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when unemployment is so high and somany Americans need
more, and not less, vocational and career training.They said the
EducationDepartment couldn’t possibly review the estimated
53,000 programs nationwide that would be affected. Besides,
they and others said, the cutoffs seemarbitrary: What’s a fair
ratio of debt to income, and who gets to decide?
EducationDepartment rule-makers responded by
proposing a complicated formula under which the debt would
not be allowed to exceed eight percent of expected earnings,
based on a ten-year repayment schedule. Five percent of
programs were projected to fail that test. Another suggestion is
that a university or college might be required to prove that there
is a “reasonable relationship” between the cost of a programand
the added amount a graduate can expect to earn with a relevant
degree or certificate.
The for-profits promise a court battle on due-process
grounds if the gainful-employment regulation is approved,
and have spent $3million since the beginning of the year
alone on lobbying to helpmake sure it isn’t, according to the
independent, nonpartisan Center for Responsive Politics.
(Federal lobbying on education overall rose to a record $106
million in 2008 and topped $100million last year. From
January throughOctober of 2010, NAICU spent $223,000 on
federal lobbying, ACE $150,639, and the Association of Public
and Land-grant Universities $250,000; but the Apollo Group
alone, parent of the University of Phoenix, spent $337,000,
Career Education Corporation $460,000, and theWashington
Post Company, owner of Kaplan, spent $420,000.)
Some 91,000 comments on the gainful-employment
measure were submitted to the
Federal Register
, by far a record
response to any EducationDepartment proposal. On the other
side, a coalition of 30 consumer, student and civil-rights groups
lined up to say the gainful-employment guidelines don’t go far
enough. Shares of for-profit education companies have slumped
since the Apollo Group, citing “regulatory and other scrutiny,”
forecast a decline in new enrollment at the University of
Phoenix. Overwhelmed, the EducationDepartment postponed
a decision on the gainful-employment rule, though all the other
regulations moved forward and will take effect July 1, 2011.
“We’ll continue to do battle with the administration on this,”
saidHarrisMiller. “The divergence comes in terms of how one
determines what is or is not a quality institution, and whether
Washington or the consumer shouldmake that decision.”
Spellings, education
secretary for George
W. Bush, weighed in.
“At a time when the
administration should
be focused on job
creation and strategies
to prepare today’s
students for tomorrow’s
jobs, it is targeting
private-sector higher
education providers
that serve about three
million students a
year,” Spellings wrote
in a
Washington Post
op-ed. “The result could be more jobs lost
and fewer Americans getting the education they need to secure
good jobs.”
Spellings laudedObama’s graduation initiative, his support
for community colleges, and the increase in Pell grants, which
Bush raised, too. But she blasted the end of federally subsidized
private lending, saying it robbed consumers of choice, and said
the crackdown on for-profit schools would disproportionately
hurt low-income andminority students.The president’s good
start had “quickly faltered,” Spellings wrote. “The Obama
administration’s tendency to spendmore money and support
aggressive government solutions began to get the better of it.”
(Spellings, who now runs her own political consulting firm,
declined to be interviewed.)
Meanwhile, a funny thing had happened on the way to
the rule-making process. Conventional nonprofit universities,
among the for-profits’ most consistent critics, realized the
regulations would affect them, too. It turned out that 40,000 of
the 53,000 programs that fell under the gainful-employment
proposal, for example, were at traditional nonprofits, and while
most of those were likely not endangered, all would now be
under closer federal control. Among other quandaries this
presented, if a student started at a for-profit institution and
transferred to a nonprofit university, the total of his or her loans
By the Numbers
Higher education in Obama’s first two years
Amount of stimulus money that went to higher education: $23 billion
Projected ten-year savings from eliminating student-loan subsidies: $87 billion
Actual savings: $46 billion
Amount of this that was supposed to go to community colleges: $12 billion
Amount that actually did: $2 billion
Amount that went to Pell grants: $39 billion
Number of applicants for Pell grants in 2007: 12 million
Number of recipients: 5 million
Amount dispensed: $13 billion
Expected number of applicants next year: 19 million
Expected number of recipients: 9 million
Estimated amount to be dispensed: $35 billion
Increase this year in public-university tuition: 7.9 percent
Increase this year in private-university tuition: 4.5 percent
Inflation rate: -.4 percent
Current proportion of 25- to 34-year-olds with a postsecondary degree: 38 percent
Obama’s goal: 60 percent by 2020
Number of states whose community college budgets were down or flat this year: 32
Two-year increase in community college enrollment: 24 percent
Private, for-profit share of total postsecondary enrollment: 10 percent
Share of Pell grants that now go to students at private, for-profit schools: 24 percent
Questions eliminated from the Free Application for Federal Student Aid (FAFSA):
22 (more than 20 percent)
Increase in FAFSA applications filed since then: 33 percent
Sources: U.S. Department of Education, American Association of Community Colleges,
Congressional Budget Office
The runaway upsurge
in the cost of Pell
grants has been
propelled in part by
tuition increases—7.9
percent for public
universities and
colleges this year.