The Liberal Paradox
Suppose that a conservative Republican Administration, in the middle of high unemployment and an economic slowdown, proposed new regulations that would most hurt lower income people and minority groups and the for-profit colleges and universities that serve them? Can you imagine the cries of outrage from liberal critics, condemning "hard-hearted" Republicans targeting the most vulnerable young people in our society?
Yet that is exactly what the Department of Education's proposed "gainful employment" regulations would likely do. They are almost exclusively aimed at "for profit" private colleges, which are predominantly comprised of lower income and minority students. Let's be careful about characterizing, as some liberals have done, those schools catering to such vulnerable at-risk students with "open admission" policies as "bad actors" whereas the more selective elitist Harvards and Stanfords with less student loan defaults are deemed "good actors."
This has the uncomfortable look and feel of disparate class and racial treatment - which should make liberals very uncomfortable.
So how to explain the paradox that, in fact, these proposed regulations are being proposed by a progressive Democratic Administration and its strongest proponents are liberal members of congress?
There appear to be three explanations - each one less meritorious than the other.
The first is a simple misunderstanding of the facts. For example, liberals supporting these proposed regulations rightly complain about marketing and other abuses. But the fact is, such abuses occur at non-profits and public institutions as well as at for-profits and, in any event, the gainful employment regulation doesn't even address the issue of these abuses (although liberal commentators and editorial writers continue to conflate the two issues).
Moreover, those liberals who cite the excess "cost" of student loan defaults among the lower income and minority students ignore two inconvenient, indisputable facts: first, billions of dollars of taxpayer subsidies that go to non-profits and public colleges are not available to for-profits; and for-profits cost taxpayers substantially less per-student each year than non-profits and public colleges, when the approximately $1 billion of taxes/year paid by for-profits are taken into account.
Second, this is a classic example of overly broad regulations confirming the law of unintended consequences.
How overly broad? According to the Department of Education's own data released last month, its proposed "gainful employment" regulations are so poorly crafted that if applied to non-profits too (which they currently are not), Harvard Medical School, D.C.'s famous minority school, Howard University, and 93 of 100 Historic Black Colleges in the U.S. would all fail the so called loan repayment test. But, supporters of the regulation say, failing just one-of-two tests won't result in loss of student federal loan eligibility. However, just recently, Iowa Democratic Senator Tom Harkin, one of the strongest proponents of this proposed regulation, suggested that failure of the loan repayment test alone should be enough to bar student loans to those who need them the most.
This is why numerous members of the Congressional Black Caucus have strongly weighed in against these proposed regulations and more and more representatives from minority and blue collar communities are waking up and opposing the proposed regulation.
The third explanation appears a classic example of ideology trumping facts: the instinctive negative reaction of many liberals to the word "profit" when associated with providing education. This seems uncomfortably similar to opposition by most liberals to private "charter" schools within urban public school districts, opposition that seemed increasingly paradoxical as more and more inner city parents supported having the choice of charter schools for their children.
The fact is, it is precisely the profit motive that causes for-profits to offer more flexible, consumer-responsive schedules and courses, such as night classes, online courses, and new curricula that are directly responsive to recent changes in the job market.
Clearly Secretary Duncan needs to put an amber light on the "Gainful Employment Regulation" as it is presently written. As Harry C. Alford, President and CEO of the National Black Chamber of Commerce wrote recently, "student debt is a national problem, one that must be addressed, but imposing regulations on schools that are effectively educating students is unnecessary."
If any regulation is necessary, then Mr. Duncan owes it to the most vulnerable students who will be disproportionately hurt by the current version to use a scalpel, not a hatchet, and to address the issue of excessive student debt at all higher education institutions - not just at for-profits, but at non-profits and public universities as well.
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Lanny J. Davis, a Washington D.C. attorney and former Special Counsel to President Bill Clinton in 1996-98, serves as a paid "Special Advisor" to the Coalition for Educational Success, a group composed of several companies that own and operate for-profit higher educational colleges in the U.S.
Critics of the "for profit" schools cite an appalling 60% dropout rate. Guess what? Nationwide 4-year graduation rate is on ly 40% or so anyway. How is that a problem?
People who are low income who go to school to better themselves sometimes don't succeed in getting a dream job or have other considerations that make them inattentive to or unable to pay their student loans. So do upper income people.
This is not needed legislation. Better to have a criminal or civil fraud investigation if there are abuses of promise vs. delivery.
I'm a bankruptcy attorney. I can't tell you how many victims of for-profit schools call my office every year and ask if they can get out from under the $75,000, $100,000, even $150,000 in debt they amassed for some dinky degree in cooking or photography that equips them to make $25,000 a year in some crappy job. My law school education didn't cost that much. It's criminal.
After graduating, my friends and relatives ended up with years of minimum wage jobs and most never repaid their student loans - they couldn't afford it. But the institutions still got the money. You can see the TV commercials. It's obvious. Saying these institutions are good for their students is like saying $50 late fees help credit card holders. It's just stupid. And seeing Republicans defend them, as if they're good, is making me think that they're the Party of Stupid, and reminds me of all the promises they made during the Contract with America for reducing spending that they didn't uphold. Like eliminating this wasteful spending of federal education dollars. And I was actually considering voting for a few this go-round...
Enzo just doesn't want the baby thrown out with the bathwater. Isn't there another way to punish the scheisters?
At least I am using my Master's degree to teach for University of Phoenix to help me pay off this massive student loan debt. If I lose my job because of this, then my debt should be forgiven since the closest thing I had to gainful employment was taken away by GovCo.
Lanny Davis is a lobbyist masquerading as a pundit. We all know he is being paid hefty sums by the for-profit education companies in an attempt to derail the Gainful Employment rule, and I’d like to know just how much he is being paid.
The Department of Education is not targeting minority and lower income Americans, it is attempting to protect them and the American taxpayer from the for-profit institutions that have long been targeting them with prior assistance from Sally Stroup and Bush’s Department of Education.
Public and non-profit institutions do not spend millions per year on lead generation companies such as Vinyl Interactive and EducationDynamics who run sites such as jumpstartscholarship.com and freecollegescholarships.net. These two companies even went to court to battle out the question of who had first come up with the idea to lure students into for-profit schools be advertising “free scholarships”.
The for-profit education companies are throwing major money around and sadly comes from taxpayers and should be spent on educating students. Nearly all opposition to the rule has been purchased with campaign contributions and other direct and indirect funding from for-profit institutions. Their hired hand Lanny Davis seems to be leading the public campaign while DCI Group and others work hard behind the scenes.
I'm going to be serious here.I'm more worried about kids who go toa NP and stay 4-5 years and leave withno job skills.I one asked my fathe how my cousin(Eve who will never read this could take such absolute crap courses.His reply;
"Your cousin has a very good trust fund.You, however,will have to work for a living."
I saee a lot of twenty somethings asking about employment-who have a degree ,but no trust. They do have debts that are non dischargeable though.
I think Mr Davis is being accurate and more tha n a lttle brave e here.And as far as being paid for his services,I generally like getting paid when I remove a skin tumor.is that bad?
What does that have to do with good technical and vocational schools? Why lump them all together?
http://www.exxonsecrets.org/html/orgfactsheet.php?id=113
http://www.nlpc.org/stories/2010/09/10/new-documents-implicate-two-house-members-scholarship-scandal
Gainful employment means that if a certain percentage of a school's graduates aren't employed by a certain time, then that school is failing to show it's benefit of it's business (or school). How does that make it harder for minorities to get loans? If anything it makes sure that business (or "school") is selling a good product. 2nd that's capitalism, man. If a product isn't good, we don't buy it. We don't let the seller dress it up, put a new coat of paint on it and say its a good thing. No we make sure it's right before we buy it. And since the government is fronting the money for us (loans, grants, and even bailing out the banks that give out private loans) anyway, they have a right to make sure they get paid back their money too. Wouldn't you do the same thing? (besides, the taxpayers are really fronting the bill, the government is making sure we're getting what we pay for...get it yet?)
Anyway, U of P graduates only 15% of its students and has a 44% retention rate from the last time I checked, we need to make sure their selling a good "education" since they can't even keep their students in class...
Gainful Employment would NOT hurt the students. It would hurt the schools. The students will STILL get the same grants and loans. The schools will be blocked from taking them for programs that yield HIGH DEBT and no results.
Trust me, I am a victim of 2 of these schools. 79k in debt is not a future. It's being worse off than where you would have been anyway.
These schools are churning and burning students. They need to be weened off the government breast.
If these schools truly are offering a better future, then they will thrive without the government money.
Right now they're acting like section 8 landlord slum lords.
50k-150k for an art/cooking degree?
It just doesn't work.
With Gainful Employment, the students will be free to take their grants and loans to another institution. If their credits do not transfer, then that is yet another reason that school should not be operating in the first place and the student would have grounds to sue the school.
The Art Institutes is a major offender of this. They are actively abusing both the deceptive recruitment tactics found at the 15 for-profit colleges that the GAO caught.
They put programs out and change them at will for whatever is 'hot' at that moment. Students fall for it and get screwed because there is minimal jobs that pay that high nor consumer bankruptcy protections. Without this, students lose.
Just look at the Art Institutes... still trying to convince people they will find them a job in the creative world when the skills they teach are sub par at best.
Shut down these fraud institutes. If there are ones out there that are doing good, they'll still prosper. But the marketing right now on these schools is too much to rely on consumers learning YEARS AFTER.
But, forget about the way my student advisers deliberately misled me to keep their own jobs safe, or the fact that I did more writing (but less learning) in 1 year there than my girlfriend did at 4 years in Georgia State; let’s talk about tuition. I'm in the hole about 30 grand for one year. One Year! I could have spent that on a Bachelor's at local 4 year University.
Let’s talk about the fact that these are businesses that sell education. Though the model was well-intentioned, without regulation, just like any other business sector, its well intentions can be perverted. FORGET THE DEMOGRAPHICS! This is about people. Regulation is necessary in keeping a business' practice honest and its product genuine.
We all suffer when a product is exploited. And yes, a disproportionate number of minorities will be affected, but that's because a disproportionate number of minorities attend the for-profit schools. I don't appreciate our "Leaders" using our name in vein. Honestly, if a man can't pay back a loan he shouldn't be allowed to receive one; education or not. It's called responsibility, not racism...Wrong "R".