For-profit colleges have boomed in the last decade, spurred largely by success in hoovering up public money — for-profit college students now account for a quarter of all Pell Grant disbursements, although they only make 12 percent of all college students. Between grants and loans, federal programs provide some 90 percent of all for-profit revenue.
All this would be fine if the for-profits were providing consistently strong education at a reasonable price — but they’re not. Many are no more than diploma mills, preying on uninformed students and providing them with worthless degrees while burdening them with major long-term debt. As a result, nearly half of all student loan defaults come from the for-profit sector.
This hurts the students at the for-profits, of course, but it hurts needy students at more reputable institutions too. Every Pell Grant dollar funneled into the pockets of a for-profit college shareholder’s pocket is a dollar that’s not available to a public community college student who could really benefit from it. The for-profits are gaming the system in an incredibly harmful way.
In light of all this Obama Department of Education announced plans for new regulations last year, promising to crack down on the worst of the culprits and cut off their access to federal money. As the New York Times reports today, the colleges fought those rules, hard, with a huge and expensive lobbying push … and won:
Rattled by the administration’s tough talk, the colleges spent more than $16 million on an all-star list of prominent figures, particularly Democrats with close ties to the White House, to plot strategy, mend their battered image and plead their case. …
In all, industry advocates met more than two dozen times with White House and Education Department officials, including senior officials like Education Secretary Arne Duncan, records show, even as Mr. Obama has vowed to reduce the “outsize” influence of lobbyists and special interests in Washington.
The result was a plan, completed in June, that imposes new regulations on for-profit schools to ensure they adequately train their students for work, but does so on a much less ambitious scale than the administration first intended, relaxing the initial standards for determining which schools would be stripped of federal financing.
There is one silver lining to this story, however. Though federal oversight has been scaled back, students are beginning to wise up on their own. New numbers released this August show huge declines in for-profit enrollment, with similar reductions in revenue. The last thing folks need in an economy like ours is an expensive, worthless, loan-burdened degree, and in spite of the government’s shameful inaction, Americans are figuring that out.