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Guest Post: For-Profit Colleges Are Spending Millions to Sow Confusion and Fear

Published:  September 27, 2010

By Craig Smith

Last week, I opened The Washington Post each morning to see full-page advertisements from the usual deep-pocketed corporations trying to persuade Congress and policymakers to protect their companies’ bottom lines. There they were: Big Oil (Exxon, Shell, BP), Big Tech (IBM), Big Industry (Northrop Grumman, Honda). And alongside, a new kid on the block: Big Education.

The for-profit higher education giant Corinthian Colleges has taken out two- to three-page color ads in newspapers around the country opposing new rules that the U. S. Department of Education has proposed that aim to protect students from predatory practices at  unscrupulous for-profit colleges. In an interview with The Chronicle of Higher Education, Corinthian’s chief executive officer boasted that the company “was spending ‘in the high seven figures’" on its media campaign against the Education Department’s proposed regulations on Gainful Employment. Considering that Corinthian gets nearly 90 percent of its revenues from the federal student aid programs, here’s another case of our hard-earned tax dollars being put to work!

The goal of the advertising campaign is to create the sense that there is mass opposition to the proposed rules. There’s not. There is sector-specific opposition fueled by millions of dollars designed to create that impression. So it is hardly surprising that the ads are entirely misleading.

First, the ads present inflated claims about the impact of these regulations. They warn, for instance, that the regulations would put 100,000 people out of work, force thousands of educational and training programs to close, and deny up to a million students access to the programs of their choice. The implication, of course, is that these are all successful programs that the feds are randomly and unfairly shutting down.

To the contrary, the proposed gainful employment regulations will not be shutting down successful programs at any type of institution. In fact, the majority of programs -- as Ben Miller at Education Sector and the Education Department itself have shown -- will remain eligible for Title IV funds. These include the vast majority of programs at for-profit colleges.

The only programs (programs not schools) that would become ineligible for Title IV money are those where less than 35 percent of their former students are paying down principal on their federal student loans AND where (students) have a debt-to-earning ratio that is (above) 30 percent of their discretionary income AND 12 percent of (their) total income. This is a threshold that is so low, it is amazing that anyone has the chutzpah to argue against it. One has to ask why the for-profit industry isn’t eager to get rid of the bad apples that rot the image of the rest.

It is also important to remember that it is only the program that becomes ineligible to enroll new students with Title IV money. Students already enrolled have the option to complete the program or switch to a different program or school.

Second the ads have a consistent theme -- that the closure of these programs would be devastating for low-income and minority students and that those who really care about these students are generally opposed to these regulations. 

This again has more to do with rhetoric than reality, as major organizations advocating on behalf of these students have come out in support of the proposed rules as a necessary protection against programs that target minority students but fail to help them succeed.

For example, the presidents of six major organizations representing historically black colleges and other minority serving institutions have endorsed the proposed rules. In a letter they sent last week to Education Secretary Arne Duncan, the groups wrote

The missions of our organizations are based on a special responsibility toward many of the students and families who are being victimized by the fast-buck proprietary practices targeted by these regulations. In order for our nation to keep President Obama’s commitment to regain for the U. S. world leadership in college education, we must ensure that programs meet recognized standards and that students are well informed.  Students deserve protection from incurring excessive debt. Employers deserve to know that their employees are well qualified.

In their letter, the groups take aim at another of the ads’ claims -- that this regulation would hurt the chances of reaching President’s Obama goal of leading the world in college graduation rates by 2020.  This is perhaps the oddest of arguments since it poses a rather large logical inconsistency: It is President Obama’s own Department of Education that has proposed this rule. Clearly, while they want more college graduates, they want graduates who can succeed in the workforce rather than just reaching a goal on paper. 

As the good folks at The Quick and the Ed have pointed out, this ad campaign “which purports to defend students but instead seeks to instill fear, uncertainty, and doubt about the regulations, is a classic example of manufactured evidence and Astroturf industry lobbying.” This is, in fact, the type of cynical campaign you launch when it is clear that the majority opinion is against you, when major news outlets continue to editorialize in support of the regulations, when media story after media story reports on problems throughout the sector, and when GAO takes a look at your schools and finds problems at every single institution they visited.

Unfortunately, money talks in the nation’s capital and the for-profit groups know that. Even worse is that those who advocate on behalf of students, particularly low-income and minority students, simply don’t have the resources to “max out” their contribution to a member of Congress or to buy millions of dollars worth of full-page advertisements day after day. If they did have a voice, they might ask, Corinthian Colleges -- “why must we pay up to 10 times as much for your classes as we would at our local community college?”

Luckily, the Department of Education has kept its focus on protecting students and taxpayers. This is not a case of big government overstepping as the for-profits would have Congress believe. Nor is this about hurting students and trying to suppress job creation (really, does anyone think that the administration would set out to do that?). No, this is an example of exactly why we have a federal government: to invest in and strengthen our system of higher education and to ensure that the investment it makes is good for the students, their families and communities, business and industry and the country as a whole.  The proposed rule on gainful employment is a modest step in that right direction.  Let’s hope that those values benefiting and protecting the many come out ahead of profit margins lining the pockets of a few companies.

Craig Smith is the Deputy Director of Higher Education for the American Federation of Teachers where his primary responsibilities are field services and communications with an emphasis on political and legislative action. Prior to joining the AFT’s national staff, he was a full-time faculty member and local union president at Salt Lake Community College. Craig blogs regularly on AFT’s Faculty and College Excellence website. His views are his own and not necessarily those of the New America Foundation.

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