2015, Corinthian Colleges <a href="https://www.washingtonpost.com/news/grade-point/wp/2016/09/29/feds-found-widespread-fraud-at-corinthian-colleges-why-are-students-still-paying-the-price/">shut down</a> when faced with claims that the company misrepresented job placement and graduation rates. In 2016, ITT Technical Institutes closed after the U.S. Department of Education banned the school from enrolling new students because of its “<a href="https://www.marketwatch.com/story/itt-is-second-major-for-profit-college-to-declare-bankruptcy-since-last-year-2016-09-16?mod=article_inline">shaky financial management</a>.” Since then, thousands of defrauded students from the shuttered schools – and other closed for-profit colleges – have <a href="https://www.usnews.com/news/education-news/articles/2019-12-11/student-loan-borrowers-defrauded-by-for-profits-will-only-receive-partial-relief-under-new-devos-plan">largely denied student loan forgiveness</a>.</p>
<p>To help people avoid falling into a similar situation, we suggest anyone thinking about enrolling in college consider the following when evaluating their range of choices:</p>
<h2>Is the school you plan to attend for-profit?</h2>
<p>To determine if a college is a for-profit, use the U.S. Department of Education’s <a href="https://collegescorecard.ed.gov/">College Scorecard</a>. It includes information for more than 7,000 colleges and universities. All you need to do is enter a school’s name in the search bar, which pulls up a profile that includes a gray icon labeled “public,” “private not-for-profit” or “private for-profit.” If you discover a school falls into the latter category, don’t automatically write it off. Continue to do more independent research.</p>
<h2>How much will you pay for a degree?</h2>
<p>For-profit colleges and universities generally cost more than their public counterparts but are cheaper than private nonprofits. In 2017-18, <a href="https://nces.ed.gov/programs/digest/d18/tables/dt18_330.40.asp">tuition and fees of four-year institutions</a> averaged $9,044 for traditional publics, $17,020 for for-profits, and $34,621 for private nonprofits. That’s a lot of money, regardless of which type of school you choose. But for many, it’s worth paying to get a college degree. </p>
<p>This is where for-profits aren’t as good of a bet. Only <a href="https://nces.ed.gov/programs/digest/d16/tables/dt16_326.10.asp?current=yes">32%</a> of full-time undergraduates who started in 2009 at a for-profit college graduated within six years. Compare that to 59% at traditional public colleges and 66% at traditional private colleges.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/326573/original/file-20200408-152974-3rgb10.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/326573/original/file-20200408-152974-3rgb10.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/326573/original/file-20200408-152974-3rgb10.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/326573/original/file-20200408-152974-3rgb10.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/326573/original/file-20200408-152974-3rgb10.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/326573/original/file-20200408-152974-3rgb10.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/326573/original/file-20200408-152974-3rgb10.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Experts say it pays to research a college before you enroll.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/photo/afro-woman-using-laptop-at-home-royalty-free-image/1169296048?adppopup=true">valentinrussanov/Getty Images</a></span>
</figcaption>
</figure>
<p>Use <a href="https://collegescorecard.ed.gov/">The College Scorecard</a> to research exact costs and degree completion rates for the schools you’re considering. The Scorecard also has information about how much student loan debt graduates owe. Pay extra attention to this measure. Graduates of for-profit colleges and universities often take on a lot of loans but have difficulty repaying them. According to the most recent <a href="https://ticas.org/accountability/statement-on-the-release-of-student-loan-default-rates/%22%22">figures</a>, for-profits account for a hefty third of all student loan defaults but less than a tenth of total enrollments.</p>
<p>A good tool for evaluating your own loans versus projected earnings is Nerd Wallet’s <a href="https://www.nerdwallet.com/blog/loans/student-loans/is-college-worth-it/#calc">college affordability calculator</a>, which recommends no more than 10% of a college graduate’s take-home pay should go towards student loan debt.</p>
<h2>Does the school provide a high-quality education?</h2>
<p>Determining how well different colleges and universities support students’ learning is challenging for many reasons, but a basic indicator of quality is <a href="https://www.chea.org/about-accreditation">accreditation</a>. We recommend any school you are considering, for-profit or not, should be accredited, especially by <a href="https://www.edsmart.org/regional-vs-national-accreditation/">a regional association</a>. Accreditation means their programs align with general higher education standards. Students at unaccredited schools <a href="https://www2.ed.gov/students/prep/college/diplomamills/index.html">cannot receive federal financial aid</a>. Plus, <a href="https://fortune.com/2013/11/08/b-school-remorse-when-the-degree-is-just-not-worth-it/">finding a job</a> can be difficult with an unaccredited degree.</p>
<p>You can determine an institution’s accreditation status – and if any of its specific programs are separately accredited for careers that require professional licenses, such as for nurses or pharmacists – through the Department of Education’s <a href="https://ope.ed.gov/dapip/#/home">Database of Accredited Postsecondary Institutions and Programs</a>.</p>
<h2>What job market opportunities exist for graduates?</h2>
<p>Traditional colleges and universities move slowly. It can take years for a new degree program to be developed and made available to students. One area where for-profits do comparatively well is <a href="https://evolllution.com/opinions/curve-competitive-advantages-for-profit-colleges/">responding to current opportunities in the job market</a>. The Bureau of Labor Statistics’ <a href="https://www.bls.gov/ooh/">Occupational Outlook Handbook</a> provides information about salary, work environment and educational requirements for hundreds of occupations. If your ideal career’s degree obligations cannot be met by a nonprofit institution, a for-profit provider could possibly help. </p>
<p>An important caveat: For most established majors, employers do not view degrees from for-profit universities favorably. <a href="https://onlinelibrary.wiley.com/doi/abs/10.1002/pam.21863">One study</a> found that people whose resumes listed no postsecondary degree whatsoever had the same chances of landing a job interview as those who graduated from a for-profit college. <a href="https://www.nber.org/papers/w20528.pdf">Other research</a> shows among people with bachelor’s degrees in business, the chances of getting an interview are around 22% lower for online for-profit graduates compared to those from nonselective public universities.</p>
<h2>Why should anyone attend a for-profit?</h2>
<p>Sustainable for-profit colleges and universities don’t try to copy traditional schools. <a href="https://files.eric.ed.gov/fulltext/ED536282.pdf">They do something different</a>, often for a different population of students. Some for-profits have found success <a href="https://www.educationdive.com/news/how-strayer-is-using-partnerships-viral-courses-to-transcend-for-profit/416015/">partnering with employers</a> to create skill-based content to develop and retain a capable workforce. Others have experimented with self-paced <a href="https://www.insidehighered.com/digital-learning/article/2019/08/28/students-move-faster-and-spend-less-direct-assessment-programs">competency-based programs</a> that allow experienced students to earn degrees quicker. </p>
<p>Despite the controversy surrounding this sector, for-profit schools might be a useful choice for some. Anyone planning to enroll in postsecondary education should seek out independent sources of information about their options. But when considering whether to attend a for-profit, prospective students should be particularly careful.</p>
<p>[<em>Get the best of The Conversation, every weekend.</em> <a href="https://theconversation.com/us/newsletters/weekly-highlights-61?utm_source=TCUS&utm_medium=inline-link&utm_campaign=newsletter-text&utm_content=weeklybest">Sign up for our weekly newsletter</a>.]</p><img src="https://counter.theconversation.com/content/134872/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>For-profit colleges have a history of deceptive practices that have left thousands of students in the lurch, two higher education scholars warn.Molly Ott, Associate Professor of Higher & Postsecondary Education, Arizona State UniversityDerrick Anderson, Associate Professor of Public Policy, Arizona State UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1150232019-06-10T19:54:54Z2019-06-10T19:54:54ZFor-profit education is the leading cause of America’s student debt crisis<figure><img src="https://images.theconversation.com/files/267827/original/file-20190405-180036-65515r.jpg?ixlib=rb-1.1.0&rect=0%2C29%2C1500%2C970&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">U.S. student debt is estimated at about $1,5 trillion.</span> <span class="attribution"><span class="source">Arena/Shutterstock</span></span></figcaption></figure><p>As of February 2019, student debt in the United States was more than <a href="https://www.forbes.com/sites/zackfriedman/2019/02/25/student-loan-debt-statistics-2019/">$1.5 trillion</a>. The rapid growth of America’s student debt is a cause for concern for numerous observers, who fear the outbreak of a financial crisis.</p>
<p>The ever-increasing cost of higher education, combined with a reduction in public subsidies, has meant that students have resorted to loans en masse. This type of debt is very different than other loans contracted by US households, however. Unlike consumer loans or mortgages, higher-education loans in theory enable the accumulation of human capital and can enable graduates to earn higher incomes in the future.</p>
<p><a href="https://www.oecd-ilibrary.org/education/education-at-a-glance_19991487">OECD studies</a> clearly show that individual investment in higher education can be strongly rewarded. In the United States, <a href="https://files.eric.ed.gov/fulltext/ED524299.pdf">Georgetown University</a> has demonstrated that over their lifetimes, graduates with a bachelor’s degree can expect to earn around $1,300,000 more than those without one, and even at the beginning of their careers, they can earn more than <a href="https://www.naceweb.org/job-market/compensation/the-difference-a-masters-degree-can-have-on-starting-salary/">$50,000</a> annually. With this additional income, the average student loan – around <a href="https://studentloanhero.com/student-loan-debt-statistics/">$30,000</a> – can easily be paid back.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/279092/original/file-20190612-32351-1uy077j.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/279092/original/file-20190612-32351-1uy077j.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/279092/original/file-20190612-32351-1uy077j.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=347&fit=crop&dpr=1 600w, https://images.theconversation.com/files/279092/original/file-20190612-32351-1uy077j.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=347&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/279092/original/file-20190612-32351-1uy077j.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=347&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/279092/original/file-20190612-32351-1uy077j.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=436&fit=crop&dpr=1 754w, https://images.theconversation.com/files/279092/original/file-20190612-32351-1uy077j.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=436&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/279092/original/file-20190612-32351-1uy077j.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=436&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Investment in high-quality advanced education remains highly beneficial. In the United States, nearly 70% of workers aged 25-64 who have a masters degree or higher earn more than the median income.</span>
<span class="attribution"><a class="source" href="https://www.oecd-ilibrary.org/sites/eag-2018-en/1/2/2/4/index.html?itemId=/content/publication/eag-2018-en&_csp_=f25abc58c25319ce4c8c74d26c3f40dd&itemIGO=oecd&itemContentType=book">OECD</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<p>Surprisingly, <a href="https://www.brookings.edu/research/the-looming-student-loan-default-crisis-is-worse-than-we-thought/">Judith Scott-Clayton</a> of Columbia University has observed that the larger the loan, the fewer problems the student is likely to have with repayments. This can be explained by the fact that while top US universities are private institutions and expensive, they offer good career prospects. Human capital investment in high-quality higher education is therefore a good thing for the future of both young people and society (public and private gains are high), even if this means taking on significant debt.</p>
<h2>Default rates remain high</h2>
<p>Given that 81% of American student debt is financed by the federal government, it doesn’t have the same capacity to provoke a systemic crisis, as did the subprime disaster. </p>
<p>While this means that the amount of student debt is not a problem in and of itself, defaults on repayments have sharply increased. The <a href="https://www.newyorkfed.org/microeconomics/databank.html">Federal Reserve Bank of New York</a> indicated that the rate of serious delinquencies had risen from 6.03% in the first quarter of 2006 to 11.38% in the third quarter of 2013. The 2007-2009 economic crisis had a significant impact on employment in the United States, including for those with a graduate degree. What is surprising is that the rate of delinquency remained high, at 11.42% in December 2018, although employment rates improved considerably.</p>
<p>Using detailed data provided by the Department of Education, <a href="https://www.brookings.edu/research/the-looming-student-loan-default-crisis-is-worse-than-we-thought/">Scott-Clayton</a> showed that repayment defaults are particularly frequent when it comes to for-profit institutions. Her predictions are pessimistic: the default rate for borrowers who attended a for-profit college could reach 70% by 2023, she estimated, far higher than the default rate following graduation from a bachelor’s degree from a public institution or private nonprofit institution.</p>
<h2>$400,000 in advertising per day</h2>
<p>In his book, <a href="https://www.researchgate.net/publication/314977391_Diploma_mills_How_for-profit_colleges_stiffed_students_taxpayers_and_the_American_dream_by_AJ_Angulo"><em>Diploma Mills: How For-Profit Colleges Stiffed Students, Taxpayers and the American Dream</em></a>, Alexander Angulo details these institutions’ often-unscrupulous practices, dating back to the 18th century. He notes that their drive for profit is difficult to reconcile with professional and academic standards:</p>
<blockquote>
<p>“If you’re dependent on quarterly profits, tuition revenue, if your main goal is to [impress] investors, this distorts the fundamental purpose of higher education.”</p>
</blockquote>
<p>In a 2018 study carried out for the US Treasury, <a href="https://www.nber.org/papers/w22287">Nicolas Turner and Stephanie Riegg</a> observed that on average, the revenue gap between those who attended a for-profit college and those with no higher education is statistically insignificant. This means that a large number of the courses provided by these institutions do not meet the needs of the economy. Based the definition of the <a href="http://www.oecd.org/fr/education/innovation-education/1870581.pdf">OECD</a>, their investment in human capital is essentially non-existent.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/267167/original/file-20190402-177181-xc4f6t.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/267167/original/file-20190402-177181-xc4f6t.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=416&fit=crop&dpr=1 600w, https://images.theconversation.com/files/267167/original/file-20190402-177181-xc4f6t.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=416&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/267167/original/file-20190402-177181-xc4f6t.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=416&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/267167/original/file-20190402-177181-xc4f6t.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=523&fit=crop&dpr=1 754w, https://images.theconversation.com/files/267167/original/file-20190402-177181-xc4f6t.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=523&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/267167/original/file-20190402-177181-xc4f6t.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=523&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">In 2012, the for-profit Phoenix University was Google’s top advertiser.</span>
<span class="attribution"><span class="source">Ken Wolter/Shutterstock</span></span>
</figcaption>
</figure>
<p>It is thus important to ask why these institutions have had such significant success, <a href="https://nces.ed.gov/ipeds/TrendGenerator/app/answer/2/3?f=1%3D3">quadrupling enrollment</a> between 2002 and 2010 (from 382,600 to 1,590,000 students for bachelor’s degrees or equivalent, and higher). Here are a few possible explanations:</p>
<ul>
<li><p>They mainly target relatively vulnerable and poorly informed populations – African-Americans, low-income people, first-generation students (whose parents never went to university) – and bought their perceived legitimacy through advertising. For example, in 2012, Phoenix University was Google’s number-one advertiser, spending nearly <a href="https://www.reuters.com/article/net-us-forprofitcolleges-analysis-idUSBRE8AR0FJ20121128">$400,000 per day</a>.</p></li>
<li><p>They have benefited from the unwitting support of the US government, which grants federal loans almost systematically, without checking the level of human capital acquired by students. Banks would likely have been more cautious.</p></li>
<li><p>The Great Recession (2007-2009) created a counter-cyclical increase in the demand for education (job seekers needed to be better trained, given the drop in demand for workers and the drop in opportunity cost for undertaking studies), which gave these institutions a significant boost.</p></li>
</ul>
<h2>Predatory behavior</h2>
<p>Over the last few years, numerous for-profit colleges have been taken to court for duplicitous and misleading practices. 98.6% of complaints received by the <a href="https://tcf.org/content/report/college-complaints-unmasked/?agreed=1">Department of Education</a> concern for-profit institutions. Before it disappeared, the private group Corinthian Colleges was forced to pay a fine of <a href="https://www.forbes.com/sites/schoolboard/2018/03/19/for-profit-colleges-teachable-moment-terrible-outcomes-are-very-profitable/">$30 million</a> for false advertising, in particular with regards to its claims about graduate jobs. The crisis in reputation and the counter-cyclical effect of the economic upturn led to a drop of <a href="https://nces.ed.gov/ipeds/TrendGenerator/app/answer/2/3?f=1%3D3">679,000 students</a> enrolled in for-profit colleges, down 43% between 2010 and 2017. Over the same period, enrollments in public universities rose 11.7%, with a 6.2% increase for nonprofit private universities. The for-profit college bubble is illustrated by the changes in <a href="https://nces.ed.gov/ipeds/TrendGenerator/app/answer/2/3?f=1%3D3">enrollment since 2002</a>.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/267161/original/file-20190402-177196-eh8p0y.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/267161/original/file-20190402-177196-eh8p0y.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/267161/original/file-20190402-177196-eh8p0y.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=323&fit=crop&dpr=1 600w, https://images.theconversation.com/files/267161/original/file-20190402-177196-eh8p0y.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=323&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/267161/original/file-20190402-177196-eh8p0y.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=323&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/267161/original/file-20190402-177196-eh8p0y.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=406&fit=crop&dpr=1 754w, https://images.theconversation.com/files/267161/original/file-20190402-177196-eh8p0y.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=406&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/267161/original/file-20190402-177196-eh8p0y.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=406&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Changes in enrollment in for-profit colleges (courses of four or more years).</span>
<span class="attribution"><a class="source" href="https://nces.ed.gov/ipeds/TrendGenerator/app/answer/2/3?f=1%3D3">Nces.ed.gov</a></span>
</figcaption>
</figure>
<p>Lastly, market logic indicates that there could well be a coming implosion for the for-profit sector in US higher education, similar to the subprime crisis. In both cases, loans were granted to vulnerable populations for untenable projects (either in education or real estate). The collapse of the for-profit sector should naturally resolve graduates’ loan repayment problems, but this will take several years.</p>
<p>To prevent unscrupulous for-profit institutions from taking advantage of those who are most vulnerable, stricter regulations are required. In particular, the quality of courses and their relevance to market needs must be rigorously checked. Arne Duncan, education secretary under Barack Obama, wanted to curb the excesses of those he called “bad actors” (mainly for-profit institutions). But the system created for this purpose, the <a href="https://www.usnews.com/education/blogs/student-loan-ranger/2015/07/08/what-the-new-gainful-employment-rule-means-for-college-students">“Gainful Employment Rule”</a>, did not come into effect prior to Donald Trump’s election. The current president has ensured the rule is not enforced.</p>
<hr>
<p><em>Translated from the French by Alice Heathwood for Fast ForWord.</em></p><img src="https://counter.theconversation.com/content/115023/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jean-Philippe Ammeux ne travaille pas, ne conseille pas, ne possède pas de parts, ne reçoit pas de fonds d'une organisation qui pourrait tirer profit de cet article, et n'a déclaré aucune autre affiliation que son organisme de recherche.</span></em></p>Student loan defaults have risen sharply, and the number-one reason is deceptive and misleading practices by for-profit institutions.Jean-Philippe Ammeux, Directeur, IÉSEG School of ManagementLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/958342018-05-09T10:33:00Z2018-05-09T10:33:00ZAvoid high student debt and dropping out by asking these 4 questions about any college<figure><img src="https://images.theconversation.com/files/217949/original/file-20180507-46347-1drt6ky.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">High student debt levels and low salaries can make it difficult for graduates to get ahead.</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/recent-college-graduate-surprised-about-tuition-157494935">Burlingham/www.shutterstock.com</a></span></figcaption></figure><p>Even though for-profit colleges get a bad rap for being <a href="https://www.nytimes.com/2017/12/21/us/politics/for-profit-universities-debt-relief-devos.html">predatory</a> and leaving students saddled with debt but no degree, a significant number of private nonprofit and public colleges have the same issues.</p>
<p>For example, <a href="https://ticas.org/sites/default/files/pub_files/colleges_where_most_students_borrow_and_few_repay.pdf">a recent analysis</a> examined 781 colleges where most students borrow and few can repay their loans. While the analysis found that 73 percent of those schools were for-profit colleges, it also identified 209 private nonprofit and public colleges with low completion rates and heavy borrowing.</p>
<p>So, how can prospective students identify problematic colleges that will likely saddle them with debt and where few of their fellow students will graduate? As a <a href="https://scholar.google.com/citations?user=i_l5SU4AAAAJ&hl=en%20or%20can%20use%20this%20webiste:%20http://www.bu.edu/sed/profile/jake-murray/">policy analyst</a> who examines issues of quality and equity in higher education, I suggest four questions students should ask when exploring which college to attend. </p>
<h2>1. How selective is the college?</h2>
<p>Many higher education institutions have a mission to educate as many students as possible - especially public and state systems - and thus have high acceptance rates. But other schools have high acceptance rates because they are motivated by the need for revenue.</p>
<p>For example, many private nonprofits with small endowments depend heavily on tuition. These colleges <a href="https://www.forbes.com/sites/maggiemcgrath/2014/07/30/the-invisible-force-behind-college-admissions/#56f1b15370a5">aggressively</a> seek to bring more students through the door who can pay tuition, whether out of pocket or through loans, even though many of these students are not <a href="http://www.highereducation.org/reports/college_readiness/CollegeReadiness.pdf">“college ready,”</a> and need to take remedial courses and struggle academically. </p>
<p>If the college in question is nonselective, the next three questions take on added importance. </p>
<h2>2. Do most students borrow?</h2>
<p>If a school is likely to leave you with a four-year debt of US$37,000 (the national average) or higher, the school might be too expensive or have limited aid to offer. Or it might aggressively push students to take loans.</p>
<p>The majority of students borrow some amount to finance their education. But depending on annual tuition and limited forms of other aid, colleges can hamstring students with sizable debt after graduation that then has a drag effect.</p>
<p>A recent study found that graduates with loans of $10,000 or more reach the national median net worth at a rate <a href="https://www.marketwatch.com/story/heres-how-much-an-extra-10000-in-student-debt-will-set-you-back-over-your-lifetime-2016-10-26">26 percent slower</a> than those without this debt level. Therefore, if a particular college requires you to borrow heavily, the next two questions will help determine if the debt is worth the gamble. </p>
<h2>3. Do students finish?</h2>
<p>If a given school’s six-year graduation rate – a <a href="https://nscresearchcenter.org/">national benchmark</a> for college completion – trails the national average of 59 percent for four-year colleges, there could be trouble.</p>
<p>For many students, failing to complete college in six years means not only carrying debt but carrying debt without receiving a <a href="https://www.usatoday.com/story/money/nation-now/2016/07/04/college-debt-no-degree-drop-out-regret-default-loans/86576186/">degree or credential</a>, which means decreased job prospects. And for dropout students who seek to continue their education elsewhere, <a href="https://www.usnews.com/news/national-news/articles/2016-11-22/when-credits-dont-count-transfer-students-face-debt-more-classes">transferring credits</a> can be a challenge. </p>
<h2>4. How much will I earn?</h2>
<p>While on average graduates will be $37,000 in debt, at some schools they can expect to earn relatively low annual salaries – that is, somewhere between $30,000 and $40,000 – 10 years from when they first enrolled at their college. Of course, earnings will vary across professions and graduates. But low earnings make it <a href="https://www.brookings.edu/research/the-trouble-with-student-loans-low-earnings-not-high-debt/">challenging for students to pay off their debt</a>. A general rule of thumb is that a student’s total debt <a href="https://www.washingtonpost.com/news/grade-point/wp/2018/02/24/how-much-is-too-much-to-pay-for-college/?noredirect=on&utm_term=.62784299a229">should not exceed their anticipated annual salary</a>. Thus, students should make the quick calculation of whether anticipated jobs and earnings 10 years after graduation are worth the anticipated debt.</p>
<p>Answers to these four questions are publicly available online through the U.S. Department of Education’s <a href="https://collegescorecard.ed.gov/">College Scorecard</a>.</p><img src="https://counter.theconversation.com/content/95834/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jake Murray does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>In order to avoid colleges where graduates owe so much and earn so little that they can hardly pay back their student loans, students should ask these key questions about any college they plan to attend.Jake Murray, Faculty Director for Professional Education, BU School of Education, Boston UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/926422018-03-07T11:43:13Z2018-03-07T11:43:13ZPurdue-Kaplan deal blurs lines between for-profit and public colleges<figure><img src="https://images.theconversation.com/files/209198/original/file-20180306-146697-1whjhfa.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Purdue Global is the name of a new online education venture that involves Purdue and Kaplan universities.</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/download/confirm/733727227?src=p4-2Sxtn0WHyLiGhA5SDgw-1-0&size=huge_jpg">Shutterstock.com</a></span></figcaption></figure><p>As far as universities go, Kaplan and Purdue could not have been more different.</p>
<p>Kaplan University, which operated under parent company Graham Holdings, a <a href="https://finance.yahoo.com/quote/GHC/">$3.2 billion corporation</a>, was part of the troubled for-profit college sector. </p>
<p>Purdue is generally considered <a href="https://www.usnews.com/best-colleges/purdue-1825/overall-rankings">one of the best public universities in the United States</a> and <a href="https://www.timeshighereducation.com/world-university-rankings/purdue-university">the world</a>.</p>
<p>Be that as it may, the two schools joined forces in a remarkable union that was <a href="https://www.purdue.edu/newsroom/releases/2018/Q1/purdue-university-receives-hlc-approval-for-purdue-global.html">formally approved</a> this week by the Higher Learning Commission, the agency that accredits both institutions.</p>
<p>The move enables Kaplan to shed its for-profit status and the stigma associated with it. In a sense, you might think of Kaplan as having married up.</p>
<p>Many for-profit institutions have converted to nonprofit status, and vice versa. But this is the first time a publically traded for-profit university has become part of a state system of higher education.</p>
<h2>Leaving the for-profit sector</h2>
<p>It’s not hard to understand why Kaplan would want to ditch the for-profit label. The for-profit sector has <a href="https://nces.ed.gov/programs/coe/indicator_cha.asp">declined dramatically</a> since its height in 2010. Enrollment crumbled under <a href="https://www.gao.gov/products/GAO-10-948T">accusations</a> that for-profits provided low-quality education and used fraud and deception to recruit unwitting students, leaving many in debt and unable to get a job to pay back loans. After new regulations and oversight added unprecedented levels of accountability, large for-profits like Corinthian Colleges and ITT Technical Institute <a href="https://www.insidehighered.com/news/2016/09/07/itt-tech-shuts-down-all-campuses">declared bankruptcy</a> due to cash-flow problems related to legal issues and restrictions in access to federal financial aid. Kaplan gains a lot from turning to Purdue and leaving the for-profit world behind. </p>
<p>Last year, Purdue agreed to take over Kaplan University as its online education arm. Unlike Kaplan’s interest in moving away from for-profit status, Purdue’s decision to fold a for-profit college into its operation was <a href="https://www.insidehighered.com/digital-learning/article/2017/05/03/perspectives-field-purdue-kaplan-marriage">surprising</a>. But why would Purdue link arms with a for-profit institution?</p>
<p>In his <a href="https://www.youtube.com/watch?v=3_fTzHb_-ek&feature=youtu.be">presentation announcing the deal</a>, Purdue President Mitch Daniels framed the move as an extension of his university’s public mission. He argued that as a land-grant university, Purdue provides broad access to higher education, but that there are still millions of students who are not being served. Online education can be a solution to this problem, but Daniels argued that Purdue could not build enough capacity quickly enough to address the need on its own. Daniels concluded that Purdue needed to buy that capacity from a school that already had it. </p>
<p>That school ended up being Kaplan University. For the <a href="https://www.edsurge.com/news/2017-05-16-why-donald-graham-sold-kaplan-university-to-purdue-for-1">bargain price of just one dollar</a>, Purdue acquired Kaplan’s programs, students and faculty. A separate board of trustees will govern Purdue Global, the name of this new online education endeavor. Board members will be selected by Purdue, <a href="https://www.purduenewu.org/faq/">according to the university</a>. Indiana students are eligible for in-state tuition for all Purdue Global programs just like at other public institutions in the state. Other than that and changing the name to Purdue Global on their diploma, most other aspects of the Kaplan University student experience will continue into <a href="https://www.purduenewu.org/faq/">Purdue Global</a>.</p>
<h2>The nature of the deal</h2>
<p>Kaplan Higher Education – the for-profit company that remains after the transfer of Kaplan University – will enter into a 30-year contract with Purdue to provide support services. These services include not just technology and administrative support, but also central university activities such as recruiting, admissions and financial aid. </p>
<p>The <a href="http://www.ghco.com/phoenix.zhtml?c=62487&p=irol-SECText&TEXT=aHR0cDovL2FwaS50ZW5rd2l6YXJkLmNvbS9maWxpbmcueG1sP2lwYWdlPTEyMDgwOTExJkRTRVE9MCZTRVE9MCZTUURFU0M9U0VDVElPTl9FTlRJUkUmc3Vic2lkPTU3">service contract</a> – and Purdue’s outsourcing of its online learning operations to a for-profit vendor – is key to understanding the deal. Dozens of prominent universities have made similar deals, usually with <a href="https://tcf.org/content/report/private-side-public-higher-education/">less transparency</a> than what Purdue has provided.</p>
<p>For example, over the last decade, the <a href="https://rossier.usc.edu/usc-rossier-extends-partnership-with-2u/">University of Southern California has contracted with the for-profit company 2U</a>. Under a long-term contract, 2U provides support for the technical development of courses and degree programs, admissions, student recruitment and student advising. The degrees are from USC but just about everything else that gets students into the programs and keeps them there comes from 2U.</p>
<p>Other companies, like StraighterLine, <a href="https://www.straighterline.com/how-it-works/how-to-earn-college-credits/">offer online general education courses</a> to students directly. Over 100 partner institutions then accept them as transfer credit for their own degrees. The international student market is served by private companies like Navitas and Shorelight Education. They contract with universities via <a href="https://www.insidehighered.com/news/2017/05/26/report-looks-perceptions-third-party-pathway-programs-international-students">pathway programs</a> to recruit foreign students and prepare them to enter into degree programs. Kaplan is a <a href="https://www.insidehighered.com/news/2017/05/26/report-looks-perceptions-third-party-pathway-programs-international-students">major player</a> among pathway program providers but they are not selling that part of the business to Purdue.</p>
<p>The conversion of a for-profit university into a public institution of higher education is only half the Purdue-Kaplan story. The other half is about privatizing core aspects of higher education. The Purdue-Kaplan merger should put both issues in the spotlight.</p><img src="https://counter.theconversation.com/content/92642/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Kevin Kinser does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>A deal that allows Kaplan University to shed its for-profit status and join Purdue University may represent a new way for troubled for-profit colleges to survive.Kevin Kinser, Professor of Education Policy Studies, Penn StateLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/909992018-02-04T18:07:13Z2018-02-04T18:07:13ZVice-chancellors’ salaries are just a symptom of what’s wrong with universities<figure><img src="https://images.theconversation.com/files/204687/original/file-20180204-19933-4pjhrm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">shutterstock</span></span></figcaption></figure><p>The recent <a href="https://www.theguardian.com/education/2017/nov/28/bath-university-vice-chancellor-quits-after-outcry-over-468k-pay">furore</a> over the UK’s highest-paid vice-chancellor, Bath University’s Dame Glynis Breakwell, exposes much that is wrong with higher education. </p>
<p>The case has drawn public attention to the inflated salaries of vice-chancellors and the huge wage disparities between managers and low-paid casual academics. In some cases, vice-chancellors in Australia take home more in <a href="https://www.ngarainstitute.org.au/articles/2016/11/2/the-great-divide-the-new-fat-cats-in-australias-universities">one week</a> than a casual employee earns in a year. </p>
<p>Interestingly, the majority of vice-chancellors in both the UK and Australia are male. On the whole they earn significantly more than their female counterparts. </p>
<p>What has led to this great divide? What is driving inequality across the sector? And how do these wage disparities compare to the private sector? </p>
<h2>University fat cats</h2>
<p>While Breakwell’s annual salary of A$812,000 created a storm, Australia’s highest-paid vice-chancellors take home around 1.5 times that. In fact, Breakwell’s salary would <a href="https://www.theguardian.com/australia-news/2018/jan/22/pay-of-australian-university-heads-called-into-question-after-uk-protest">rank 28th</a> in Australia out of 38 public university vice-chancellors.</p>
<p>These 38 vice-chancellors <a href="https://www.theaustralian.com.au/higher-education/uni-vicechancellors-average-salary-package-hits-890000/news-story/f01aaa072fe5a7ceaa0c2d8154f282fb">were paid</a> an average A$890,000 in 2016. Twelve earned more than A$1 million. The best-paid vice-chancellor was Sydney University’s Professor Michael Spence, who received A$1.4 million, after a 56% increase over five years. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/204751/original/file-20180204-19961-12sk8mz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/204751/original/file-20180204-19961-12sk8mz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/204751/original/file-20180204-19961-12sk8mz.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/204751/original/file-20180204-19961-12sk8mz.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/204751/original/file-20180204-19961-12sk8mz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/204751/original/file-20180204-19961-12sk8mz.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/204751/original/file-20180204-19961-12sk8mz.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Michael Spence (left), the vice-chancellor of Sydney University, is Australia’s highest-paid vice-chancellor.</span>
<span class="attribution"><span class="source">AAP/Dan Himbrechts</span></span>
</figcaption>
</figure>
<p>Professor Greg Craven at the Australian Catholic University followed on the heels of Spence, earning A$1.25 million. Just behind Craven was Professor Ian Jacobs at UNSW on A$1.22 million. The lowest remuneration went to vice-chancellors at Southern Cross (A$500,000) and Murdoch universities (A$585,000). </p>
<p>In addition to these lucrative salaries, many vice-chancellors get performance-related bonuses. </p>
<p>By comparison, vice-chancellors at a number of prestigious UK universities earn considerably less. The vice-chancellor of England’s Oxford University – which <a href="https://www.timeshighereducation.com/world-university-rankings/2018/world-ranking#!/page/1/length/25/sort_by/rank/sort_order/asc/cols/stats">topped the Times Higher Education World University Rankings in 2018</a> – was paid £350,000 (A$616,000). The vice-chancellor at Cambridge University received £349,000 (A$614,000) in 2016. </p>
<p>In fact, <a href="https://www.chronicle.com/interactives/executive-compensation#id=table_private_2014">university bosses</a> in Australia are among the <a href="https://www.chronicle.com/article/39-Private-College-Leaders/238561">highest paid in the world</a>. They also fare extremely well when compared to other public sector employees in Australia. Prime Minister Malcolm Turnbull earns less than all but one vice-chancellor, <a href="http://www.abc.net.au/news/2017-06-23/politicians-under-fire-for-pay-increases-while-penalty-rates-cut/8646872">taking home</a> around A$527,000 a year. </p>
<p>Despite repeated <a href="https://www.senatorbirmingham.com.au/sustainability-and-excellence-in-higher-education/">federal budget cuts</a>, job cuts and rising student fees, vice-chancellors’ salaries continue to grow. Much of this can be attributed to the mindset of university councils. They are often comprised of business leaders, retired politicians, senior university managers and senior academics who set salary levels by <a href="http://onlinelibrary.wiley.com/doi/10.1111/j.1467-8543.2008.00689.x/full">benchmarking</a> against comparable positions in other corporate sectors. </p>
<p>Central to this calculus is income generation and the achievement of a surplus. That’s duly rewarded by a performance-related salary bonus. </p>
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<strong>
Read more:
<a href="https://theconversation.com/universities-get-an-unsustainable-policy-for-christmas-89307">Universities get an unsustainable policy for Christmas</a>
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<p>The recent acceleration of vice-chancellors’ salaries stands in contrast to the remuneration of Australia’s highest-earning CEOs, with the median <a href="https://www.businessinsider.com.au/australias-10-highest-paid-ceos-in-the-asx-100-2016-8">top 100</a> down 5.2% in 2016 to A$1.72 million. </p>
<h2>The glass ceiling</h2>
<p>While Breakwell is the UK’s highest-paid vice-chancellor, women remain under-represented in the sector. They also receive lower pay than their male counterparts. </p>
<p>In the UK, only <a href="http://www.universityrankings.com.au/vice-chancellor-salary-packages.html">29% of vice-chancellors are women. In Australia, women occupy just 25%</a> of these positions.</p>
<p>In Australia, women vice-chancellors receive an average income of A$831,000 – A$42,000 less than their male peers. Only one female vice-chancellor – Professor Margaret Gardner at Monash University – earns more than A$1 million, compared to nine men. </p>
<h2>Well-paid VCs sell the corporate university</h2>
<p>Growing academic wage disparities have coincided with more intense global market competition for students and research funding. International students, who pay <a href="http://alluniversities.com.au/tuition-fees-list.html">up to three times more in upfront fees</a> than their domestic peers, now comprise Australia’s <a href="https://www.universitiesaustralia.edu.au/Media-and-Events/media-releases/Australia-s-education-exports-at-record-high#.WnaHFZP1VsN">third-largest export</a>, worth around AU$21.8 billion a year. </p>
<p>It’s little wonder that universities run multi-million-dollar marketing campaigns to “strategically differentiate” themselves in order to gain greater “market share”. </p>
<p>At the <a href="https://www.researchgate.net/publication/309558101_Introduction_Challenging_the_Privatised_University">corporate</a>, fiscally driven university, the ability of vice-chancellors and their senior colleagues to generate income is pivotal. This is evidenced in vice-chancellor job descriptions and selection criteria that appear occasionally in flashy brochures. </p>
<h2>Salaries a symptom</h2>
<p>Federal Education <a href="https://www.senatorbirmingham.com.au/interview-on-2gb-breakfast-with-steve-price/">Minister Simon Birmingham</a> has used the controversy around inflated salary packages to attack the sector, demanding universities show they’re creating value-for-money to justify such remuneration. </p>
<p>But demanding value-for-money from vice-chancellors alone is a distraction from the far bigger challenge of addressing the institutional inequities that span across Australian universities. These inequities - of which salaries are part - constrain university research and education <a href="http://www.researchcghe.org/publications/public-goods-and-public-policy-what-is-public-good-and-who-and-what-decides/">in the service of the public good</a>. </p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/a-focus-on-private-investment-means-universities-cant-fulfil-their-public-role-45094">A focus on private investment means universities can't fulfil their public role</a>
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<hr>
<p>The higher education policy of successive governments has played a significant role in driving this inequality, as well as creating the conditions for the corporatisation of universities. Fat-cat salaries are just a symptom of the corporate model, not the cause.</p>
<hr>
<p><em>The image of Michael Spence has been corrected since publication. We apologise for the error.</em></p><img src="https://counter.theconversation.com/content/90999/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Richard Hil is the Convenor of the Ngara Institute.</span></em></p><p class="fine-print"><em><span>Kristen Lyons does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Vice-chancellors often benchmark their salaries against comparable positions in other corporate sectors, a symptom of the trend towards the corporatisation of universities in Australia.Kristen Lyons, Associate Professor Environment and Development Sociology, The University of QueenslandRichard Hil, Adjunct Associate Professor, School of Human Serivces and Social Work, Griffith UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/827232017-08-25T01:23:16Z2017-08-25T01:23:16ZWhy students need better protection from loan fraud<figure><img src="https://images.theconversation.com/files/182856/original/file-20170821-26863-1j6vju0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">How can we help the tens of thousands of college students who have been defrauded?</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/portrait-homeless-teenage-girl-on-street-268224728?src=6RgKpr6d7wbQApJwPDl5WQ-1-37">SpeedKingz/Shutterstock.com</a></span></figcaption></figure><p>A college education can set you up for a lifetime – though it can come with a hefty price tag: Some unfortunate students have gotten both a mountain of debt and an education that falls far short of their expectations.</p>
<p>Across the nation, a few for-profit colleges have been <a href="https://www.consumerfinance.gov/about-us/newsroom/consumer-financial-protection-bureau-takes-action-against-bridgepoint-education-inc-illegal-student-lending-practices/">deceiving students</a> into taking out private loans that cost more than advertised. Others have made <a href="http://www.fox8live.com/story/33730398/degree-of-debt-as-for-profit-college-students-struggle-school-leaders-are-getting-rich">false claims</a> about job placement rates or have offered credits that don’t transfer and – in some cases –<a href="http://www.denverpost.com/2013/12/05/argosy-university-denver-fined-3-3-million-for-deceptive-practices/">don’t qualify students</a> for the licenses they need.</p>
<p><a href="http://time.com/money/collection-post/3573216/veterans-college-for-profit/">Veterans</a> have been particularly targeted, with schools eyeing their GI benefits. And for-profit colleges generally attract a higher percentage of <a href="http://www.ihep.org/sites/default/files/uploads/docs/pubs/portraits-low-income_young_adults_attendance_brief_final_june_2011.pdf">low-income students</a>, making these students targets as well.</p>
<p>As a scholar of educational law and policy, I’ve spent many years studying student loans and the debt crisis. What’s clear is that students who have been victimized by fraud (particularly in the for-profit sector) need help when it comes to getting the justice they deserve.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/182842/original/file-20170821-28104-imsrce.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/182842/original/file-20170821-28104-imsrce.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/182842/original/file-20170821-28104-imsrce.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=393&fit=crop&dpr=1 600w, https://images.theconversation.com/files/182842/original/file-20170821-28104-imsrce.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=393&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/182842/original/file-20170821-28104-imsrce.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=393&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/182842/original/file-20170821-28104-imsrce.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=494&fit=crop&dpr=1 754w, https://images.theconversation.com/files/182842/original/file-20170821-28104-imsrce.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=494&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/182842/original/file-20170821-28104-imsrce.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=494&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">California Attorney General Kamala Harris successfully sued Corinthian Colleges for misrepresenting job placement rates and school programs to lure low-income state residents.</span>
<span class="attribution"><span class="source">AP Photo/Eric Risberg</span></span>
</figcaption>
</figure>
<h2>Corinthian Colleges</h2>
<p>Corinthian Colleges, a California-based for-profit that filed for <a href="https://www.insidehighered.com/news/2015/05/05/corinthian-enters-bankruptcy-us-responds-debt-relief-calls">bankruptcy</a> in 2015, is one of the prime culprits when it comes to student loan fraud. Last year, the California attorney general’s office obtained a <a href="http://www.latimes.com/local/lanow/la-me-ln-corinthian-colleges-judgment-false-advertising-20160323-story.html">judgment</a> against Corinthian for more than a billion dollars after a judge ruled that the school had engaged in deceptive advertising and unlawful lending practices.</p>
<p>Federal authorities have also challenged Corinthian. In 2015, the Consumer Financial Protection Bureau obtained a <a href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-secures-480-million-in-debt-relief-for-current-and-former-corinthian-students/">40 percent reduction</a> in the private loans owed for tuition at Corinthian Colleges.</p>
<p>More recently, the U.S. Department of Education <a href="http://www.mass.gov/ago/docs/press/2017/borrower-defense-multistate-letter.pdf">discharged student loan debt</a> for over 27,000 students who enrolled in one of Corinthian’s programs, and it has promised debt relief to 23,000 more former students seeking debt relief based on allegations of fraud.</p>
<h2>Student loan forgiveness</h2>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/182845/original/file-20170821-8916-9cdyht.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/182845/original/file-20170821-8916-9cdyht.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/182845/original/file-20170821-8916-9cdyht.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=900&fit=crop&dpr=1 600w, https://images.theconversation.com/files/182845/original/file-20170821-8916-9cdyht.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=900&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/182845/original/file-20170821-8916-9cdyht.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=900&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/182845/original/file-20170821-8916-9cdyht.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1131&fit=crop&dpr=1 754w, https://images.theconversation.com/files/182845/original/file-20170821-8916-9cdyht.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1131&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/182845/original/file-20170821-8916-9cdyht.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1131&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Many students who were defrauded by for-profit colleges are still weighed down by debt.</span>
<span class="attribution"><span class="source">AP Photo/Jacquelyn Martin</span></span>
</figcaption>
</figure>
<p>Unfortunately, efforts by state and federal agencies haven’t brought full relief to everyone who was defrauded. Of the <a href="https://nces.ed.gov/programs/digest/d14/tables/dt14_105.50.asp">approximately 3,400 for-profit educational institutions</a> in the U.S., at least 28 have <a href="https://www.brookings.edu/opinions/lots-riding-on-ed-dept-standard-for-student-loan-forgiveness/">undergone investigation</a>. Four of the eight largest companies have faced <a href="https://doi.org/10.1007/s12115-012-9541-0">significant legal action</a> for unscrupulous recruiting or business practices.</p>
<p>Corinthian alone has more than <a href="https://www.nytimes.com/2015/06/09/education/us-to-forgive-federal-loans-of-corinthian-college-students.html">350,000 former students</a>; and ITT Tech, another for-profit that filed for bankruptcy amid a cloud of fraud accusations, had more than <a href="http://www.latimes.com/business/la-fi-itt-tech-20170103-story.html">35,000 students</a> when it closed.</p>
<p>Tens of thousands of students have filed claims with the U.S. Department of Education seeking relief from loans they took out to enroll in fraudulent institutions like Corinthian, but these claims haven’t been processed expeditiously. In fact, the department has <a href="http://www.kalb.com/content/news/Records-Student-loan-forgiveness-has-halted-under-Trump-436811883.html">dragged its heels</a> since Education Secretary Betsy DeVos took over. Not a single loan relief application has been approved this year and the Department is <a href="https://consumerist.com/2017/07/06/states-say-education-secretary-betsy-devos-broke-law-by-delaying-protections-for-student-loan-borrowers/">reexamining</a> the rule that allows students to petition for debt relief.</p>
<h2>Legal loopholes</h2>
<p>The student loan forgiveness rules are designed to expedite claims against fraudulent institutions. These rules are vital for students who haven’t been able to successfully file their own lawsuits when they believe a college has defrauded them.</p>
<p>Students have been trying to sue Corinthian, for example, over its deceptive conduct since at least 2006. But Corinthian, <a href="https://www.washingtonpost.com/news/grade-point/wp/2016/04/28/its-almost-impossible-for-students-to-sue-a-for-profit-college-heres-why/?utm_term=.5561d38e51c3">like many other for-profit schools</a>, used fine-print forced arbitration clauses in its student enrollment contracts to have such cases dismissed. Students are instead forced to bring their claims one by one before a private arbitrator – one agreed to by the school. Even if a student wins, the arbitrator has no power to change the school’s future practices or address students in the same situation.</p>
<p>Mandatory arbitration agreements are quite common in contracts for car loans and credit cards, but many believe they’re <a href="https://www.insidehighered.com/news/2017/06/26/advocates-say-department-inaction-forced-arbitration-leave-defrauded-borrowers-bind">fundamentally unfair in the education sector</a>, since such agreements force students to relinquish their right to sue for damages as a condition of enrollment.</p>
<p>Yet, in 2013 (two years before Corinthian filed for bankruptcy), the Ninth Circuit Court of Appeals ruled that an arbitration clause imposed on students at Corinthian Colleges <a href="http://cdn.ca9.uscourts.gov/datastore/opinions/2013/10/28/11-56965.pdf">was enforceable</a> and dismissed a class action lawsuit filed by students who claimed to have been injured by Corinthian’s deceptive practices.</p>
<p>Had the lawsuit – and others like it – been allowed to proceed in a public court, plaintiffs might have obtained judgments that would have forced Corinthian to change the way it recruited and served its students.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/182848/original/file-20170821-4987-12p0zii.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/182848/original/file-20170821-4987-12p0zii.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/182848/original/file-20170821-4987-12p0zii.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=246&fit=crop&dpr=1 600w, https://images.theconversation.com/files/182848/original/file-20170821-4987-12p0zii.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=246&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/182848/original/file-20170821-4987-12p0zii.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=246&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/182848/original/file-20170821-4987-12p0zii.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=309&fit=crop&dpr=1 754w, https://images.theconversation.com/files/182848/original/file-20170821-4987-12p0zii.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=309&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/182848/original/file-20170821-4987-12p0zii.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=309&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">ITT Technical Institute, a for-profit college that shuttered its campuses in 2016, included mandatory arbitration clauses in its student enrollment contracts.</span>
<span class="attribution"><a class="source" href="https://commons.wikimedia.org/wiki/File:ITT_Technical_Institute_campus_Canton_Michigan.JPG">Dwight Burdette</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<h2>Help is on the way</h2>
<p>Fortunately, some help is on the horizon – if Congress and Secretary DeVos don’t block it. Last year, the Education Department enacted a rule to protect defrauded students. Under this rule, schools that take federal aid <a href="https://www.nclc.org/images/pdf/special_projects/sl/defend-doe-borrower-def-rule.pdf">cannot use forced arbitration</a> to prevent students from pursuing fraud claims in court. But DeVos has <a href="http://www.condemnedtodebt.org/search/label/mandatory%20arbitration">delayed the rule</a> and is considering <a href="https://www.usatoday.com/story/money/2017/06/14/trump-administration-will-re-do-two-student-loan-rules/102856170/">reversing it</a>.</p>
<p>Although most for-profit colleges are opposed to a federal rule that bans mandatory arbitration, they are not unanimous. <a href="https://www.insidehighered.com/quicktakes/2016/05/20/apollo-eliminates-mandatory-arbitration-clauses">Apollo Education Group</a>, the parent company of the University of Phoenix, announced in 2016 that it would eliminate mandatory arbitration clauses in student-enrollment agreements. Greg Cappelli, Apollo’s CEO, said at the time that the decision “is the right choice for all of our students.” The same month, <a href="https://www.washingtonpost.com/news/grade-point/wp/2016/05/23/two-of-the-biggest-for-profit-colleges-are-making-it-easier-for-students-to-sue/">DeVry University</a> also decided to eliminate mandatory arbitration clauses.</p>
<p>The Consumer Financial Protection Bureau also just issued a <a href="https://www.consumerfinance.gov/about-us/blog/weve-issued-new-rule-arbitration-help-groups-people-take-companies-court/">new rule</a> that will restore the ability of students, <a href="http://www.fairarbitrationnow.org/wp-content/uploads/Fact-Sheet-Service-Member-and-Veterans.pdf">service members</a> and other consumers to band together in court when banks, student lenders and other financial companies act illegally. The rule has widespread support, including from <a href="https://www.nclc.org/images/pdf/arbitration/military-coalition-letter-arb-rule.pdf">The Military Coalition</a>, <a href="http://www.fairarbitrationnow.org/wp-content/uploads/2016/05/Coalition-Letter-on-Final-CFPB-Arb-Rule.pdf">310 consumer and community groups</a> and over <a href="http://www.fairarbitrationnow.org/wp-content/uploads/CFPB-academics-arbitration-letter-2017-7-10.pdf">250 law professors and academics</a>.</p>
<p>This new Consumer Financial Protection Bureau rule will not just help students. It would have prevented Wells Fargo, which created up to <a href="https://www.bloomberg.com/news/articles/2017-05-12/wells-fargo-bogus-account-estimate-in-suit-grows-to-3-5-million">3.5 million fake accounts</a>, from using forced arbitration clauses to <a href="http://www.latimes.com/business/la-fi-wells-fargo-arbitration-20151205-story.html">kick people out of court</a>, allowing the fraud to <a href="http://www.latimes.com/business/hiltzik/la-fi-hiltzik-wells-arbitration-20160926-snap-story.html">continue</a>.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/182851/original/file-20170821-4987-ayrgqe.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/182851/original/file-20170821-4987-ayrgqe.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/182851/original/file-20170821-4987-ayrgqe.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/182851/original/file-20170821-4987-ayrgqe.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/182851/original/file-20170821-4987-ayrgqe.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/182851/original/file-20170821-4987-ayrgqe.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/182851/original/file-20170821-4987-ayrgqe.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/182851/original/file-20170821-4987-ayrgqe.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">If the administration blocks the new rules, students will be in danger of losing their ability to have loans forgiven.</span>
<span class="attribution"><a class="source" href="https://flic.kr/p/aAhJCP">jjinsf94115</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-nd/4.0/">CC BY-NC-ND</a></span>
</figcaption>
</figure>
<h2>What’s next?</h2>
<p>Unfortunately, Wall Street lobbyists are pushing Congress to <a href="https://www.americanbanker.com/news/fight-over-cfpb-arbitration-rule-may-just-be-starting">block the Consumer Financial Protection Bureau rule</a> through legislation. The U.S. House of Representatives voted to do so in July, and it’s now up to the Senate to decide the rule’s fate.</p>
<p>Meanwhile, for-profit schools continue to fight against the borrower defense rules that ban mandatory arbitration clauses. In fact, <a href="https://www.insidehighered.com/news/2016/07/11/proposed-federal-rules-student-debt-forgiveness-worry-some-nonprofit-colleges">even some nonprofits</a>, including <a href="https://www.insidehighered.com/sites/default/server_files/files/HBCU_BorrowerDefense.pdf">historically black colleges</a>, are requesting changes to other aspects rule, believing it could leave them vulnerable to the financial drain of frivolous lawsuits.</p>
<p>Students deserve the right to be protected from fraud – and to seek relief from the courts when they aren’t. If left as they are, both the Consumer Financial Protection Bureau and Department of Education rules would protect that right.</p><img src="https://counter.theconversation.com/content/82723/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Richard Fossey does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Students across the country have been defrauded by for-profit schools. Fine print in their enrollment contracts has stopped them from bringing their cases to court, but new rules could help.Richard Fossey, Professor of Education, University of Louisiana at LafayetteLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/817932017-08-11T00:59:34Z2017-08-11T00:59:34ZBetsy DeVos’ 6-month report card: More undoing than doing<figure><img src="https://images.theconversation.com/files/181705/original/file-20170810-27649-uj8hzn.jpg?ixlib=rb-1.1.0&rect=1543%2C0%2C2887%2C1802&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Betsy Devos has been busy advancing a conservative education agenda since her confirmation earlier this year.</span> <span class="attribution"><span class="source">AP Photo/Jacquelyn Martin</span></span></figcaption></figure><p>Since the inauguration of Donald Trump, the news cycle has been dominated by stories of White House controversy: <a href="https://theconversation.com/trumps-revised-travel-ban-still-faces-legal-challenges-74141">a travel ban</a>, <a href="https://theconversation.com/facing-the-threat-from-north-korea-5-essential-reads-81873">North Korea</a>, <a href="https://theconversation.com/trump-isnt-letting-obamacare-die-hes-trying-to-kill-it-81373">health care</a> and more.</p>
<p>Meanwhile, Secretary of Education <a href="https://theconversation.com/who-is-betsy-devos-70843">Betsy DeVos</a> has been busy fulfilling her conservative agenda that seeks to broaden school choice and market-based schooling in pre-K through higher education.</p>
<p>As a researcher of education policy and politics, I’ve been following Secretary DeVos’ first six months in office. Here’s a quick look at what’s she’s done – and what’s been left in limbo.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/181706/original/file-20170810-27677-19dobnt.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/181706/original/file-20170810-27677-19dobnt.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/181706/original/file-20170810-27677-19dobnt.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/181706/original/file-20170810-27677-19dobnt.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/181706/original/file-20170810-27677-19dobnt.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/181706/original/file-20170810-27677-19dobnt.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/181706/original/file-20170810-27677-19dobnt.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Devos at her January 2017 confirmation hearing.</span>
<span class="attribution"><span class="source">AP Photo/Carolyn Kaster</span></span>
</figcaption>
</figure>
<h2>Student loan forgiveness</h2>
<p>Student loan forgiveness is one area in which DeVos seems to be changing direction from the Obama administration. In particular, she’s considering changes to the “<a href="https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancellation/borrower-defense">borrower defense to repayment</a>” regulations. These rules help students who have been defrauded or left in the lurch by university closures.</p>
<p>The Trump administration has approved none of the more than 15,000 applications it has received for loan forgiveness. An estimated <a href="https://www.forbes.com/sites/zackfriedman/2017/07/28/student-loan-forgiveness-trump">65,000 applications</a> are currently pending after DeVos called a halt to the rules – an act that <a href="http://money.cnn.com/2017/07/06/pf/college/betsy-devos-lawsuit-student-loan-rule/index.html">prompted 18 states to sue</a> DeVos in July.</p>
<p>Meanwhile, on August 1, a <a href="http://www.npr.org/2017/08/02/541126799/new-fears-for-public-service-loan-forgiveness">legal motion was filed</a> by the Department of Education that has left another loan forgiveness initiative in a state of limbo. Since 2007, the <a href="https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancellation/public-service">Public Service Loan Forgiveness Program</a> has forgiven student debt for public employees (e.g., teachers, firefighters, police) after payments are made for 10 years. Some 500,000 people are waiting to see if their debt will be forgiven as expected.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/181707/original/file-20170810-4090-1l67vay.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/181707/original/file-20170810-4090-1l67vay.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/181707/original/file-20170810-4090-1l67vay.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/181707/original/file-20170810-4090-1l67vay.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/181707/original/file-20170810-4090-1l67vay.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=502&fit=crop&dpr=1 754w, https://images.theconversation.com/files/181707/original/file-20170810-4090-1l67vay.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=502&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/181707/original/file-20170810-4090-1l67vay.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=502&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">DeVos has left the Public Service Loan Forgiveness Program in limbo. The program alleviates student debt for people like firefighters, social workers and teachers.</span>
</figcaption>
</figure>
<h2>For-profit colleges</h2>
<p>At the heart of the loan forgiveness controversy is the role of for-profit colleges and universities.</p>
<p>Under the Obama administration, revisions to the borrower defense rules came about after reports of <a href="https://www.forbes.com/sites/zackfriedman/2017/07/28/student-loan-forgiveness-trump">for-profit institutions luring students</a> into taking out student loans. Some of these schools – including <a href="http://www.nbcnews.com/news/education/corinthian-colleges-shuts-down-ending-classes-16-000-overnight-n348741">Corinthian Colleges</a> and <a href="https://www.insidehighered.com/news/2016/09/07/itt-tech-shuts-down-all-campuses">ITT-Tech</a> – abruptly closed, leaving students unemployed or <a href="http://college.usatoday.com/2016/03/25/former-corinthian-colleges-to-pay-over-1b-for-defrauding-students/">lacking the skills promised</a> by the institution. These closings account for the majority of the loan forgiveness applications pending due to DeVos’ delay. </p>
<p>What’s more, DeVos is seeking to loosen federal restrictions on for-profit colleges and universities. The Obama-era <a href="https://www.usnews.com/education/blogs/student-loan-ranger/2015/07/08/what-the-new-gainful-employment-rule-means-for-college-students">Gainful Employment Rule</a> requires colleges and universities to report how many of their graduates are able to pay back their student loans after graduation and what their income level is once completing a degree or certificate program. </p>
<p>DeVos called the current system “<a href="https://www.ed.gov/news/press-releases/secretary-devos-announces-regulatory-reset-protect-students-taxpayers-higher-ed-institutions">a muddled process that’s unfair to students and schools</a>” and has decided to discard the current version of the Gainful Employment Rule and start the process from scratch.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/181708/original/file-20170810-20110-179265w.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/181708/original/file-20170810-20110-179265w.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=246&fit=crop&dpr=1 600w, https://images.theconversation.com/files/181708/original/file-20170810-20110-179265w.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=246&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/181708/original/file-20170810-20110-179265w.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=246&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/181708/original/file-20170810-20110-179265w.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=309&fit=crop&dpr=1 754w, https://images.theconversation.com/files/181708/original/file-20170810-20110-179265w.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=309&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/181708/original/file-20170810-20110-179265w.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=309&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Under DeVos, for-profit colleges may see a relaxing of Obama-era regulations.</span>
<span class="attribution"><a class="source" href="https://commons.wikimedia.org/wiki/File:ITT_Technical_Institute_campus_Canton_Michigan.JPG">Dwight Burdette</a></span>
</figcaption>
</figure>
<h2>Sexual assault on campus</h2>
<p>Student loan forgiveness and for-profit regulations aren’t the only Obama-era initiatives that DeVos is seeking to roll back. DeVos has also been at the center of a controversy regarding campus sexual assault and Title IX, the anti-discrimination law.</p>
<p>During the Obama administration, a <a href="https://obamawhitehouse.archives.gov/blog/2014/09/19/president-obama-launches-its-us-campaign-end-sexual-assault-campus">great deal of focus</a> was paid to the widespread problem of sexual assault on college campuses. As a result, the administration <a href="https://www.washingtonpost.com/politics/biden-and-obama-rewrite-the-rulebook-on-college-sexual-assaults/2016/07/03/0773302e-3654-11e6-a254-2b336e293a3c_story.html">issued guidelines</a> that advised universities to treat rape as a form of sexual harassment. University officials who failed to do so would be considered in violation of <a href="https://www2.ed.gov/about/offices/list/ocr/docs/tix_dis.html">Title IX</a>.</p>
<p>In an effort to reduce sexual violence on campus, the <a href="https://www2.ed.gov/about/offices/list/ocr/letters/colleague-201104.pdf">administration suggested</a> that action be taken with a “<a href="https://www.insidehighered.com/news/2017/08/04/little-appetite-rollback-obama-guidelines-campus-sexual-assault">preponderance of evidence</a>” – a looser evidence standard that allowed alleged victims to request investigation more easily.</p>
<p>DeVos and her staff claim that the climate on campuses has swung too far in the wrong direction, leaving many men unfairly accused of assault. In fact, Candice Jackson, DeVos’ hire to head the civil rights division of the Department of Education, came under fire – and <a href="http://www.npr.org/2017/07/13/537082095/education-department-official-apologizes-for-flippant-campus-sexual-assault-comm">later apologized</a> – for “flippant” remarks she made characterizing the majority of campus sexual assault cases as the result of two drunk students or unhappy ex-girlfriends.</p>
<p>DeVos intends to revisit the current policy, but her intentions are still unclear. Importantly, whatever guidelines DeVos institutes, the U.S. Department of Education would likely maintain the power to withdraw federal funding to public institutions that fail to comply with Title IX guidelines. The department does not, however have direct methods with which to enforce sexual assault protections.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/181709/original/file-20170810-20679-6m0dub.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/181709/original/file-20170810-20679-6m0dub.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=481&fit=crop&dpr=1 600w, https://images.theconversation.com/files/181709/original/file-20170810-20679-6m0dub.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=481&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/181709/original/file-20170810-20679-6m0dub.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=481&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/181709/original/file-20170810-20679-6m0dub.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=605&fit=crop&dpr=1 754w, https://images.theconversation.com/files/181709/original/file-20170810-20679-6m0dub.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=605&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/181709/original/file-20170810-20679-6m0dub.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=605&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Former Vice President Joe Biden speaking at an anti-sexual violence event. Devos is looking to revisit the Obama administration’s campus sexual assault policies.</span>
<span class="attribution"><span class="source">AP Photo/Paul Vernon</span></span>
</figcaption>
</figure>
<h2>Civil rights</h2>
<p>Early in her tenure as secretary of education, DeVos <a href="https://theconversation.com/explainer-why-transgender-students-need-safe-bathrooms-50831">rescinded Obama-era guidelines</a> interpreting Title IX with regard to protections for transgender students.</p>
<p>In June, Jackson <a href="https://www.documentcloud.org/documents/3866816-OCR-Instructions-to-the-Field-Re-Transgender.html">released a document</a> instructing schools on the topic of transgender students. It does not include <a href="http://www.latimes.com/local/education/la-essential-education-updates-southern-this-is-the-trump-administration-s-new-1497632892-htmlstory.html">bathroom protection for transgender students</a>, a key component of the Obama-era guidelines.</p>
<p>This document, in addition to Jackson’s controversial comments about sexual assault, <a href="http://blogs.edweek.org/edweek/campaign-k-12/2017/08/democrats_blast_betsy_devos_hostility_civil_rights.html">spurred House Democrats</a> to demand the dismissal of Jackson from her post, but nothing has yet been done. </p>
<p>In addition to the policy shift for transgender students, DeVos has also been criticized for claiming that <a href="http://www.businessinsider.com/betsy-devos-comments-about-hbcus-2017-2">historically black colleges and universities</a> were great pioneers of school choice. The comment <a href="https://www.washingtonpost.com/news/grade-point/wp/2017/02/28/devos-called-hbcus-pioneers-of-school-choice-it-didnt-go-over-well">enraged critics</a>, leaving DeVos to <a href="https://apnews.com/c48492774a0a4f6185e3ef208ef83dd5">apologize</a> and attempt to combat perceptions that she may be insensitive to the plight of African-Americans.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/181711/original/file-20170810-20110-15ydlmy.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/181711/original/file-20170810-20110-15ydlmy.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=431&fit=crop&dpr=1 600w, https://images.theconversation.com/files/181711/original/file-20170810-20110-15ydlmy.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=431&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/181711/original/file-20170810-20110-15ydlmy.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=431&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/181711/original/file-20170810-20110-15ydlmy.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=542&fit=crop&dpr=1 754w, https://images.theconversation.com/files/181711/original/file-20170810-20110-15ydlmy.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=542&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/181711/original/file-20170810-20110-15ydlmy.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=542&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Gavin Grimm’s suit to grant transgender students access to appropriate facilities remains undecided.</span>
<span class="attribution"><span class="source">AP Photo/Steve Helber</span></span>
</figcaption>
</figure>
<h2>Special education</h2>
<p>In July, DeVos gave her first major speech on special education for students with disabilities. Critics were disappointed in her <a href="https://www.washingtonpost.com/news/answer-sheet/wp/2017/07/18/the-deep-irony-in-betsy-devoss-first-speech-on-special-education">emphasis on school choice</a>, rather than the need for more resources dedicated to special education in public schools.</p>
<p>DeVos also stated in that speech that she has prioritized special education complaints in the Office of Civil Rights, which is not actually the office that deals with special education complaints. This confusion came six months after DeVos also took heat for <a href="http://time.com/4637642/betsy-devos-confirmation-education-policy">confusion about federal special education law</a> at her confirmation hearing.</p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/fftskn5HFdA?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">At her confirmation hearing in January, Betsy DeVos came under fire for a perceived lack of understanding about IDEA, the federal special education law.</span></figcaption>
</figure>
<h2>What’s next?</h2>
<p>In sum, while Secretary DeVos has been in office, much of her agenda has been focused on rescinding actions taken by the Obama administration, without enacting much in the way of official replacement policy herself. This has left many policies and guidelines in a state of uncertainty while the country waits to see what will happen.</p>
<p>It appears that she’s changing what she can with her official power – and using her pulpit to influence. But broad change requires legislative action, which is yet to be seen.</p><img src="https://counter.theconversation.com/content/81793/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Dustin Hornbeck does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>From student loans to Title IX, Betsy DeVos has had a busy six months in office. But despite numerous reversals of Obama-era guidelines, little has come in the way of tangible policy.Dustin Hornbeck, Ph.D. Student in Educational Leadership and Policy, Miami UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/657052016-09-23T03:41:42Z2016-09-23T03:41:42ZPublic universities are under threat – not just by outside reformers<figure><img src="https://images.theconversation.com/files/138829/original/image-20160922-22518-641nq7.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">What are threats facing America's public universities?</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/brownfields/5420465063/in/photolist-9fZiqc-bXR59o-bXQSfy-4Qw69f-uJJtD-82QsWH-4QrTht-bXR6Ys-bXQK8L-4Qw1QY-bXQP6J-9Kbt4c-bXRfUo-4QrMwV-M3tDB-bXQq45-bXQn49-4Qw6VQ-4QvZ5o-4QrTWr-4QwbbE-bXQwGm-5M6Nmj-9Swku7-bXR1Cs-4QrRUk-fS7yJ-M3muh-bTAa7e-bXScFm-4QrTda-sG5ssW-bXQg5h-4Qw5Mh-82TBXo-8j3YnV-uJJHa-bTA9Et-bXQmiw-bTAab2-bXQ3US-9Kbt3p-GNDM8L-bXSb9y-4QrPBe-dcKn6Q-4QrR1g-bXPMWo-dcKop7-dcKnof">Matthew Ephraim</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc/4.0/">CC BY-NC</a></span></figcaption></figure><p>A new documentary, <a href="http://www.starvingthebeast.net">“Starving the Beast,”</a> recently examined the state of public higher education. Directed by <a href="http://www.stevemimsfilms.com/Site/home.html">Austin-based award-winning documentarian Steve Mims</a>, the film argues that a network of right-wing think tanks and educational reformers <a href="https://www.insidehighered.com/news/2016/03/22/starving-beast-examines-ideological-shifts-funding-higher-education">are undermining public universities</a>. It suggests that America’s great public universities may die from a thousand cuts unless policymakers change course.</p>
<p>My experience as a higher education policy researcher leads me to share many of Mims’ concerns. There are <a href="https://theconversation.com/what-berkeleys-budget-cuts-tell-us-about-americas-public-universities-54997">many</a> <a href="https://theconversation.com/what-berkeleys-budget-cuts-tell-us-about-americas-public-universities-54997">serious challenges</a> facing public universities. </p>
<p>However, my research also shows more than a right wing conspiracy is to blame for the condition of public higher education today.</p>
<h2>Let’s first look at what the film tells us</h2>
<p>This film’s story has many villains and few heroes. It describes how conservative politicians, think tank wonks, education reformers and wealthy political donors work together to transform public universities. According to Mims, they have two goals. The first is to run public universities like businesses. The second is to stop universities from teaching and research that contradict conservative values.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/138842/original/image-20160922-22502-rdvrgc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/138842/original/image-20160922-22502-rdvrgc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=398&fit=crop&dpr=1 600w, https://images.theconversation.com/files/138842/original/image-20160922-22502-rdvrgc.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=398&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/138842/original/image-20160922-22502-rdvrgc.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=398&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/138842/original/image-20160922-22502-rdvrgc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=501&fit=crop&dpr=1 754w, https://images.theconversation.com/files/138842/original/image-20160922-22502-rdvrgc.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=501&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/138842/original/image-20160922-22502-rdvrgc.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=501&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Have universities really been idyllic bastions of academic freedom?</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/kimberlykv/4495912134/in/photolist-7RhJ3s-dZJXWz-E2rWyT-rx2xeE-52vwjo-9XxaYL-fhdrpK-6xBuui-9Xxjzs-9XutnB-EkJ9gn-7LSZ6M-9XtuXX-f5Ra6H-pfehms-9XuqP6-bQ9C7X-9XudmB-jVfCNy-jVeYji-8BJPE4-6uC6Y6-bQWfKK-dZfuWf-4qrTiZ-9yd2ZL-9Xup2p-81Tbtd-b3Kxhp-bzhos1-6q7KEo-9XxdtL-9XtwZz-fhsEoS-oDYrUj-KpYfv-b3KwGZ-9Xx1h1-6uFqmf-jwsppL-7fsMEh-aBiHXQ-bzhp1L-9Xx5Js-eSR8Yn-bC2vhd-9Xu7G6-hetdL6-AuCXw-ffDzmi">Kimberly Vardeman</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<p>The film shows how many recent reforms are ideologically motivated. For example, one idea that motivates reform today is economist <a href="http://www.laffercenter.com/the-laffer-center-2/">Arthur Laffer’s</a> “trickle-down economics.” Laffer theorizes that all government spending slows economic growth and innovation. </p>
<p>Laffer’s ideas lead reformers to believe reducing state support for higher education will boost the economy and prompt universities to become more efficient. </p>
<p>The other concept that has gained much traction is <a href="http://www.hbs.edu/faculty/Pages/profile.aspx?facId=6437">Harvard Business School professor Clayton Christensen’s</a> idea of <a href="http://www.claytonchristensen.com/key-concepts/">“disruptive innovation,”</a> which holds that established organizations innovate only when upstart competitors upend their business model. For the reformers this means promoting for-profit colleges to compete with public universities. </p>
<p>Anti-tax lobby groups like <a href="http://www.atr.org">Americans for Tax Reform (ATR)</a> are also implicated in the film. Since 1986 many elected Republicans have pledged to ATR never to raise taxes, making it hard to adequately fund higher education. </p>
<p>The results of all of this, according to Mims, are devastating budget cuts, program closures, and the erosion of academic freedom.</p>
<p>But here’s the problem: In focusing on contemporary developments, the film implies that public universities were, until recently, well-supported, idyllic bastions of intellectual freedom.</p>
<p>In creating this impression, Mims indulges in what <a href="http://www.tandfonline.com/doi/pdf/10.1080/01425692.2012.746260?needAccess=true">I describe</a> as higher education critics’ tendency “to reject the present by pointing to a more perfect past.” Idealizing the past may tell a good story but it ignores the <a href="http://thenewpress.com/books/lost-soul-of-higher-education">long history of political struggle</a> that has led to the present crisis.</p>
<h2>Why there’s another side to the story</h2>
<p>Let’s consider the recent history of some of the challenges facing public universities.</p>
<p>Declining funding for higher education has been a serious problem in recent years. After the Great Recession in 2008 public universities in most states <a href="http://www.nea.org/assets/img/PubAlmanac/Zumeta_2010.pdf">experienced dramatic funding cuts</a>. But these cuts followed decades of decline. </p>
<p>A 2015 report of the <a href="https://www.amacad.org/multimedia/pdfs/publications/researchpapersmonographs/PublicResearchUniv_ChangesInStateFunding.pdf">American Academies of Arts and Sciences (AAAS)</a> shows that in 1990 14.6 percent of state budgets went to higher education, but by 2014, this share had dropped to 9.4 percent.</p>
<p>I share the assessment that the <a href="https://theconversation.com/college-is-worth-it-who-should-pay-for-it-57085">states invest too little</a> in higher education. Decline in state funding has led to <a href="http://fivethirtyeight.com/features/fancy-dorms-arent-the-main-reason-tuition-is-skyrocketing/">increased tuition</a>. But, as the AAAS report shows, other demands on state budgets, including increased health care spending, partly explain declines in higher education funding.</p>
<p>Research does show that Republican governors and Republican-controlled legislatures fund higher education <a href="https://muse.jhu.edu/article/364700/summary">less generously</a> than Democratic governments. Nevertheless, some of the policies that weaken public universities have enjoyed bipartisan support. For example, policies allowing more public funding to go to for-profit colleges have had backing <a href="https://jhupbooks.press.jhu.edu/content/degrees-inequality">from both Democrats and Republicans in Congress</a>.</p>
<h2>Let’s look within</h2>
<p>Another claim made in the film is that reforms are designed to undermine academic freedom. </p>
<p>I disagree that threats to academic freedom come only from outside forces. This portrayal is too generous to universities, which often make decisions for nonacademic reasons. </p>
<p>Mims shows that intellectual activities that disagree with conservative ideology sometimes attract the ire of conservative politicians. One troubling example from the film is the <a href="https://www.aaup.org/article/closure-poverty-center-north-carolina#.V9cGg2U0r9o">closure of a poverty research center</a> in North Carolina. </p>
<p>But as public policy expert from University of California, Berkeley <a href="https://gspp.berkeley.edu/directories/faculty/david-kirp">David Kirp</a> demonstrates in his book, <a href="http://www.hup.harvard.edu/catalog.php?isbn=9780674016347&content=bios">“Shakespeare, Einstein, and the Bottom Line,”</a> financial interests often trump academics at America’s universities. <a href="https://muse.jhu.edu/article/609049#b5">Although painful for those involved</a>, many program closures are motivated by <a href="https://muse.jhu.edu/article/180178/summary">cost and efficiency concerns</a> rather than political ideology. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/138843/original/image-20160922-22533-1sac9iw.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/138843/original/image-20160922-22533-1sac9iw.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=399&fit=crop&dpr=1 600w, https://images.theconversation.com/files/138843/original/image-20160922-22533-1sac9iw.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=399&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/138843/original/image-20160922-22533-1sac9iw.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=399&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/138843/original/image-20160922-22533-1sac9iw.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=502&fit=crop&dpr=1 754w, https://images.theconversation.com/files/138843/original/image-20160922-22533-1sac9iw.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=502&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/138843/original/image-20160922-22533-1sac9iw.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=502&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">A large number of faculty are now hired on a part-time or contingent basis.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/24736216@N07/4661675641/in/photolist-86WiKX-nJv14m-bFe1kG-nN82HJ-6wthZv-bThSyP-Naw4b-eiXUYS-c3Dk8Y-sSEeRG-8xvJQE-do9X1q-nh9omw-9J9RJu-nVFJ13-bV4oMs-nTJDTd-bFdZEo-nJFKCP-nscnxJ-6qxSQD-nscoHE-dBHsUP-bU8K7K-dA8wQ5-bFe1TL-nscegT-nJoNyD-6wxtew-bU8JRP-bFe2em-bU8KA8-nvNguJ-ePtH3G-bU8EZ6-bThTPn-bFe1bU-nNeLDd-bFe1EW-dA33S8-bFe2cf-eiifB8-8wbV1w-bFe25y-ePtGcS-c4cYXS-bFe1HN-nMZBra-nvNGme-4PsbAZ">Roger W</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span>
</figcaption>
</figure>
<p>“Starving the Beast” also identifies anti-tenure policies as a major threat to academic freedom. Sure enough, recent developments, such as <a href="http://www.politico.com/story/2015/07/scott-walker-college-professor-tenure-120009">policies in Wisconsin</a> <a href="http://www.huffingtonpost.com/2011/04/07/college-professor-salary-texas_n_845667.html">and Texas,</a> weaken tenure and academic freedom. These are threats that come from outside of higher education. And, indeed, these policies concern me. </p>
<p>But <a href="https://www.aaup.org/issues/contingency/background-facts">more than one-half of all faculty</a> are now “contingent” – that is, they teach on a semester-to-semester basis. This <a href="http://www.newfacultymajority.info">“new faculty majority”</a> has little protection for academic freedom. In my assessment, widespread use of contingent faculty by colleges and universes poses the greatest threat to the academic profession.</p>
<h2>Who is responsible?</h2>
<p>Mims suggests that most people don’t know what is happening to public universities. That may be true. But in my assessment, social values might also contribute to the problem. </p>
<p>Results of a study by University of Michigan <a href="http://www-personal.umich.edu/%7Ekstange/JacobMcCallStangeConsValue2013.pdf">economists Brian Jacob, Brian McCall and Kevin Stange</a> indicate that most students make enrollment decisions based on campus amenities such as state-of-the-art gyms rather than academics. Campus officials seem to be responding to what students want: Campus amenities are among the <a href="http://www.ingentaconnect.com/content/aea/jep/2012/00000026/00000001/art00009">fastest-growing categories</a> of expenditures at public universities.</p>
<p>It’s also the case that many students go to college for job training rather than the intrinsic value of learning. A study by the Higher Education Research Institute at UCLA shows that 70 percent of college freshman believe earning a college degree is “very important” in order “to be able to <a href="http://www.heri.ucla.edu/monographs/TheAmericanFreshman2015.pdf">make more money.”</a></p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/138846/original/image-20160922-22527-61r3ix.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/138846/original/image-20160922-22527-61r3ix.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=379&fit=crop&dpr=1 600w, https://images.theconversation.com/files/138846/original/image-20160922-22527-61r3ix.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=379&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/138846/original/image-20160922-22527-61r3ix.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=379&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/138846/original/image-20160922-22527-61r3ix.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=476&fit=crop&dpr=1 754w, https://images.theconversation.com/files/138846/original/image-20160922-22527-61r3ix.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=476&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/138846/original/image-20160922-22527-61r3ix.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=476&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Often student enrollment decisions are based on campus amenities.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/pennstatelive/22346816132/in/photolist-A3HgTj-epdXP4-eavLiA-pBQBto-8xfzpL-eavY3U-bweYAx-bEo933-e51qKf-b41LxV-eW42a8-ar98Tk-aDdY5N-pf1Mvt-668vua-eavWQC-8xarL5-eavZVS-rgTjhN-ehrpz9-51rBdW-eaqbEk-dMjBVv-faNTRc-9EhSiX-8xfzry-eUKMxw-aQZoFV-srXepo-egpFep-8xfzom-fCc8qR-o2SJHt-abncPw-brfcKe-9vTHtf-8rpLbD-8xbT8A-8x5Pjz-nMqSt1-pBRqkP-drdwjS-drdw8j-8x9TkR-dzkuy3-cPNj2b-bDrL6Y-edUNX3-b2nX4z-5VF8BN">Penn State</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-nd/4.0/">CC BY-NC-ND</a></span>
</figcaption>
</figure>
<p>What is more, policies and politics destructive to public universities appear to be popular. Tax increases would be necessary to <a href="http://www.bloomberg.com/news/articles/2016-08-01/majority-of-americans-want-college-to-be-free">maintain high-quality education</a> at low costs. Yet a majority of Americans believe <a href="http://www.gallup.com/poll/1714/taxes.aspx">their taxes are too high</a>. </p>
<p>And several of the politicians featured in “Starving the Beast” as being harmful to universities, including Scott Walker of Wisconsin and Bobby Jindal of Louisiana, were elected to two terms by the people of their states. </p>
<h2>Asking some tough questions</h2>
<p>What does this all mean?</p>
<p>If, like me, you are anxious about the condition of public universities, “Starving the Beast” will only heighten your concerns. The film is a compelling account of how special interests collude to weaken public universities. </p>
<p>However, it tells only part of the story.</p>
<p>In addition to holding educational reformers and ideologues to account, it is my view as an educational researcher that we should also ask tough questions of ourselves, our neighbors and to university officials: </p>
<p>Are we willing to pay higher taxes for better higher education? How do we make educational choices for ourselves and for our families? Should university leaders rely on contingent professors while investing in football stadiums and gyms?</p>
<p>By asking these questions, I am not providing excuses for policies that Mims correctly identifies as harmful to public universities. I agree that state policies have been harmful to public universities. But what I am suggesting is that those concerned with the condition of public higher education consider the problem in a broader context with research-based evidence. </p>
<p>Excellent, accessible and affordable public universities are not possible without a broad public support.</p><img src="https://counter.theconversation.com/content/65705/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Brendan Cantwell does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>A provocative new documentary, ‘Starving the Beast,’ blames the condition of higher ed on right-wing policies. A scholar argues that the film ignores a long history that has led to current crisis.Brendan Cantwell, Assistant Professor of Higher, Adult, and Lifelong Education, Michigan State UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/605852016-06-15T09:49:22Z2016-06-15T09:49:22ZThe truth about for-profit colleges and Trump University<p><a href="http://www.npr.org/sections/thetwo-way/2016/05/31/480214102/trump-university-playbooks-released-by-court-advise-being-courteous-to-media">Documents released</a> in a federal lawsuit against Trump University have put presumptive Republican presidential candidate Donald Trump on the defensive. Democratic candidate Hillary Clinton is <a href="http://time.com/4353917/hillary-clinton-trump-university/">now highlighting the fraud</a> that is at the center of the case. </p>
<p>In the process, <a href="https://www.washingtonpost.com/news/grade-point/wp/2016/06/01/what-trump-university-has-in-common-with-another-failed-for-profit-college/">many commentators</a> are identifying the Trump University business model as further indication of the fraudulent activity seen to be endemic to all for-profit higher education institutions. </p>
<p>I have been studying for-profit higher education since the late 1990s. While there are some parallels, Trump University is not representative of for-profit higher education. It is not regulated by the same agencies nor does it have to follow the same rules.</p>
<p>In fact, the Trump University case has little to do with the current challenges faced by for-profit higher education in the U.S.</p>
<h2>The for-profit university</h2>
<p>For-profit colleges and universities are educational institutions that operate for financial gain. They have been part of the higher education landscape since the <a href="https://jhupbooks.press.jhu.edu/content/diploma-mills">1800s</a>. For most of their history, they existed apart from traditional nonprofit and public colleges and universities. </p>
<p>For-profits educated students who were not interested in earning a degree and focused on fields that mainstream institutions were ignoring, such as stenography and bookkeeping.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/125946/original/image-20160609-7064-r7n94t.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/125946/original/image-20160609-7064-r7n94t.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/125946/original/image-20160609-7064-r7n94t.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/125946/original/image-20160609-7064-r7n94t.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/125946/original/image-20160609-7064-r7n94t.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/125946/original/image-20160609-7064-r7n94t.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/125946/original/image-20160609-7064-r7n94t.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">How do for-profit universities work?</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/gageskidmore/23443094212/in/photolist-BHzZaw-bY2FEw-eZWR1d-skSwkL-wF72U-wF6Pa-wF7pR-RGu8t-wF6Y3-ouQ9Ta-8XhNvG-61uVwu-asuh98-8XeLZa-qpiYu4-576zTv-6gUzdY-FXQ4yA-8Ac9Xx-oGNcUm-9XbEi-9Xckt-5hKXVm-4yPopz-4RrtEk-bkB32n-9XchC-ivJ6NV-DUT6RF-r6Jw1L-6w2WJr-6f4EKj-5BW5K2-6fez68-cLPk5j-5hDZ3c-7WwNsq-svtdqR-6w35gt-4QVgbB-4yUWDC-qs2u5U-sm94vQ-5MfmzX-7P8bpB-4yQ2zp-qo2R3u-899kcc-rT8t3-hazjPb">Gage Skidmore</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span>
</figcaption>
</figure>
<p>That separate status changed after the <a href="http://lawhigheredu.com/102-proprietary-or-for-profit-colleges-and-universities.html">Higher Education Act was reauthorized in 1972</a>. Students attending for-profit institutions could be treated just like students at other institutions. They could now get grants and subsidized loans to pay for their tuition. </p>
<p>But, like other institutions that wanted access to this federal money, the for-profits had to agree to <a href="http://thomas.loc.gov/cgi-bin/cpquery/?&dbname=cp112&sid=cp112uqnjG&refer=&r_n=hr177.112&item=&&&sel=TOC_38109&">state, federal and accreditor oversight</a>. </p>
<h2>Accessing aid</h2>
<p>Over the last half-century, more and more for-profits have participated in the federal aid programs. They were attracted to the program, even with the additional oversight, because they could enroll more students and make more money.</p>
<p>There are currently about 3,400 federally funded for-profit colleges and universities in the U.S., <a href="http://nces.ed.gov/programs/digest/d14/tables/dt14_105.50.asp">according to official statistics</a>. This is compared to about 2,000 public institutions and 1,800 nonprofits. All of them need to meet
standards of their accreditors, the states they operate in and the U.S. Department of Education. </p>
<figure class="align-left ">
<img alt="" src="https://images.theconversation.com/files/125983/original/image-20160609-7054-yiezbt.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/125983/original/image-20160609-7054-yiezbt.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/125983/original/image-20160609-7054-yiezbt.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/125983/original/image-20160609-7054-yiezbt.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/125983/original/image-20160609-7054-yiezbt.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/125983/original/image-20160609-7054-yiezbt.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/125983/original/image-20160609-7054-yiezbt.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">For-profits rely on federal aid.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/armydre2008/7714200766/in/photolist-cKFi8u-dB3GVB-9kFZh4-3cjrwC-edZStq-5vxVyF-dQCx2Y-k1H7g-8fmgar-4N3XZy-5vSvLu-5y1hEV-nauXNC-5AByeQ-9Nv8dj-5z8Fwo-ontV22-5zhjCN-pDZsh8-4HYGCQ-4HWXEh-pVykUz-5zd2gK-5CAN1U-kmwscx-521iyP-kmwfRX-kmywpW-3kWApz-9NEYMC-5vNbG8-m5pYEi-7RsNQH-9eVrd5-5DgLde-oQrz1m-5zhj4Y-qL5DSN-dv5tUF-mk1sF6-pVSaUu-c7E7if-8Aya3d-aFuhBZ-kmwm2r-5ABxCh-nEz8i-5zd2cK-kmwmD8-5AxiFe">frankieleon</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<p>That students can get grants and take out loans distinguishes for-profit higher education from other businesses – like Trump University – that may claim to educate students. This aid is supposed to serve the <a href="http://eric.ed.gov/?id=ED525737">public purpose</a> of higher education as being vital to the nation’s well-being and not simply facilitate the pursuit of private profit.</p>
<p>Student aid is also what provides the focus for regulating higher education. There are specific requirements called “<a href="http://www.higheredcompliance.org/resources/program-integrity-rules.html">program integrity</a>” rules that these institutions must follow in order to justify their receipt of student aid. The rules involve how institutions advertise their programs, recruit students and prepare graduates for employment. It is these rules that are causing difficulty for many for-profit institutions.</p>
<h2>What’s going wrong</h2>
<p>For example, one of the rules involves what is known as “<a href="http://www2.ed.gov/policy/highered/reg/hearulemaking/2009/compensation.html">incentive compensation</a>” for student recruiters. For-profits are not allowed to pay employees based on how many students they managed to enroll at the institution or how much financial aid they were successful in getting for students.</p>
<p>In 2002, the Bush administration modified this rule. This came about after a <a href="http://chronicle.com/article/For-Profit-Colleges-Praise-a/13510">former lobbyist</a> for the Apollo Group, which owns the University of Phoenix, a for-profit institution, was put in charge of higher education policy. The changed rule specified 12 “<a href="http://www.gao.gov/new.items/d10370r.pdf">safe harbors</a>” that would not be considered violations. These exemptions allowed for raises to be given to recruiters and other staff as long as there was some <a href="http://www.finaid.org/educators/20100426incentivecompensation.pdf">justification for pay</a> other than enrollment increases.</p>
<p>For-profits took advantage of these loopholes to aggressively recruit students. <a href="https://nces.ed.gov/programs/digest/d15/tables/dt15_303.20.asp?current=yes">Enrollment</a> increased by 150 percent over the next seven years. </p>
<p>Subsequently, in response to <a href="http://www.nacacnet.org/issues-action/policy/Documents/brief_incentivecomp.pdf">reports of abuse</a>, in 2011, Obama’s Department of Education closed the loopholes. Following this policy change, enrollment at for profits declined by <a href="https://nces.ed.gov/programs/digest/d15/tables/dt15_303.20.asp?current=yes">at least 20 percent</a>. </p>
<h2>Dependence on financial aid</h2>
<p>It is important to note that for-profit higher education is dependent on federal dollars to survive. For-profits are not directly subsidized by states like public institutions. And they don’t discount their tuition like nonprofit institutions. Instead they ask students to pay the full cost.</p>
<figure class="align-right ">
<img alt="" src="https://images.theconversation.com/files/125985/original/image-20160609-7096-2wp6pf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/125985/original/image-20160609-7096-2wp6pf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=605&fit=crop&dpr=1 600w, https://images.theconversation.com/files/125985/original/image-20160609-7096-2wp6pf.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=605&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/125985/original/image-20160609-7096-2wp6pf.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=605&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/125985/original/image-20160609-7096-2wp6pf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=760&fit=crop&dpr=1 754w, https://images.theconversation.com/files/125985/original/image-20160609-7096-2wp6pf.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=760&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/125985/original/image-20160609-7096-2wp6pf.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=760&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">For-profits need federal dollars to survive.</span>
<span class="attribution"><a class="source" href="http://www.shutterstock.com/cat.mhtml?lang=en&language=en&ref_site=photo&search_source=search_form&version=llv1&anyorall=all&safesearch=1&use_local_boost=1&autocomplete_id=&searchterm=student%20loan&show_color_wheel=1&orient=&commercial_ok=&media_type=images&search_cat=&searchtermx=&photographer_name=&people_gender=&people_age=&people_ethnicity=&people_number=&color=&page=1&inline=315781718">Dollar image via www.shutterstock.com</a></span>
</figcaption>
</figure>
<p>As a consequence, most institutions get more than 70 percent of their <a href="https://studentaid.ed.gov/sa/sites/default/files/fsawg/datacenter/library/6302014summary.pdf">revenue from federal aid programs</a>. The government prohibits for-profits from getting more than 90 percent of their revenue from government grants and loans. </p>
<p>But oddly, money from veterans’ programs is not included in this calculation. Since these programs are funded from the Department of Defense rather than the Department of Education, they were not part of the Higher Education Act rules. If all government funding was included, <a href="https://www.insidehighered.com/news/2014/10/13/more-profit-colleges-would-fail-9010-rule-if-veterans-benefits-are-included-analysis">many more institutions would cross the 90 percent threshold</a>. </p>
<p>Changing this loophole is on the congressional agenda. But it is being vigorously opposed by the for-profit lobbyists.</p>
<p>The current for-profit reliance on federal money means that the federal government is the primary customer of for-profit higher education. And the one who pays sets the rules.</p>
<h2>Fraud accusations</h2>
<p>To be clear, none of these are issues that suggest for-profits are fraudulent institutions. They are mainly about how for-profit institutions recruit students and whether the jobs students get with a for-profit degree are worth the expense. There are other criticisms connected to their eligibility for federal aid programs.</p>
<p>Nevertheless, <a href="http://link.springer.com/article/10.1007%2Fs12115-012-9541-0#page-1">accusations of fraud</a> have dogged for-profit higher education. The biggest case was the collapse and bankruptcy of <a href="http://www.huffingtonpost.com/2015/05/04/corinthian-colleges-bankruptcy_n_7205344.html">Corinthian Colleges</a>. Corinthian had over 100,000 students at its peak, with almost 100 campuses across the country. </p>
<p>But the federal government <a href="https://www.insidehighered.com/news/2014/06/20/major-profit-chain-faces-bankruptcy-feds-turn-heat">restricted access to student aid</a> in 2014 out of concern that Corinthian was mishandling funds. Later proof of false advertising resulted in a <a href="http://college.usatoday.com/2016/03/25/former-corinthian-colleges-to-pay-over-1b-for-defrauding-students/">billion-dollar judgment</a> against the company. </p>
<p>Because of this, former Corinthian students are <a href="https://studentaid.ed.gov/sa/about/announcements/corinthian">now eligible for debt relief</a> for the loans they took out to attend. </p>
<h2>Why Trump U is different</h2>
<p>Coming back to the initial question, here’s what’s different about Trump University: To begin with, Trump University is not an <a href="http://chronicle.com/blogs/ticker/that-time-donald-trump-started-a-university-and-an-amazing-blog/102305">accredited</a> institution. In fact, New York authorities insist it was <a href="http://www.newyorker.com/news/john-cassidy/trump-university-its-worse-than-you-think">breaking the law</a> by calling itself a university. </p>
<figure class="align-left ">
<img alt="" src="https://images.theconversation.com/files/125986/original/image-20160609-7079-f0jzat.png?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/125986/original/image-20160609-7079-f0jzat.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=567&fit=crop&dpr=1 600w, https://images.theconversation.com/files/125986/original/image-20160609-7079-f0jzat.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=567&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/125986/original/image-20160609-7079-f0jzat.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=567&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/125986/original/image-20160609-7079-f0jzat.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=713&fit=crop&dpr=1 754w, https://images.theconversation.com/files/125986/original/image-20160609-7079-f0jzat.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=713&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/125986/original/image-20160609-7079-f0jzat.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=713&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">One commentator’s view of Trump U.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/notionscapital/27129606980/in/photolist-HkmjYu-29RVSQ-6wi1we-rfoE5g-rab8n9-rack4W-egjotY-rfowUp-qBVFpX-ryBcrg-rrCR64-rh8ytf-74WPMw-quLeWJ-rrD5cp-rabazA-rh8vMy-rh9xv3-dbSGwx-vMQG5J-8mrygx-cZCKDf-b3Ga9B-quYbLF-cZCLdh-racdFW-cZCJDS-dMg6xj-rpsGhE-rrKB7T-rrD7HM-b3FTCx-rrKFJD-daAsHS-8REDAp-x8oowR-92vnXu-rWKnwC-nQ72U-rWJfw5-segL58-rWHUgf-d1TE27-d1TE81-czTNoy-rWJ8Bd-d1TE5m-8EByBJ-aexKrR-c8cbaC">Mike Licht</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<p>Without approval from the state or oversight from accreditation agencies, students at Trump University couldn’t get federally backed grants and loans. And because it wasn’t part of the federal aid program, none of the program integrity rules applied.</p>
<p>With no federal money at risk, Trump University is simply a case of what New York Attorney General Eric Schneiderman called <a href="http://www.cnn.com/2016/06/02/politics/eric-schneiderman-attorney-general-trump-university-fraud/">“straight-up fraud.”</a> The case is being brought under laws that apply to any business.</p>
<p>Essentially the institution is accused of <a href="http://www.newyorker.com/news/john-cassidy/trump-university-its-worse-than-you-think">running a scam</a> where free classes were used to lure in customers for expensive seminars that promised to reveal Trump’s secret of real estate investing. In reality, there were no secrets, only high-pressure sales tactics used to sell <a href="https://www.washingtonpost.com/news/answer-sheet/wp/2015/08/08/trump-university-why-the-n-y-attorney-general-called-it-a-scam/">expensive seminars</a>. </p>
<p>Most for-profit colleges and universities, however, are not accused of fraud. They are in the cross-hairs primarily because they rely on government money to survive. And for-profits could eliminate much of the scrutiny if they dropped out of the federal aid programs. </p>
<p>Trump University doesn’t have that option. Even if Trump dropped out of the campaign for president, the trouble with his university would remain.</p><img src="https://counter.theconversation.com/content/60585/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Kevin Kinser does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>For-profit colleges and universities have been in a lot of trouble. But the case of Trump University is different. To start with, it cannot even be called a for-profit university.Kevin Kinser, Associate Professor of Education, University at Albany, State University of New YorkLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/302332014-09-11T05:11:37Z2014-09-11T05:11:37ZWho benefits from huge federal subsidies to US for-profit colleges?<p>A number of high-profile cases have put for-profit higher education in the US under the spotlight in recent months. In July, Corinithian Colleges, one of the largest for-profit providers in the country, <a href="http://www.theguardian.com/education/2014/jul/28/corinthian-colleges-for-profit-education-debt-investigation">agreed to sell 85 of its campuses and close another 12</a> after a number of investigations into its finances and marketing. </p>
<p>This followed a case brought by the Consumer Financial Protection Bureau’s <a href="http://www.consumerfinance.gov/newsroom/cfpb-sues-for-profit-college-chain-itt-for-predatory-lending/">against ITT Educational Services</a>, accusing it of predatory student lending. Each institution has over 70,000 students and annually receives over US$1 billion in federal financial aid. </p>
<p>Public policy debates surrounding for-profit higher education are less about whether it can actually be profitable – <a href="http://www.wcvb.com/money/forprofit-education-stocks-on-fire/27922708">because many providers are doing well</a> – than about who profits. But what is forfeited when the higher education system subsidises these for-profit colleges, also known as proprietary institutions?</p>
<h2>40 years of expansion</h2>
<p>For-profit higher education has dramatically expanded in the last 40 years in the US. Between 1970 and 2009, enrollment in for-profit, degree-granting institutions <a href="http://scholar.harvard.edu/files/lkatz/files/dgk.pdf">grew by more</a> than 100-fold to 1.85m students, nearly 10% of all enrollments. This was compared to a 2.4-fold increase in not-for-profit higher education. From 2000 to 2009, degree and non-degree-granting enrollments tripled in the for-profit higher education sector, versus a 22% increase in not-for-profit higher education. </p>
<p>Before President Barack Obama’s election, for-profit higher education received bi-partisan federal support, evident in the continuation of rules that underwrite a business model dependent on federal subsidy. </p>
<p>Under the 90/10 rule, introduced in 1992, for-profit institutions cannot receive more than 90% of their revenues from federal student financial aid – that does not include federal aid for veterans’ benefits. But <a href="http://capseecenter.org/wp-content/uploads/2012/02/ForProfit_Nimble-Critters_Feb-2012.pdf">many of the largest for-profit</a> providers such as the University of Phoenix, Kaplan, receive over 80%. The sector as a whole receives 73.7% of its revenues from this source. These “for-profits” really are “for (federal) subsidy” institutions.</p>
<h2>Higher debt and lower results</h2>
<p>All this has come amid reduced public funding for public higher education and widening gaps between escalating tuition and limited grant aid that has contributed to massive student debt (over 1$ trillion) and default. In this context, is near-full federal subsidy of for-profits a prudent use of public monies? </p>
<p>Students in two and four-year proprietary institutions are <a href="http://nces.ed.gov/pubs2013/2013165.pdf">far more likely</a> than those at public two and four-year non-doctorate and doctorate-granting institutions to take out student loans, and more likely to accrue higher debt. </p>
<p>Completion rates for BAs are <a href="http://scholar.harvard.edu/files/lkatz/files/dgk.pdf">much lower</a> in four-year for-profits than public universities, as are levels of satisfaction with academic programmes. </p>
<p>Employment outcomes are poorer. And, controlling for individuals’ characteristics, students at for-profit two-year and four-year colleges are 26% and 16% <a href="http://muse.jhu.edu/login?auth=0&type=summary&url=/journals/review_of_higher_education/v037/37.2.hillman.html">more likely to default</a> than those going four-year public colleges. </p>
<p>Such economic and educational outcomes are even more problematic given that proprietary institutions enroll <a href="http://scholar.harvard.edu/files/lkatz/files/dgk.pdf">disproportionately high numbers</a> of low-income and minority students. There is a substitution effect – at the public purse’s expense. For-profit institutions have <a href="http://www.ihep.org/assets/files/publications/m-r/Portraits-Low-Income_Young_Adults_Attendance_Brief_FINAL_June_2011.pdf">increased their share</a> of poor students, from 13% in 2000 to 19% in 2008, as the proportion of such students in public four-year institutions decreased, from 20% to 15%.</p>
<h2>Tightening of controls</h2>
<p>To be sure, there is great diversity in the for-profit higher education sector. Yet, almost all the growth is in for-profit chains such as the University of Phoenix and Laureate International Universities that operate across many states or even countries, with most enrollment online. </p>
<p>The focus of recent government actions and proposed regulations relate not just to the sector as a whole, but also to some of its biggest for-profit chains. One of the Obama administration’s initiatives is an effort to <a href="http://www2.ed.gov/policy/highered/reg/hearulemaking/2012/gainfulemployment.html">promulgate a “gainful employment” regulation</a>, denying federal financial aid to for-profit institutions (and not-for-profits’ vocational programmes) that have high default rates or average graduate employment insufficient to repay student loan debt. </p>
<p>That stems from the existing data on debt and default and from concerns about institutions’ fraudulent reporting, marketing, and recruiting.</p>
<p>The initiative is an executive action by Obama, so doesn’t need to pass through congress. The Department of Education is now preparing to implement the regulations after receiving comments from across the sector. </p>
<h2>Impact on the public HE sector</h2>
<p>More than such abuses, and the direct costs of publicly subsidising proprietary higher education, there are indirect costs and effects too. For-profit institutions not only take monies out of a financially strapped public sector, they also drive public universities towards privatising practices of <a href="http://books.google.co.uk/books/about/Academic_Capitalism.html?id=A-7bFoyY8wcC">“academic capitalism”</a>. These <a href="http://www.aft.org/pdfs/highered/academic/june04/Rhoades.qxp.pdf">include</a> escalating tuition, spending relatively more on marketing, recruitment, management, and (often failed) revenue-generating initiatives, and less money on instruction.</p>
<p>So who profits, even if some for-profits fail? Private shareholders, not public stakeholders. That profit is extracted at the expense of the public purse, and particularly of the least advantaged populations. </p>
<p>Perhaps most destructive, though, is a privatised system’s forfeiture of responsibility and commitment to the broader public interest over the interests of the would-be private firm. That pattern is now too often heard and seen in the discourse and practices of managers at public universities too. </p>
<hr>
<p><em>This article is part of series on for-profit education. Read the other <a href="https://theconversation.com/uk/topics/for-profit-education">articles in the series here</a>.</em></p><img src="https://counter.theconversation.com/content/30233/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Gary Rhoades does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>A number of high-profile cases have put for-profit higher education in the US under the spotlight in recent months. In July, Corinithian Colleges, one of the largest for-profit providers in the country…Gary Rhoades, Head, Department of Educational Policy Studies & Practice, and Professor and Director, Center for the Study of Higher Education, University of ArizonaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/299292014-09-09T05:33:29Z2014-09-09T05:33:29ZThe big winners from Sweden’s for-profit ‘free’ schools are companies, not pupils<figure><img src="https://images.theconversation.com/files/58336/original/skw7vxzc-1409914245.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">At the end of the day, who benefits?</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/dahlstroms/3548284681/sizes/l">Håkan Dahlström</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span></figcaption></figure><p>Sweden’s free school model is often rolled out as an example by both those for and against the idea of companies running schools. One of the first countries in the world to allow schools to be run for profit, now <a href="http://www.ft.com/cms/s/0/dc8bb3b4-29f2-11e4-914f-00144feabdc0.html">nearly a fifth</a> of students go to <em>friskola</em>, or free schools. Yet 20 years after their introduction, there is little evidence to show that pupils are the ones gaining most from the reforms. </p>
<p>Free schools – called free because they are not government-run – were introduced in 1992 in Sweden as a part of a major restructuring of the education system. The country went from a highly centralised system in which municipalities and schools had very limited influence, to one of the most decentralised systems in Europe. Behind this major reform was a centre-right government, which for the first time in post-war Sweden mustered an effective attack on the Social Democrats and the colossal welfare state. Reformers argued that increased local control over decision-making would lead to more effective school economies, greater variation and choice.</p>
<h2>For-profits drive free school growth</h2>
<p>The new government introduced school vouchers in 1992 that parents could use to send their children to either state-run schools (nine-year, all-through comprehensive schools) or newly established independent schools – the free schools. At the time, fewer than 1% of all school-age children were enrolled in independent schools, but in the years since then the private education sector, supported by public funding, has rapidly expanded. </p>
<p>The sector was not reined in by Sweden’s Social Democrats upon their return to government between 1994 and 2006. Instead, they endorsed and even strengthened it, raising state subsidies to free schools from 85% to 100%. They argued that the financial situation of parents should not determine their children’s educational opportunities.</p>
<p>This cross-party consensus was crucial for the private school sector to take off. Its growth was not driven by community groups seeking to set up new schools but rather by for-profit providers who were allowed into the “school market”. </p>
<p>In 2011, 20% of Swedish school children attended free schools at upper secondary level and 10% attended free schools at primary or lower secondary level. More than <a href="http://www.iea.org.uk/sites/default/files/publications/files/Schooling%20for%20money%20-%20web%20version_0.pdf">65% of all of these schools</a> are for-profit, which translates into 13% of all Swedish schools. The not-for-profit free schools, usually offering alternative curricula or religious education, occupy a niche within the private school sector and are extremely slow growing.</p>
<h2>Are the students doing better?</h2>
<p>Since their inception, free schools have been <a href="http://www.skolverket.se/om-skolverket/andra-sprak-och-lattlast/in-english/the-swedish-national-agency-for-education-1.61968">subject to research</a>, primarily concerned with two issues: student attainment and educational inequality. When it comes to attainment, numerous studies have been produced with mixed results. Generally, they show that free schools haven’t improved student attainment to such a degree that the model is desirable for other countries to copy. </p>
<p>Research by Swedish academics Anders Böhlmark and Mikael Lindahl has found that <a href="http://repec.iza.org/dp2786.pdf">an increase</a> in the free school share in a municipality moderately improves short-term educational outcomes for 15 to 16-year-olds. However, they <a href="http://ftp.iza.org/dp3691.pdf">do not find any</a> impact on medium or long-term educational outcomes. </p>
<p>In other words, the advantage that children schooled in areas with free schools have by the age of 16 is not translated into greater achievements later in life. They score no better than children educated in government-run schools in final exams in upper secondary education at the age of 18 and 19. They are also no more likely to participate in higher education than those who were schooled in areas without free schools. </p>
<p>There is an ongoing debate in Sweden as to whether the slightly higher achievement at the earlier age may be attributed to grade inflation. Even if this is not the case, the short-term effect is still too small to yield any long-term positive effects for young people.</p>
<h2>More social segregation</h2>
<p>On the issue of educational inequality, <a href="http://repec.iza.org/dp2786.pdf">national studies</a> show that use of school choice has augmented social and ethnic segregation in Sweden, particularly in relation to schools in deprived areas.</p>
<p>The <a href="http://www.oecd.org/pisa/keyfindings/pisa-2012-results.htm">2012 Programme for International Student Assessment</a> (PISA) data from the Organisation for Economic Co-operation and Development put this issue into the limelight, when it showed that Sweden’s results in reading, maths and science had declined – in part as a result of increasing social inequality. </p>
<p>A more uneven distribution of children from social groups across schools <a href="http://www.llakes.org/wp-content/uploads/2010/08/Z.-Regimes-of-Social-Cohesion.pdf">leads to lower results</a>, because children’s academic achievement depends largely on the characteristics of their peers.</p>
<p>Although there are not enough free schools to have had a strong impact on the 2012 PISA results, they are nevertheless a contributing factor. Albeit on a small scale, free schools <a href="https://theconversation.com/what-swedish-free-schools-reveal-about-social-segregation-24682">have increased social segregation,</a> even in the context of the relatively egalitarian education system. </p>
<h2>Cutting costs</h2>
<p>The main beneficiaries of Sweden’s free schools seem to be the education businesses making profit, not children. Although a few businesses, such as <a href="http://www.tes.co.uk/article.aspx?storycode=6341728">JB Education</a> have recently gone bankrupt, it is generally a thriving sector. </p>
<p>Government funding is attached to the number of pupils at a school, so free schools are incentivised to prioritise quantity over quality. </p>
<p>In order to cut salary costs – the most expensive item on the school budget – free schools employ a higher number of unqualified teacher assistants than in the state schools. Those who are qualified are generally younger and less experienced. The teachers in free schools are also responsible for a higher number of students than in the state sector.</p>
<p>Innovation appears to be primarily based on the extensive use of technology and individual learning skills, reducing face-to-face contact between teachers and students. In addition, unlike government schools, free schools are not required to have science labs, libraries and school nurses, all elements which help in reducing costs.</p>
<h2>Quantity over quality</h2>
<p>In turn, the focus on quantity over quality has resulted in increased government regulation of education. The main examples of this have been the re-centralisation of the national curriculum in 2011, which all schools in Sweden must abide by, alongside more regulation of teachers’ practices. </p>
<p>If the aim of education is to reconcile high achievement and social integration (Finland serving as an <a href="http://www.oecd.org/pisa/pisaproducts/46581035.pdf">excellent example</a>), it can be concluded that Sweden’s free schools have had the opposite effect. </p>
<p>Consumer surveys show, perhaps surprisingly, that Swedish parents are generally happy with the free schools. However, they are critical of taxpayers’ money going straight to the businesses. In that respect, the free schools have remained controversial since their birth. </p>
<p>The Swedish experience shows that allowing for-profit providers into the “school market” has not lead to increased standards and improved schools, but instead permitted another vested interest into education in pursuit of aims above those of childrens’ education, in this respect: profit. </p>
<hr>
<p><em>This article is part of series on for-profit education. Read the other <a href="https://theconversation.com/uk/topics/for-profit-education">articles in the series here</a>.</em></p><img src="https://counter.theconversation.com/content/29929/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Susanne Wiborg receives funding from the ESRC. </span></em></p>Sweden’s free school model is often rolled out as an example by both those for and against the idea of companies running schools. One of the first countries in the world to allow schools to be run for…Susanne Wiborg, Reader in Education, Department of Lifelong and Comparative Education, UCLLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/310692014-09-07T23:00:11Z2014-09-07T23:00:11ZFor-profit state schools have some attractions, but they’d be politically toxic<p>The latter days of Michael Gove’s time at the Department for Education were <a href="https://theconversation.com/birmingham-has-most-to-lose-from-gove-may-extremism-row-27650">dominated by the Trojan Horse</a> extremism plot in Birmingham. But in his four years as secretary of state, there were recurring suggestions that Gove was doing his own plotting. By this account, free schools would be the “Trojan Horse” through which profit-making companies could run state schools.</p>
<p>To the disappointment of the conspiracy theorists I suppose, I never saw any such plans – secret or otherwise – while I served as Gove’s permanent secretary. Nor have I seen anything to suggest otherwise since I left the Department for Education in 2012.</p>
<p>Gove’s comments to the Leveson inquiry in 2012 that he <a href="http://www.theguardian.com/politics/2012/may/29/michael-gove-open-state-schools-profit">had an “open mind”</a> about allowing profit-makers to run free schools have been held up by his numerous critics as proof of his intent. What is less reported is his immediate caveat: “I apply one test [to profit-making]: are we improving education overall and improving the lives of the poorest most of all?” </p>
<p>Gove’s position was reflected by his successor Nicky Morgan, who in a <a href="http://news.tes.co.uk/b/news/2014/09/03/nicky-morgan-refuses-to-rule-out-schools-being-run-for-profit.aspx">webchat with teachers</a> refused to rule out for-profit schools under a future Tory government – while also observing that “most people may not be very keen” on the idea.</p>
<p>Yet on the surface, it is difficult to have a principled moral objection to making a profit from state education, and I say that as one whose whole personal and family experience has been of state schools. Many aspects of operating schools can be, and are, already outsourced to the private sector – supply teachers, catering, special needs support, textbooks and IT.</p>
<p>Furthermore, the private sector could leverage capital to allow schools to expand quickly to meet demand. After all, the state cannot afford to create and maintain hundreds of thousands of surplus places, in the off-chance that demand might increase in time.</p>
<p>But any suggestion that the “core” activities of state schools – teaching and leadership principally – might be privatised would provoke a visceral reaction. Yet the suspicion lingers that the Conservative party may be tempted in this direction the other side of an election. This is despite the apparent <a href="http://news.tes.co.uk/b/news/2014/08/15/nicky-morgan-academies-are-39-just-part-of-the-picture-39-as-charm-offensive-continues.aspx">“play safe” policy</a> that the recent change of secretary of state appeared to represent.</p>
<p>So with no moral objections that make consistent sense and the bracing ideological attractions of exploring privatisation’s next frontiers, why would a major commitment to profit-making schools be such a bad idea?</p>
<h2>Evidence in short supply</h2>
<p>First, there is little conclusive evidence yet that commercial operators in <a href="http://www.ft.com/intl/cms/s/0/dc8bb3b4-29f2-11e4-914f-00144feabdc0.html?siteedition=uk">Sweden</a>, <a href="https://theconversation.com/sweeping-reforms-set-to-end-for-profit-education-in-chile-26406">Chile</a> and the US are universally more effective in running government-funded schools. No robust models have been established for whether profit-making would meet demand for good school places; be commercially viable; create better choice; increase competition; or raise standards. These remain <a href="http://www.newstatesman.com/blogs/the-staggers/2012/02/profit-schools-providers">inconvenient truths</a> for the disciples of privatisation.</p>
<p>Second, English schools are rooted in a different private sector – the private charitable sector. The move to universal education was promoted through organised religion. As a result, the Church of England and the Roman Catholic Church run thousands of schools in a decidedly non-profit making manner.</p>
<p>It is often forgotten by <a href="http://www.iea.org.uk/sites/default/files/publications/files/Schooling%20for%20money%20-%20web%20version_0.pdf">right-of-centre ideologues</a> that the academies programme was built on private philanthropy. It was the brilliant insight of Lord Adonis and others that many wealthy people wanted to “give back” to education in a way that went well beyond providing expensive new facilities in independent schools. In its own way, the coalition government has enhanced public sector philanthropy through headteachers, teachers and charitable trusts building federations – all fired by moral purpose, not profit.</p>
<p>Third, any move to privatise state schools could let other education providers off the hook. Local authorities may have a different role to that which they occupied historically when it came to “their” schools. But every locality needs strong schools. High-quality education should remain at the heart of the civic mission, something that progressive mayors and councils around the country recognise.</p>
<p>Independent schools, universities and further education colleges all have a contribution to make. Their willingness to act as equal partners to state schools, assisting them in their mission, is likely to be much more popular than for-profit providers who retain an image problem when it comes to education.</p>
<h2>Not a vote-winner</h2>
<p>This goes to the heart of the complex, nuanced British psyche when it comes to choice in education. <a href="http://www.lse.ac.uk/newsandmedia/news/archives/2011/12/schoolchoice.aspx">Research</a> from the London School of Economics and British Social Attitudes in recent years shows that while parents value choice when it comes to where their children are educated, they balance that up against the impact on others. Values seem to matter.</p>
<p>Those values continue to influence parental views on school reform. We will argue for years to come on the impact of the Gove-led changes, but it is undoubtedly the case that increasing public unease was causing problems for the government. Against such a backdrop, it has hard to believe that the introduction of profit-making state schools would be a vote-winner.</p>
<p>Capitalism may not be in crisis, but Labour’s <a href="http://www.thetimes.co.uk/tto/news/politics/article4030637.ece">pointed attacks</a> on how it is working are striking a chord. In such a climate, allowing taxpayers’ money for the basic provision of education to go to shareholders will be a very tough political sell.</p>
<p>State education may have a bit to do before it becomes an NHS-like national religion. But relentless attacks on it, with for-profit schools as the answer, go down much worse than many politicians and commentators seem to think. Too often, they speak with little, if any, direct experience of state education, unlike the vast majority of their fellow citizens.</p>
<h2>Not going the way of the NHS</h2>
<p>Does this mean that state education will forever be barred to for-profit providers? For the time being, yes. Despite what I have written above, that may be a pity. The NHS has shown over the past decade that there is a role for the private sector in delivering core public services. Despite controversy and resistance from some quarters, many people seem to accept that this makes good sense. But that is very far from saying that wholesale marketisation would be acceptable, something that its advocates often fail to understand.</p>
<p>In education, small-scale interventions may be the way forward and an opportunity for the private sector to demonstrate that it can fill the gap where the state has failed. Alternatively, if there are limits to expansion capacity within the publicly funded system then, again, the private sector may be able to support in a complementary manner. What works is often what is best.</p>
<p>Labour’s <a href="http://www.educationengland.org.uk/documents/wp1997/excellence-in-schools.html">1997 mantra of “standards not structures”</a> may have been overly simple in that structures do play a part – a point that Tony Blair came to realise. But slick slogan though it was, it pointed to an essential truth and one which Labour has recognised once again. If we want to improve our education system, then what happens in classrooms and schools is much more important than what goes on in the fevered imagination of policy wonks.</p>
<hr>
<p><em>This article is part of series on for-profit education. Read the other <a href="https://theconversation.com/uk/topics/for-profit-education">articles in the series here</a>.</em></p><img src="https://counter.theconversation.com/content/31069/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>David Bell does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The latter days of Michael Gove’s time at the Department for Education were dominated by the Trojan Horse extremism plot in Birmingham. But in his four years as secretary of state, there were recurring…David Bell, Vice-Chancellor, University of ReadingLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/264062014-05-20T05:14:43Z2014-05-20T05:14:43ZSweeping reforms set to end for-profit education in Chile<p>Chile’s newly re-elected president Michelle Bachelet <a href="http://michellebachelet.cl/programa/">has announced a radical set of educational reforms</a> that are set to review the country’s market-based approach to primary and secondary education. </p>
<p>Bachelet’s reforms – aimed at dismantling a series of neoliberal policies put in place in the early 1980s – will be paid for by an <a href="http://www.bloomberg.com/news/2014-04-14/rich-deducting-groceries-in-chile-target-of-bachelet-plan-taxes.html">overhaul of the tax system</a>. They include three key measures: to end public funding to private, for-profit schools, to make all primary and secondary education free of charge, and to prohibit contested selective practices used in school admission processes. Bachelet <a href="http://www.gob.cl/2014/05/19/jefa-de-estado-firma-proyectos-de-ley-que-ponen-fin-al-lucro-la-seleccion-y-el-financiamiento-compartido-en-la-educacion-escolar-y-la-creacion-de-una-nueva-institucionalidad-parvularia/">sent the proposals</a> to the Chilean parliament on May 19, and a long controversial legislative debate is now expected.</p>
<p>The changes imply a significant departure from the previous three decades of educational policies in Chile, which have gone precisely in the opposite direction by promoting a market-oriented educational system. </p>
<p>A key reason behind the policy shift is the strong and persistent student movement, which started in 2006 (at the start of Bachelet’s first presidential term) and has been continuously active in Chile since 2011. The student movement has consistently demanded <a href="http://www.tc.columbia.edu/i/a/document/28175_15_02_Bellei_Cabalin.pdf">the kind of policy reform Bachelet has now announced</a>. </p>
<p>But students <a href="http://www.buenosairesherald.com/article/158971/chileans-march-to-pressure-bachelet-on-reforms">took to the streets in May</a> to keep the pressure on. In this context, it is important to ask whether these policy reforms are also based on evidence, as opposed to a mere political response to social protests.</p>
<h2>End to for-profit education</h2>
<p>First, the announced reform prohibits for-profit private providers of education, when their profits are obtained directly or indirectly from public funds. This is aimed at ensuring public expenditure on education will go directly to improve quality.</p>
<p>Since the creation of the Chilean school voucher system in 1980 the fastest growing sector has been that of for-profit institutions. The voucher system – where the state gives parents a voucher to use in either private or public schools – was created as part of a market-oriented reform that also included decentralisation of the public education and privatisation. </p>
<p>As a result, for-profit institutions currently account for a third of the total national primary and secondary enrolment, and receive state subsidies on equal terms with not-for-profit private and public institutions.</p>
<p>At the post-secondary level, universities are meant to be non-profit entitites. But <a href="http://www.uchile.cl/publicaciones/97057/con-fines-de-lucro">there is evidence</a> that some new private universities use subterfuges to permit the return of profits for their owners, such as by contracting services or leasing buildings through related companies. </p>
<p>Some international companies including Laureate International and Apollo have purchased large private universities in Chile. </p>
<p>In 2011, a special commission of the House of Representatives identified systematic and extensive practices through which the owners of some private universities <a href="http://www.camara.cl/pdf.aspx?prmTIPO=MANDATOSGRALDET&prmID=6866&prmTIPODOC=COM&prmPERIODO=2010-2014">avoided the law to make profits</a>. </p>
<p>The courts have also begun to <a href="http://www.universityworldnews.com/article.php?story=20121206064955774">investigate allegations</a> of undercover profit and use of illegal tactics by new private institutions to obtain the quality accreditation required to access public resources. </p>
<p>Profit-making motives have also been related to <a href="http://www.econ.uchile.cl/uploads/publicacion/70f845877d9fb897c334e82a9f627fea782d7a6b.pdf">undesirable practices in education</a>, including discrimination against students from low-income families and students with low academic abilities, low quality education services, and the uncontrolled growth of low-cost undergraduate programs with low employability outcomes. There is <a href="http://issuu.com/cefech/docs/sesion_2-cristian_bellei-el_lucro_e/1">also evidence</a> that for-profit schools are less effective than non-profit schools in terms of educational attainment.</p>
<h2>Free education for all</h2>
<p>In another section of the reforms, Bachelet has embraced free education, proposing the end of the co-payment system at the school level. This is a family fee-charging mechanism called “shared funding” that allows and encourages private voucher schools to charge a tuition fee without losing access to the state subsidy. It is used in around 80% of private voucher schools. </p>
<p>The fact that Chile’s government-funded private schools are allowed to charge tuition fees to families has been a highly controversial issue for two decades, because compulsory education is formally “free” in Chile.</p>
<p>The co-payment system introduces a price discrimination mechanism among schools, which is directly linked to the socio-economic status of the student population. This co-payment system has been linked to the high and increasing level of <a href="http://www.tandfonline.com/doi/full/10.1080/02680939.2013.806995#.U3pDO_l5OaI">socioeconomic school segregation in Chile</a>, which is the highest among OECD countries.</p>
<p>On the other hand, there is no evidence that this mechanism has improved <a href="http://www.sciencedirect.com/science/article/pii/S0738059310001367">Chilean educational quality</a>. </p>
<p>The fact that Chilean students are so highly segregated may be related to the finding that consistently indicates that – in comparative terms – students’ academic achievement is strongly related to students’ socio-economic status in Chile. By eliminating the co-payment system, Bachelet is attempting to reduce school social segregation and reinforce parents’ school choice.</p>
<h2>End to discrimination</h2>
<p>The reforms are also trying to eliminate discriminatory practices by schools. Chilean schools apply arbitrary mechanisms for selecting students, both in the admission process and throughout students’ academic trajectories. </p>
<p>Primary and secondary schools select students based on past performance, prediction of future performance, student’s behaviour, family income, and other family characteristics. These selective mechanisms are especially prevalent in private institutions, <a href="http://onlinelibrary.wiley.com/doi/10.1111/j.1540-6237.2010.00735.x/abstract">including schools that receive state funding</a>. </p>
<p>Many of these practices have long been denounced by international organisations and human rights advocates as detrimental to students’ right to education. Nevertheless, Chilean political and judicial institutions have previously defended the notion of “free enterprise” in the education market, giving educational providers freedom to set their own rules to admit and expel students. The school selection processes were partially regulated by Bachelet’s General Education Law in 2009, but these regulations seem to have <a href="http://www.ceppe.cl/images/stories/recursos/VF_Resumen_A_Carrasco_et_al_FONIDE_Seleccion_2014.pdf">had little impact on school admission policies</a>.</p>
<p>These selection methods provide a competitive advantage to private schools compared to public schools. The state actively promotes parents’ school choice by publishing school rankings based on students’ performance and applies several test-based accountability policies, including strong sanctions to underperforming schools. Research has shown that when controlling for selection bias,
the <a href="http://www.periglobal.org/sites/periglobal.org/files/BELLEI%20-PEPG-05-13%20Private%20Public%20in%20Chile.pdf">performance advantage observed</a> in private schools compared to public school disappears.</p>
<h2>Opposition likely</h2>
<p>Overall, Bachelet’s announced reforms are attempting to reverse the extreme marketisation of Chilean education. But the technical complexities and political challenges of these policies make them a highly risky decision, and much debate is likely to ensue. </p>
<p>Representatives of private education (including the <a href="http://www.lanacion.cl/noticias/pais/educacion/bachelet-hay-mucha-mitologia-en-torno-a-la-reforma-educacional/2014-04-22/140534.html">Catholic Church</a> which is a key educational stakeholder in Chile) and opposition political leaders have already criticised different aspects of the reforms, arguing that they jeopardise the diversity of educational providers and the freedom of education. </p>
<p>Nevertheless, if successful, Bachelet will create a more appropriate institutional framework to recover, strengthen and expand Chilean public education. </p><img src="https://counter.theconversation.com/content/26406/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Cristián Bellei has been systematically consulted as an external expert by the Bachelet administration on the ongoing education reforms.</span></em></p>Chile’s newly re-elected president Michelle Bachelet has announced a radical set of educational reforms that are set to review the country’s market-based approach to primary and secondary education. Bachelet’s…Cristián Bellei, Researcher, Center for Advanced Research in Education & Sociology Department, Universidad de ChileLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/70152012-12-23T23:59:19Z2012-12-23T23:59:19ZDo we want for-profit schools in Australia?<figure><img src="https://images.theconversation.com/files/12226/original/hc7hyq22-1340752710.jpg?ixlib=rb-1.1.0&rect=31%2C31%2C3511%2C2423&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">It's time we looked at the idea of for-profit education in Australia.</span> <span class="attribution"><span class="source">EPA/Guillaume Horcajuleo</span></span></figcaption></figure><p>For-profit education is something that really doesn’t exist in Australia… yet. But in many other countries around the world it has become a normal part of education and there are now many companies providing a range of educational products.</p>
<p>One of these, for example, offers a “platinum-style” education costing up to $US100,000 or so, all the way down to a cheaper “basic model”. This company aims to cater for five million students by 2024 and may offer its shares to the public to fund further expansion. </p>
<p>The idea behind many of these companies is to fill a gap, providing cut price education relative to the established private schools in countries such as <a href="http://www.guardian.co.uk/education/2012/feb/02/quality-education-public-schools-half-price%20accessed%2020/5/12">the United Kingdom</a>. But these groups are also now considering heading our way.</p>
<h2>Do we have for-profit education?</h2>
<p>Currently the majority of Australian schools are not-for-profit. Being non-commercial is a pre-requisite for government funding, whether they are independent, Catholic or government. They are all required to put any profit they make back into the school.</p>
<p>So even the so-called “totemic schools” ultimately plough money back into the provision of extra facilities, services and scholarships for students. Certainly no single or group of individuals directly gains financial advantage from involvement in such schools. </p>
<p>The for-profit institutions that do exist in Australia do not operate in the primary or secondary school sectors. In Australia we have an expectation that government is primarily responsible for the core provision of school education. This is outlined in each state’s Education Act. </p>
<p>In addition to legislation, culturally we have an expectation that government will be the primary provider of school education.</p>
<h2>Public culture</h2>
<p>This expectation works, to a point, as our nation has the infrastructure to do this. Interestingly some countries where private providers have grown most rapidly have been in Eastern Europe, parts of Asia and Latin America - where suitable infrastructure often does not exist.</p>
<p>There are those who suggest that we, as a nation, should rethink the orthodoxy that certain services such as education must be delivered exclusively by the public sector or on a not-for-profit basis. This is a complex discussion and one that will need to consider cultural, educational, economic and even philosophical issues. </p>
<p>Are we talking about private, stand-alone institutions or are we talking about the government handing over the provision of public education to private providers? Perhaps it is timely that we examine again what we want in providing an education for our citizens.</p>
<h2>Shift in thinking</h2>
<p>If we see education as reflecting the societal goals of the host culture, then a certain schooling product is envisaged. If the goal is one of profit, where a subset of the citizenry is advantaged, then a different paradigm will exist.</p>
<p>At present, there is a move towards greater school and community partnerships, and indeed this is a federal government imperative. If the $5 billion dollar education funding boost estimated by the Gonski review is right and the government is unwilling or unable to provide this, then one response might be to outsource provision to private providers. </p>
<p>The recent <a href="http://www.deewr.gov.au/schooling/ReviewofFunding/Pages/default.aspx">Review of Funding for Schooling</a> estimates $1.4 billion was provided to schools from private sources including donations in 2009. While education is still coming to terms with the involvement of not-for–profits in the delivery of education, we are challenged to ensure that schools and teachers remain at the heart of reform and innovation.</p>
<h2>Profit from disadvantage</h2>
<p>The involvement of for-profit organisations is that much more problematic. Even with the current system involving the not-for-profits, there is a tendency towards ad hoc, non-systemic roll-outs. </p>
<p>If <a href="http://www.theaustralian.com.au/national-affairs/grants-blighted-by-waste-lack-of-checks/story-fn59niix-1226367477596">this recent article</a> in The Australian newspaper is anything to go by, we need no more evidence of the inefficiency of many non-systemic programs due to ineffective, non-sustainable and inappropriate processes, particularly in the area of Indigenous education and community support. </p>
<p>While lack of due diligence on the part of the grant providers regarding the applicants was cited as a reason for the outcomes in this case, if credentials are based purely on economic return, then some of the offshore providers may prove very attractive. </p>
<p>The thought that some might make money out of our most disadvantaged communities though, as <a href="http://www.theaustralian.com.au/national-affairs/education/pms-adviser-challenges-non-commercial-ethos/story-fn59nlz9-1226354297310">has been suggested</a>, seems particularly galling.</p>
<h2>The best and the worst</h2>
<p>Whether there is room here for increased involvement with profit-focused organisations raises a number of issues. One would have to ask why they are needed. What niche is there to fill in Australia? It is difficult to see here exactly for what problem “private, for-profit public (or independent) schools” are designed to be the answer. </p>
<p>Organisations that operate in the area of accreditation for schools around the world talk of for-profit schools being “some of the best and some of the worst”. Considering that the bulk of a school’s expenses in Australia arise from teacher salaries, one can only imagine that savings might come from cutting corners in this area. Certainly, experiences in South East Asia, where the for-profit schools are becoming more common, would suggest this is so. </p>
<p>Given that staff quality has been identified as <a href="http://www.acer.edu.au/documents/RC2003_Hattie_TeachersMakeADifference.pdf">the single most important factor</a> over which schools have some control this may influence educational outcomes for children.</p>
<p>Similarly the regulation of crucial areas such as curriculum and assessment regimes can be problematic, if private operators favour certain approaches over national or local contexts. </p>
<h2>What next?</h2>
<p>The area of for-profit education requires careful consideration. </p>
<p>Families compelled by law to send their children to school would have every right to feel very wary of having them passed by government into the care of a contracted profit-making individual, corporation or community group not of the parents’ own choosing.</p>
<p>Either way, a discussion with full disclosure involving all stakeholder motives and a clear decision-making and quality regulation process is essential. When it is the lives of our young people at stake, we need to be that much more vigilant; else we may see another ABC childcare type debacle happening at other levels of education.</p>
<p>This is a discussion we need to have.</p><img src="https://counter.theconversation.com/content/7015/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>For-profit education is something that really doesn’t exist in Australia… yet. But in many other countries around the world it has become a normal part of education and there are now many companies providing…Annette Rome, Casual lecturer, Melbourne Graduate School of Education, The University of MelbourneAdam Smith, Board Member, Australian Council for Educational ResearchLicensed as Creative Commons – attribution, no derivatives.