Guest Opinion: Is for-profit education back?
A higher education business model targeted in the Obama administration for preying on military veterans, minorities and poor people is poised to get a second life under the new education secretary, Betsy DeVos. The businesses are for-profit college companies, including Trump University, which racked up enormous student debt that led to exploding default rates. They prey on students who lack the academic credentials to get into public higher education institutions.
For-profit colleges account for about 8 percent of total higher education enrollment but 15 percent of subsidized student loans. You don’t have to be a math whiz to know that equation’s out of whack. Taxpayers are saddled with bills they shouldn’t have to pay to bail out former students defrauded or misled by the for-profit companies.
When two industry giants, Corinthian Colleges in 2015 and ITT Technical Institute, collapsed last year, thousands of students were stranded without degrees but left mired in debt. As the largest provider of student loans, the federal government was left to bail them out.
Among the failures, the defunct Trump University was besieged by lawsuits from former students. New York’s attorney general called the school a fraud. Then-President-elect Donald Trump did not admit wrongdoing but agreed to a $25 million settlement in November.
Now the industry is roaring back, complaining it was regulated too severely and asking for relief from the Republican administration and Congress. Out are the watchdogs who cracked down on the multibillion-dollar industry. Some of the new overseers are the very people who profited from it, such as DeVos.
After Trump nominated DeVos, she provided information to the U.S. Office of Government Ethics showing she benefited from investments in for-profit educational ventures. An ardent supporter of privately run schools, DeVos was questioned at length during confirmation hearings on her support for using taxpayer-funded vouchers for private, online and religious schools. She was asked few questions about her views on higher education.
That’s precisely the educational sphere in which the new administration’s power will have the most impact, since monitoring of public schools remains largely under control of states and localities. The switch in government sent industry stocks soaring. Forbes magazine reports that leaders, such as DeVry Education Group, Strayer and Grand Canyon Education, are outperforming the S&P 500 by more than 15 percent since Trump’s election.
While the industry is back making money, executives and investors are relishing the prospect of rolling back such Obama-era regulations as the “gainful employment” rule, which revokes access to federal funding for schools that don’t meet job-placement thresholds.
Veterans, minorities and low-income citizens looking to improve their lives must beware. If the industry gets what it’s seeking — reduced scrutiny, lower accountability and degraded financial stability standards — there will be renewed vigor to exploit vulnerable students.