A New Leaf at Phoenix?
August 24, 2010
WASHINGTON — When it comes to marketing and recruiting, the University of Phoenix is turning over a new leaf, or so its executives said at a briefing here Monday. “We’re doing what we think is right,” said Gregory W. Cappelli, the co-chief executive officer of Apollo Group, which owns Phoenix and other for-profit colleges and schools. The company, he said, is shifting “from a recruiting mentality and culture into one of a long-term relationship” between potential students and recruiters, who’ve been renamed “counselors.” The briefing was framed as a discussion about Apollo’s position paper, “Higher Education at a Crossroads,” which touts the for-profit sector as playing an essential role in President Obama’s access and completion goals. Apollo is actively working to brand itself as an organization chastened and determined to do better, especially after being identified in the Government Accountability Office’s “secret shopper” investigation of recruiting practices. (more)

Damaging Data on Loan Repayment
August 16, 2010
WASHINGTON — That sound you heard Friday at 5:15 p.m.? That was the collective thud of the heads of for-profit college executives hitting their desks in dismay when they got a first look at the sort of loan repayment data the U.S. Education Department expects to use in its proposed new regulatory scheme, aimed at ensuring that vocational programs prepare their graduates for “gainful employment.” The numbers were lower than many observers (supporters and critics of the for-profit college sector alike) expected, and while officials of the companies immediately disputed the legitimacy of the department’s data and again challenged the government’s underlying regulatory approach, they also seemed to recognize that the statistics presented yet another threat. One company, Strayer Education, went so far as to schedule a news conference for 7:30 a.m. today — before the stock markets open — to explain, and presumably contest, the department’s numbers for its campuses. (more)

Did the Department Drop the Ball?
August 13, 2010
WASHINGTON — The Government Accountability Office’s “secret shopper” investigation of recruiting practices at for-profit colleges was a mixed blessing for the U.S. Department of Education. At one level, the findings presented at last week’s Senate Health, Education, Labor and Pensions Committee hearing were a vindication. Videotaped evidence pointed to fraud at four colleges, and questionable or deceptive practices at all 15 campuses investigated. But, at the same time, GAO’s discoveries have put the Education Department on the defensive, trying to explain why it hasn’t done more to prevent recruiters from making deceptive statements to potential students. There are already rules on misrepresentation and incentive compensation of college employees for securing enrollments — which the department is expected to tighten in its final regulations, to be published by Nov. 1 — and while weak rules may be part of the problem, they’re not the whole story. (more)

What Harkin Wants
August 10, 2010
WASHINGTON — If it wasn’t already clear that the U.S. Senate was putting plenty of pressure on for-profit colleges, the detailed information the body’s leading voice on education is seeking from 30 companies and institutions makes it pretty obvious. At the end of last week’s hearing on for-profit higher education’s recruitment practices, Sen. Tom Harkin (D-Iowa), chairman of the Health, Education, Labor and Pensions Committee, said he wanted to “get to the bottom of this.” The this, of course, was everything about the for-profit sector — from how many students each of the 15 publicly-traded companies enrolls to how institutions train and compensate recruitment, admissions and financial aid employees. On Thursday, Harkin’s staff directed the publicly traded companies and 15 privately held for-profit institutions to submit two dossiers in the next few weeks. The first, due Aug. 26, primarily consists of information related to management structures, revenue sources and enrollment totals. The second, due Sept. 16, includes several requests for all documents and e-mail messages related to recruiter performance, financial aid procedures and tuition hikes. (more)

Has the Conversation Changed?
August 9, 2010
WASHINGTON — Leaders in for-profit higher education have historically tried to deflect criticism of the institutions by pointing to a few misbehaving “bad actors” who aggressively recruit unqualified students, keep them enrolled for as long as possible while burying them in debt and, if students stick it out long enough, award them worthless degrees. But the events of last week — most notably the findings of the Government Accountability Office’s undercover investigation of recruiting at for-profit colleges that included inducements to commit fraud at four institutions, and the highly critical Senate hearing at which the findings were aired — challenged the validity of that argument and put advocates of the sector on the defensive in a way that they have not been for years. The developments emboldened critics, saying that the week’s events prove what they’ve been saying about the systemic nature of the sector’s problems. (more)

Shellacking the For-Profits
August 5, 2010
WASHINGTON — Senate Democrats made it clear Wednesday that their examination of for-profit higher education has only just begun, and that they plan to pursue legislation aimed at reining what they see as the sector’s dishonest — if not fraudulent — practices. At a hearing on the “student recruitment experience” at for-profit colleges that began Wednesday morning and carried on through the mid-afternoon, Sen. Tom Harkin (D-Iowa), chairman of the Health, Education, Labor and Pensions Committee, outlined plans to hold more hearings on the sector, to collect broad sets of information from for-profit colleges, and to begin drafting legislation aimed at cleaning up the sector. (more)

Colleges Weigh In on Rules
August 4, 2010
WASHINGTON — The public comment period for the majority of the U.S. Department of Education’s proposed regulations aimed at protecting the integrity of the Title IV federal financial aid program ended at midnight Tuesday. Department officials have the next three months to read and consider close to 1,800 comments posted on regulations.gov (including duplicates) — ranging in length from a sentence or two to 100-page dossiers — submitted by a mix of college presidents, financial aid officers, associations, companies, and rank-and-file students and employees. Final rules must be published by Nov. 1 to go into effect on July 1, 2011, as the department has planned. (more)

Congress’s ‘Secret Shopper’
August 3, 2010
WASHINGTON — A government report detailing the findings of an undercover investigation of for-profit colleges’ recruiting tactics reveals admissions and financial aid officers engaged in unethical and sometimes illegal practices, all in the interest of persuading students to enroll and obtain federal financial aid. The report, along with an accompanying video of undercover footage, is the culmination of a three-month effort by the Government Accountability Office, Congress’s investigative wing, to determine whether and to what degree for-profit colleges are engaging in “fraudulent, deceptive or otherwise questionable marketing practices.” A copy of the report is available here. (more)

A Bit More on ‘Gainful Employment’
August 2, 2010
WASHINGTON –The U.S. Department of Education’s proposed rules defining “gainful employment” by examining students’ ability to repay their loans have spurred more questions than they’ve answered. But on Friday, James Kvaal, the new deputy under secretary of education, answered some of the most salient nuts-and-bolts questions that have emerged since the department released its notice of proposed rule making and regulatory impact analysis on July 23. And, for the first time since starting work at the Education Department earlier this summer, Kvaal explained why he believes for-profit colleges — the primary target of the rule making process – need greater regulation. “In the landscape of higher ed today, you see a lot of thriving for-profit colleges and that’s a good thing.” Even so, he said, “we should recognize that for-profit institutions do have a legal incentive or even an obligation to try and maximize their profitability for shareholders.” (more)

In Whose Interest?
July 30, 2010
WASHINGTON – Just a few hours after the U.S. Department of Education released the full text of its proposed regulations to define “gainful employment” last Friday, two groups that rarely weigh in on education issues circulated news releases expressing concern that the rule would limit minority students’ access to postsecondary education. In its statement, MANA: A National Latina Organization said that the proposed regulations would “adversely affect Hispanic students’ ability to borrow money and will limit Hispanic students’ access to higher education.” The National Black Chamber of Commerce said the rules would “disproportionately harm low-income and minority populations by discriminating against students who must borrow the needed tuition to attend college.” (more)

Partial ‘Program Integrity’
June 16, 2010
WASHINGTON – The U.S. Department of Education today released a set of proposed rules intended to prevent abuses of federal financial aid programs by establishing new consumer protections, ensuring that only eligible students receive federal aid, and clarifying the courses and programs for which students can use federal aid dollars. Though the notice of proposed rule making (NPRM) to be published in Friday’s Federal Register includes more than 500 pages of rationale and regulatory language on 15 issues related to the integrity of the federal financial aid programs, what’s most likely to get attention is what’s missing: a full set of regulations defining “gainful employment,” the mechanism through which most programs at for-profit institutions and non-degree programs at nonprofit institutions qualify for federal aid. (more)

High-Profile Trader’s Harsh Critique of For-Profit Colleges
May 27, 2010
Steven Eisman, the Wall Street trader who was mythologized in Michael Lewis’s The Big Short as that rare person who saw the subprime mortgage crisis coming and made a killing as a result, thinks he has seen the next big explosive and exploitative financial industry — for-profit higher education — and he’s making sure as many people as possible know it. In a speech Wednesday at the Ira Sohn Investment Research Conference, an exclusive gathering at which financial analysts who rarely share their insights publicly are encouraged to dish their “best investment ideas,” Eisman started off with a broadside against Wall Street’s college companies. “Until recently, I thought that there would never again be an opportunity to be involved with an industry as socially destructive and morally bankrupt as the subprime mortgage industry,” said Eisman, of FrontPoint Financial Services Fund. “I was wrong. The For-Profit Education Industry has proven equal to the task.” (more)

Comparing Higher Ed to Wall Street
April 29, 2010
Whenever worried leaders of for-profit colleges have implied in recent months that the U.S. Education Department is gunning for the institutions, officials of the federal agency have discouraged such talk, offering evenhanded rhetoric about treating all sectors the same in their push for increased accountability. The words have provided little reassurance to the colleges, since they haven’t always seemed to square with the aggressive approach the Obama administration is taking in rewriting federal rules governing vocational and other programs. On Wednesday, in a speech to state regulators who oversee for-profit colleges, the chief architect of the Education Department’s strategy, Robert Shireman, offered a much more critical assessment of the private sector institutions than he has in his public comments to date, according to accounts given by several people who were in the room. (more)

Pushback on Gainful Employment
April 22, 2010
WASHINGTON – As the U.S. Department of Education prepares to finish revising regulations intended to weed out abuses of the federal financial aid system, for-profit higher education’s major advocacy group has chosen to push back. In a letter sent Wednesday to Education Secretary Arne Duncan, the Career College Association calls on the department to scrap its proposed regulations on “gainful employment,” which would assess vocational programs based on the ratio of their graduates’ student loan debt to their incomes. The letter coincides with the CCA’s public release today of a report it commissioned on the proposal’s implications that analyzes data representing more than 600,000 students in more than 10,000 programs at its member institutions, which finds that the proposal could make thousands of for-profit programs ineligible for federal financial aid. (more)

Going Ahead With Gainful Employment
April 21, 2010
WASHINGTON — A long recession and a wavering job market have brought for-profit higher education institutions into the public eye as never before. Big advertising budgets have given them name recognition. Dramatic enrollment growth (fueled by increasing amounts of federal financial aid) and assurances to students that a degree or certificate is the path to a comfortable job in a specific field have brought them scrutiny. Many newspapers, websites and TV networks have told the tale of programs at for-profit institutions that don’t prepare students for the jobs they’ve been all but promised — and plunge them into debt in the process. While the anecdotes are often true, they’re only part of the story; some for-profit colleges (the institutions themselves prefer the term “private sector” or “market funded”) do prepare students for good jobs and don’t sink them in an overwhelming pool of post-graduation debt. (more)