08/10/2012 11:12 am ET Updated Oct 10, 2012

California Takes the High Road

Recent developments in higher education have experts pointing to California as the nation's leader in student advocacy and should set the stage for significant, necessary reform at the federal level.

As the leader of a nonprofit university my primary role is to ensure that students are receiving an affordable, quality education. Two key measures of student success are degree completion and loan repayment. A college degree is an investment in one's future, and a university that delivers on its promise to students should produce graduates with the ability to repay any student debt they might have incurred. It's a fairly simple concept.

Another important measure is the standing of a university's accreditation. The accreditation process serves as the primary means for evaluating academic quality of degree programs and examines key data regarding student outcomes. Accreditors produce in-depth reports on the health of a university and its operations, and evaluate key measures of student success.

For years, leaders in higher education have called upon the federal government to enact stricter standards for academic accreditation and higher benchmarks for access to federal financial aid dollars. Student graduation rates and loan default rates are at the heart of those standards. It is in the country's best interests to set standards high enough so that taxpayer dollars don't go into to coffers of schools where students drop out more than they graduate, or default on loans more than paying them.

The U.S. Department of Education (DOE) has tried to tighten standards, even as recently as this year, only to be met with steep opposition from well-funded lobbyists and law firms who represent the corporations operating for-profit universities. A U.S. Senate committee recently concluded a two-year investigation of for-profit institutions and released a troubling report that details why the for-profit industry fiercely fights any new regulations (they spent more than $8 million to lobby the government over the past two years and have sued the government to stall reform in the courts).

Without access to federally subsidized loans, any university would have a difficult time recruiting new students- some 66 percent of all U.S. students receive federal financial aid.

According to the Senate report, the average graduation rate for the ten largest for-profit schools in the U.S. is 20 percent, while the national average for all schools is 55.5 percent. Students at for-profit institutions make up only 10 percent of the nation's college enrollment but account for 50 percent of national student loan defaults.

According to DOE, the for-profit sector received $32 billion of taxpayer dollars in 2009-10, one quarter of all federal financial aid ($33-34 billion when you add in additional benefits for military and veteran students). With that kind of money, for-profit schools have become advertising giants, spending more on marketing and recruitment than delivering an education.

The Senate report details how for-profit institutions spent a whopping $4.2 billion on marketing themselves and recruiting new students. For-profits devote tremendous amounts of student tuition dollars to other non-education uses, such as profits to investors. The report indicates that in 2009, publicly traded, for-profits used 19.7 cents of each tuition dollar for operating profit margins, and four of the largest for-profit schools drain over 26 cents of each tuition dollar.

Until there is federal regulatory reform that forces for-profits to invest in student education and support, taxpayers will be footing the bill while big corporations continue to exploit financial aid dollars and destroy the financial future of families who turned to higher education as a way to improve their lives.

California is not waiting for these necessary reforms; it is the first state in the nation to set higher institutional standards for its grants and loans. The California Student Aid Commission just announced that institutions must have a student loan default rate of 15.5% or less and a graduation rate of 30% or greater in order to qualify for access to Cal Grant dollars.

The new standards eliminated 154 for-profit schools from being eligible and are expected to impact the plans of more than 14,500 students who attend those schools with Cal Grants. The students can continue to receive their grants if they transfer to eligible institutions - those with stronger graduation rates and lower loan default rates. It is sensible, common sense reform that keeps precious student aid dollars from low performing schools.

Another recent, significant development comes from the Western Association of Schools and Colleges (WASC), the regional accrediting agency that oversees higher education in California, Hawaii and the Pacific Islands. WASC announced, for the first time, it is publicly releasing all accreditation reports, letters to universities and other vital information regarding accreditation. My institution, Brandman University, is among the first to have accreditation information made public.

At Brandman, we embrace the notion of being accountable for student success and transparency of our student success data to the public. When students are provided with core information about a university and have access to detailed accreditation information, they can look beyond the expensive advertising and make a decision based on facts, regardless if that institution is for-profit or nonprofit.

Our rapidly changing world requires that we continue to enhance the education of our workforce. The future of our economy depends on that and we must empower students with everything they need to succeed. The incredible growth in nontraditional higher education (which the for-profit industry thrives upon) is evidence of this dramatic need. It is in the best interests of students and taxpayers that the federal government and accrediting agencies follow California and WASC's lead.

Gary Brahm is the Chancellor of Brandman University, a private, non-profit institution that is a member of the Chapman University System. Brandman serves over 12,000 nontraditional students at 26 different campuses in California and Washington, and across the U.S. online.