Higher Ed Watch

A Blog from New America's Higher Education Initiative

< Back to the Education Policy Program
Early Ed Watch
Ed Money Watch
Higher Ed Watch
Ed Data

News Flash: Last-Minute Budget Deal Delivers Blow to Career College Lobbyists on Gainful Employment

  • By
  • Stephen Burd
April 9, 2011

Higher Ed Watch has learned that the last-minute budget deal that the White House and Congress reached late last night does not include a controversial provision that would have blocked the U.S. Department of Education from issuing a regulation that aims to prevent for-profit colleges from overloading financially needy students with unmanageable levels of debt. Assuming that this tentative agreement sticks, the Education Department will remain free to finalize its proposed “Gainful Employment” rule.

While this news is not entirely surprising, given the fact that the White House and key Senate Democrats strongly opposed the provision, this does represent a major blow to the for-profit higher education industry, which has spent millions of dollars lobbying Congress to stop the Department from moving forward with this regulation.

Issues:

Forecasting the Pell Grant Budget Crisis

April 7, 2011

As readers of Higher Ed Watch well know, the budget battles raging on Capitol Hill these days could have profound implications for the future of Pell Grants, the primary source of federal student aid for low-income students. Both the White House and Congressional Republicans agree that the program is on an unsustainable path, but they have very different prescriptions for how to deal with this problem. House Republican leaders have proposed reducing the maximum Pell Grant, while the Obama administration favors making targeted reductions in the government’s student aid programs to keep the $5,550 maximum award in place. Meanwhile, there is growing recognition even among the program's most fervent supporters that action needs to be taken to get the program's costs under control.

While the seriousness of this Pell Grant budget crisis may have taken some policymakers and advocates by surprise, it was hardly unpredictable. Jason Delisle, the director of New America's Federal Education Budget Project, has been sounding the alarms for several years now both here and on our sister blog Ed Money Watch. In fact, he was among the first student aid experts in the country to warn that a day of reckoning was coming.

Issues:

The Surprising Survival (at least for now) of an Unpopular Federal Student Aid Program

  • By
  • Stephen Burd
April 7, 2011

[Editor's Note This post ran first on our sister blog Ed Money Watch]

President Obama in his fiscal year 2012 budget request put two federal student aid programs for college students on the chopping block: the Leveraging Educational Assistance Partnership (LEAP) program, which provides states with money for need-based aid for undergraduates, and the Robert C. Byrd Honors Scholarship program, which provides funds to states for merit scholarships. In their efforts to reduce federal spending in the current fiscal year, federal lawmakers have already killed the LEAP program but have so far left the Byrd scholarship program in place.

This may prove to just be a temporary reprieve, however, as the White House and Congress continue to negotiate a final budget bill for the remainder of the year that would make deeper spending cuts than those that have already been approved. Nonetheless, the fact that the Byrd Honors Scholarship program, which dates back to the 1980s, has made it through the first several rounds of cuts unscathed is fairly remarkable considering that it doesn’t have much of a constituency outside of Congress fighting for it. In fact, it is one of the few federal student aid programs that the Student Aid Alliance, a coalition of higher education associations and student advocacy groups, does not champion.

Truthfully, given its namesake, the program has never really needed the groups’ support. The program was the brainchild of the late Sen. Robert Byrd of West Virginia, who not only was the longest serving Member of Congress ever but also was the top Democrat on the Senate Appropriations Committee for nearly two decades. In that position, he held a powerful grip over the country’s purse strings.

Guest Post: Bridgepoint Case Shows Why Federal Student Aid Dollars Should be Spent on Education

April 5, 2011

By Craig Smith

Several weeks ago the Senate Health, Education, Labor and Pensions Committee focused the spotlight on the for-profit higher education company Bridgepoint Education as part of its on-going series of hearings examining the career-college sector. This hearing looked specifically at how Bridgepoint purchased a small private non-profit college in Iowa and transformed it into Ashford University, a giant for-profit school that enrolls tens of thousands of students mostly online. Sen. Tom Harkin, the Iowa Democrat who chairs the committee, identified a significant set of problems at Ashford including high withdrawal rates, the lack of any career placement services, and a growing percentage of student loan defaults.

But the data that caught my attention was what has happened to the school’s investment in instruction since Bridgepoint took over. In 2004, when the company bought Mount Saint Clare College, the institution was spending over $5,000 on instruction per student, according to data Bridgepoint provided the HELP Committee. Just five years later, with enrollment soaring at the-now Ashford University to nearly 54,000 students, the amount the company spent per student dropped to just  $700. Someone might suggest this is just another great example of a for-profit college figuring out how to “deliver education” more efficiently. However, when nearly 64 percent of your students pursuing a bachelor’s degree and 85 percent of your students pursuing an associate’s degree are withdrawing while you are capturing 30 percent of your (taxpayer-funded) revenue for profit, perhaps there is a problem with institutional priorities.

Issues:

The Sorry State of the Student Loan Industry

  • By
  • Stephen Burd
March 31, 2011

Yesterday, The Chronicle of Higher Education ran a story about the sorry state of the student loan industry. Throughout the article, we are told that the demise of the Federal Family Education Loan (FFEL) program last year has led student loan companies and guaranty agencies to lay off thousands of workers and eliminate college access programs they managed. While some lenders and guarantors are coming up with “innovative ideas for helping people pay for college” in order to survive, “many of the ideas may not work out, which could lead to a further shrinking of the industry,” the article states.

After reading the story, even we at Higher Ed Watch felt a lump in our throats. That is until we remembered an essential point that the article neglected to mention: the one and only purpose of the federal student loan program is, and has always been, to ensure that all college students have access to affordable loans for any school they wish to attend without delay or disruption. By all accounts, the U.S. Department of Education’s Direct Student Loan program is carrying out this job quite well -- and at a much lower cost to taxpayers.

Issues:

Fixing Pell Should be About More Than Just Cutting Costs

  • By
  • Stephen Burd
March 30, 2011

Sometimes a crisis presents an opportunity. That might just turn out to be the case with the Pell Grant program.

As readers of Higher Ed Watch know, Congress has not yet found the money it needs to keep the $5,550 maximum award in place for the 2011-12  academic year. House Republican leaders have proposed dealing with the program’s fiscal problems by slashing the maximum grant to $4,705. The Obama administration and Congressional Democrats oppose that approach, but instead have proposed targeted reductions in the government’s student aid programs to keep the current maximum award in place. [As Higher Ed Watch recently reported, the Congressional Budget Office may just have made their jobs harder when it revised its estimate for what lawmakers must appropriate to achieve this goal.]

The battle over the program’s fiscal year 2011 funding is likely to come to a head at the end of next week when lawmakers from both parties have vowed to complete work on a final budget for the remainder of the fiscal year (or potentially face a government shutdown). But even if the White House and Congressional leaders reach an agreement to keep the maximum grant at $5,550 this year, they will face an even bigger battle in setting a budget for the 2012 fiscal year when the cost of maintaining the maximum grant at that level is likely to exceed $40 billion.

Clearly, the Pell Grant program is on an unsustainable path. And there is a growing recognition that action needs to be taken to get its costs under control. 

But just what should be done?

Issues:

Freshmen Ineligibility: An Old-but-Wise Approach to Improving Academics in College Basketball

  • By
  • Maggie Severns
March 29, 2011

U.S. Secretary of Education Arne Duncan ushered in the NCAA Men’s Basketball tournament earlier this month with an op-ed in The Washington Post arguing that schools should only qualify for post-season play if they are on track to graduate at least 40 percent of their players.

The argument by Duncan, who is a basketball player and fan himself, has been made by many critics, including the Knight Commission for Intercollegiate Athletics, which proposed restricting participation to only those programs that graduated more than half of their players. And rightfully so: men’s college basketball does a poor job of graduating its players, with 10 of the original 68 teams in the tournament not meeting the “50 percent” benchmark this year. This leaves players who don’t go professional -- the vast majority of them -- without the knowledge and skills they need to succeed in the real world. Many sportswriters and fans, on the other hand, think that Duncan’s viewpoint is out of touch --and that critics of NCAA basketball and football need to come to grips with the fact that, for many athletes who play for hugely popular athletics programs, the sport is simply more important than the degree.

At Higher Ed Watch, we have a different problem with Duncan’s suggestion: we don’t think he goes far enough. If teams were forced to have to meet a graduation rate requirement in order to compete in the tournament, problems with cheating and academic dishonesty among players and schools would be even more rampant than they are today while the immense pressure for the players to succeed on the court would be as strong as ever. Considering the lax oversight the NCAA provides, this would not be an adequate solution for mending what is broken in Division 1 basketball.

To really get players on track to graduate, the NCAA should take a tip from its old playbook: freshmen ineligibility. We believe that the NCAA should make all Division 1 football and men’s basketball players ineligible to play during their freshmen year so they have time to adjust and ground themselves academically during the time they need it most. Then, student athletes would at least have a handle on academics before trying to balance their dual roles.

Issues:

Obama Administration Comes Out Swinging Against Career College Association Lawsuit

  • By
  • Stephen Burd
March 24, 2011

Harris Miller, the president of the group formerly known as the Career College Association, likes to say “Everyone is entitled to his own opinions, but not his own facts.”  But apparently that rule applies to everyone but his own organization.

As we've reported, the Association of Private Sector Colleges and Universities, as the group is now called, has not been shy about twisting the facts in its battle to stop the Obama administration from putting into effect regulations that would increase federal oversight over the for-profit college sector. So it shouldn't come as much of a surprise that the lawsuit that the association filed in the U.S. District Court for the District of Columbia earlier this year to block the Department from carrying out several of these rules was rife with misleading statements and outright errors.

At Higher Ed Watch, we ran a post in January responding to some of the most outlandish misstatements in the lawsuit. We focused particularly on arguments the group made to try and convince the court to strike down a regulation that would, once and for all, eliminate the safe harbors that the Bush administration put in place in 2002 to help for-profit colleges skirt a long-standing federal law that prohibits schools from compensating recruiters based on their success in enrolling students. Now, in its response to the lawsuit, the Obama administration delivers some powerful blows of its own to the career college lobbyists’ arguments.

Today we are running excerpts from the Justice Department’s brief that answer the association’s claims about the incentive compensation rule and show why the court should throw out this misguided lawsuit. Here are the claims and the administration's responses to them:

Issues:

Breaking News: Obama Administration Urges Court to Throw Out Career College Association’s Lawsuit

  • By
  • Stephen Burd
March 23, 2011

The Obama administration has filed a motion with the U.S. District Court for the District of Columbia, urging the court to throw out a lawsuit that the group formerly known as the Career College Association has brought against the Department of Education over consumer protection regulations the agency finalized in November.

As we’ve previously reported, the for-profit college lobbyists’ lawsuit seeks to block the Education Department from putting into effect in July several rules that aim to prevent unscrupulous schools from taking advantage of financially needy students. These regulations would eliminate the “safe harbors” that Bush administration officials put in place in 2002 to help for-profit schools skirt a long-standing federal law that prohibits colleges from compensating recruiters based on their success in enrolling students; strengthen the role that states play in preventing fraud, waste, and abuse in the federal student aid programs; and bolster the ability of the Department to prevent colleges from providing misleading information to prospective students and others about their programs.

The Association of Private Sector Colleges and Universities, as the group is now called, argued in its complaint that these regulations are illegal and will be extremely damaging to its member institutions. “The challenged regulations are beyond the Department’s authority and seek to impose on APSCU’s members and other schools, including public and non-profit schools, restrictions that are unlawful and arbitrary and capricious,” the lawsuit states. “APSCU has filed this lawsuit to prevent these unlawful regulations from harming students and the schools that serve them.”

In its response, which was filed with the court on Friday, the administration rejects these claims, arguing that the Department has acted well within the authority granted to it by the Higher Education Act (HEA). “The challenged incentive compensation, misrepresentation, and state authorization regulations are all permissible under the plain language of the HEA,” the government’s response states. “Plaintiff’s crabbed reading of that broad language is neither persuasive nor required.”

Issues:

Guest Post: A Win for Students? Not Quite Yet

March 22, 2011

By Bryan A. Liang

While the Obama administration’s proposed regulations on college health plans have been hailed by some as “a win for students," the game is not over yet.

The Department of Health and Human Services, which issued the proposed rules last month, should be applauded for rejecting efforts by colleges and universities to characterize their plans as “limited duration” rather than as individual insurance plans. By doing so, the agency let colleges know in no uncertain terms that their school-sponsored health insurance plans (SHIPS) cannot avoid federal regulation and healthcare reform mandates, as their lobbyists had been pushing. However, while the proposed regulations are a good start, the Department must go further to ensure appropriate student protections and address student and family needs.

The fact is that the vast majority of college students do not sign up for SHIPs, as they are already covered through another plan.  In almost all cases, these plans -- whether through a parent’s employer, on the individual market, or from a public entity -- provide better coverage than what is offered through the college. It would stand to reason then that, under health reform, students should be able to use their own private or public plan for their healthcare needs. As President Obama has stated repeatedly, “If you like your health care plan, you can keep your health care plan.”

However, these proposed regulations would leave President Obama’s promise unfulfilled. Why? Because these rules would continue to allow colleges, with very few exceptions, to refuse to accept non-SHIP health insurance as valid payment for services rendered at their campus health centers. Instead, students and/or their parents could still be forced to purchase a redundant health care plan at a cost that is not trivial. Indeed, despite the fact that college tuition is rising between 20-120% of the consumer price index, these plans require more cost-sharing than traditional private and public insurance, and they tend to be poor in overall service coverage.

Issues:
Syndicate content