Education or Exploitation: Is For-profit Education an Investment or a Scam? Part 1

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With a competitive job market and societal pressure to obtain a postsecondary degree, millions of Americans seek to obtain higher education. Some attend non-profit colleges and universities, while growing numbers enroll in programs administered by for-profits. For-profit colleges differ because they are managed and governed by private corporations and are established to make money.

According to The National Conference of State Legislatures, for-profit colleges’ enrollment has drastically increased over the past decades, enrolling about 12% of all postsecondary students. These colleges are attractive due to their year round enrollment, online options, and convenient locations that accommodate the needs of working adults, part-time students, and students with children. The growth of for-profits colleges has provided many underrepresented groups access to a higher education. However, the growing concern is whether students at for-profit colleges are receiving a quality education. Issues of low graduation rates, employability, and excessive debt have led to state and federal action. Connecticut, Maryland, California, and Michigan have responded to these issues through legislation. Currently federal action is being pursued.

On March 25, 2014, the Department of Education (DOE) released a Gainful Employment Rule proposal (PDF). The proposal requires postsecondary educational programs to sufficiently prepare students for gainful employment and establishes conditions under which these educational programs remain eligible for the student financial assistance programs, authorized under Title IV of the Higher Education Act of 1965 (HEA). This is the DOE’s second attempt at revising the Gainful Employment Rule. The first attempt was unsuccessful in part because of the lack of empirical studies to support the rule.

The new proposal emerged in response to the argument that current regulations are too lax (Ass'n of Private Sector Colleges & Univs. 436, 437). Student, veteran, and consumer advocacy groups, as well as several U.S. senators and representatives have been advocating for the DOE to strengthen the rule. Prior to technical amendments made in September 2013, regulations allowed schools to circumvent the HEA, threatening the integrity of Title IV programs (Id. 437). For example, DOE agents found that the University of Phoenix “had ‘systematically engaged in actions designed to mislead the [Department] and to evade detection of its improper incentive compensation system for those involved in recruiting activities (Id.).’”

Posted by Bianca A. Kegler on Wed. July 9, 2014 12:27 PM
Categories: Student Research
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