Brief #24—Education

Policy Summary
For-profit colleges are privately owned, post-secondary schools operated by businesses with the goal of maximizing their profits; most students are enrolled in two-year certificate programs. The schools focus on enrolling a stream of new students with little effort in improving educational programs. Unsurprisingly, most students drop out and are left with crushing student debt. Education Secretary Betsy Devos is proposing new DOE rules that would cut an estimated $13 billion in federal student loan relief for students defrauded by for-profit colleges. The changes eliminate the 2016 Borrower Defense rule, which provided student loan relief in a wide range of cases by the Obama administration after the collapse of ITT Tech and Corinthian College.

Since 2015, DOE has received more than 100,000 claims which are under review. The proposal will only apply to loans after July 1, 2019. Devos stated that DOE lays out clear rules which schools must follow in order to “avoid trouble but also stated that students are obliged to conduct their own research on for-profit schools because “postsecondary students are adults who can be reasonably expected to make informed decisions if they have access to relevant and reliable data about program outcomes.” Under the plan, students are eligible for loan relief only if they can prove that their school knowingly misled them with statements or actions that directly led them to take out loans or enroll at the school. Some committee members argued that the new proposal will prevent taxpayers from paying for unreasonable claims of fraud. LEARN MORE

DOE officials will also allow schools to defend themselves against claims of fraud because “schools deserve to defend themselves against accusations that could damage their reputations and revenue.” Such changes could strip students of their rights to recourse, making it next to impossible for students who bring claims to receive adequate relief. For instance, for-profit schools have forced students into arbitration agreements – a practice banned under the Obama administration due to the unequal bargaining power between students and schools. While the Obama administration granted full relief for borrowers, the current DOE announced that it will provide only partial relief for borrowers based on income. LEARN MORE

Unlike the Borrower Defense rule, which allowed relief in many cases dealing with breach of contract issues, Devos requirement that students must prove that a school knowingly misled them places the burden of proof unreasonably on students who have little to no access to a school’s internal operations or materials that could potentially prove a school’s intent. Eliminating the Borrower Defense rule essentially allows predatory schools to further mislead and defraud students.

Furthermore, companies running alternative schools, such as Camelot Education, have been accused of perpetuating staff-on-student violence. An investigation by The Teacher Project found allegations of abuse in Camelot schools spanning 10 years and three states in Reading; Lancaster; Philadelphia; New Orleans; and Pensacola, Florida. Although students described prison-like conditions in these schools – where they have been taunted, beaten, and isolated in order to maintain obedience and control – no staff member faced discipline or criminal charges.

It is no coincidence that for-profit colleges are more likely to recruit low-income students and underrepresented minorities by sending circulars to housing projects and assuring the availability of loans. DOE’s statement regarding the need to protect students from predatory lenders while simultaneously utilizing a patronizing tone of personal responsibility telling its victimized students to walk a tight line of perfection is deeply disturbing. For-profit schools deceptively funnel their revenues into advertising and enrollment efforts rather than into quality education programs, ensuring that a steady stream of tuition dollars will flow into the pockets of greedy executives and shareholders. Research also shows that community colleges may provide a better education at lower costs but budget pressures often mean that they are unable to meet the demands for higher education. Students unable to get into these programs are left with no option but to attend for-profit schools; the alternative is no postsecondary education – not a particularly viable option in a global economy where having a college degree has become a bare necessity to survive.

Rather than trying to squeeze blood out of stones, perhaps the DOE should focus on tightening regulation at for-profit colleges and decreasing the costs of nonprofit public or private schools, especially for low-income families. Taxpayer investment in student aid should also follow scrutiny on whether students are able to complete their studies and earn enough to justify pay back of their loans. Investing in public education to uplift disadvantaged students rather than well-to-do executives is not such a bad idea considering that a well-educated populace is essential to acountry’s successful social and economic welfare. LEARN MORE

Engagement Resources
Higher Ed for Higher Standards – Growing coalition of college presidents, trustees, chancellors, and state system leaders who believe aligned expectations and strong partnerships between K-12 and postsecondary leaders are critical to improving student success.
American Council on Education (ACE) – ACE is the nation’s most visible and influential higher education association, representing presidents of U.S. accredited, degree-granting institutions, which include two- and four-year colleges, private and public universities, and nonprofit and for-profit entities. ACE convenes representatives from all sectors to collectively tackle the toughest higher education challenges, with a focus on improving access and preparing every student to succeed.American Association of Community Colleges (AACC) A nonprofit organization and leading proponent for community colleges, representing 1,200 two-year, associate degree-granting institutions and more than 13 million students, as well as a growing number of international members.
Association of American Universities (AAU) A nonprofit 501(c)(3) organization of 62 leading public and private research universities in the United States and Canada. AAU focuses on issues important to research-intensive universities, such as funding for research, research policy issues, and graduate and undergraduate education.

This Brief was developed by USRESIST NEWS Analyst Tina Lee.

Photo By: Nathan Dumlao

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