Biden crackdown targets for-profit colleges

The Biden administration is devoting regulatory muscle to constraining for-profit colleges, threatening hard times for a sector that began another revival under Donald Trump.

The most concrete step is the Biden team’s start this month of rule-making sessions – the formal consultations with interested parties required when writing or revising the regulatory language for implementing laws passed by Congress. The months-long process appears likely to end with a range of new limits on the industry’s ability to tap into the nation’s $30 billion (£22 billion) annual allotment of federal student aid.

The for-profit industry also just suffered an important loss in California, where the state’s community college system withdrew a major new partnership. The reversal by the California Community Colleges system – with 1.8 million students at 116 campuses – hopefully will lead more public US universities to reconsider embracing “predatory for-profit college” models, said Carrie Wofford, president of Veterans Education Success, which is focused on the particular danger it sees the proprietary sector posing to military families.

The partnership, announced in October, allowed for student credit transfers between the state’s two-year colleges and an online operator known as American Military University that reached a legal settlement in Massachusetts over charges it falsely portrays itself as part of the US military.

Students also appear to be voting against the model. Four-year for-profit colleges were a bright spot amid the Covid-related enrolment declines across most of US higher education in the autumn semester of 2020, but then this past autumn suffered the worst drop by sector, with a single-year retreat of 11 per cent.

For the federal rule-making process, a chief area of attention for the Biden administration is an Obama-era bid for a gainful employment rule that would bar federal funding at for-profit institutions whose graduates often fail to find jobs. Biden officials are favouring the rule-making slog out of a belief the results will be legally stronger, despite some political allies preferring a quicker option in the federal courts.

“While we respect and appreciate outside feedback on the best route to that goal,” James Kvaal, the US undersecretary of education, said, “our judgement is that focusing on the regulatory process will produce the best, most durable rule to protect students.”

The gainful employment provision was initiated by the Obama administration as a response to the overwhelming tendency of for-profit colleges to concentrate on recruitment while leaving their students with poor training and weak job prospects.

In his previous position as president of the Institute for College Access and Success, a pro-student advocacy group, Mr Kvaal produced data showing that for-profit colleges produce one-third of all borrowers who default on their federal student loans despite enrolling only 9 per cent of all students.

Now in a top Biden administration position, Mr Kvaal described himself as “committed to restoring a strong gainful employment rule as quickly as possible”.

The lobby group for the for-profit industry, known as Career Education Colleges and Universities, has long insisted that any requirements that tie eligibility for federal student aid to future student success in the job market should be universal.

“We do not oppose accountability measures,” said Jason Altmire, the group’s president. “We believe any accountability measure that you want to impose, any metric that you want to use to measure accountability, should simply be applied to all schools without loophole and without gimmick.”

Backers of the restrictions, however, note that for-profit institutions explicitly promise immediate job-market readiness, while traditional colleges and universities have a variety of missions that are generally tied to longer-term and broader measures of human success.

paul.basken@timeshighereducation.com