Let for-profit colleges die

For-profit colleges do more harm than good.

Opinion by Aaron Fooshee, Special to the Star

For-profit colleges and universities display poor performance records and exploit both students — especially minority students — and taxpayers. For these reasons, for-profit schools should be allowed to die, starved of the government funding they suckle upon. The educational outcomes they provide students are emaciated, but it is they themselves who should wither away. We should let free market schools live or die based on the strength of their service without propping them up with federal cash.

The Biden administration’s campaign promise said it would “stop for-profit education programs from profiteering off of students” and this is a promise that must be kept.

Specifically, the Biden administration promised to "return to the Obama-Biden Borrower’s Defense Rule” that allows loan forgiveness in instances of institutional misconduct, something that the Trump administration nixed; close the “90/10 loophole” that exempts G.I. Bill funding from the requirement that colleges derive at least 10 percent of their funding from non-federal sources, causing veterans to be aggressively recruited for both the funds they bring and their force multiplying potential; and require schools to “first prove their value to the U.S. Department of Education before gaining eligibility for federal aid,” a vague but well-meaning objective.

All of these points are a good start, but I advocate going further, urging the Biden administration to support Democrat senators, Sherrod Brown’s and Elizabeth Warren’s proposed “Students Not Profits Act” (S.2640). This act would “amend the Higher Education Act of 1965 to make for-profit institutions ineligible for Federal student aid.”

This more forceful policy change is necessary to protect students and taxpayers and—with Democratic control of the presidency, Senate, and House—now is the best time to make this happen.

This is an issue that is personal to me. I’m a lifelong learner that, in addition to attending public schools like Valley College, has also attended both private for-profit and private non-profit ones. I’ve seen, first-hand, the differences in enrollment tactics, levels of support, and outcomes for myself and my peers. My for-profit school experience has been worse in every dimension.

My anecdotal experience at a for-profit school matches with what Ariel Gelrud Shiro and Richard V. Reeves, writing for the non-partisan think tank Brookings Institute, describes as a “more expensive and less effective” education, pointing to the following grim evidence:

“For-profit colleges only enroll 10 percent of students but they account for half of all student-loan defaults. Seventy-one percent of students in for-profit colleges borrow federal loans, as compared to only 49 percent of students in four-year public schools. The average amount borrowed by students in for-profit colleges is nearly $2,000 higher than the amount borrowed in 4-year public schools [because] the average tuition at a for-profit college is over $10,000 higher than at a public community college.”

The Students Not Profits Act is the most meaningful policy on offer to address these problems. According to Robert Kelchen for the Brookings Institute, among for-profit schools, about a third are funded almost exclusively—upwards of 80 percent of their revenue—by federal funds.

These institutes should be allowed to die because their outcomes don’t warrant taxpayers’ coddling. Continuing to fund these failing schools is not benign but actively harmful.

According to for-profit college recruiter turned whistleblower, Tressie McMillan Cottom, in her book, “Lower Ed: The Troubling Rise of For-Profit Colleges in the New Economy,” these schools “prey upon minority students—including racial minorities and women—because these groups, are disproportionately poor and thus, have the greatest amounts of federal financial aid available to them, as well as “the fewest college choices,” altogether making minorities desirable targets.

If for-profit colleges were delivering the goods, graduating and raising the quality of life of their students and enriching society then their profit may be warranted, but they’re simply not. They saddle students with debt and little else to show for it and, at the same time, leave taxpayers with the bill from bad loans. This public cost, according to the Congressional Budget Office, is expected to be $31 billion over the coming decades barring some interventions like those I’m advocating for.

And, perhaps, the higher public cost is that each failed education attempt leaves society with a void where a highly skilled, higher-paid professional was supposed to be, edifying our economy and, hopefully, participating in public life as a more knowledgeable community member.

So, let’s let the for-profit schools live or die in the free market they should love. They just need some prodding. The Students Not Profits Act is the best path to this end. The Biden administration should be sprinting down this path and checking off the campaign promises en route.